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Game Changer: SCRA and MLA

Servicemembers Civil Relief Act and the Military Lending Act Explained

But wait, there’s more!  Earlier I mentioned how you need to get over the mental block of paying annual fees for credit cards because the benefits will outweigh the cost. Well, it turns out if you are an active-duty servicemember Uncle Sam gave you some benefits in exchange for serving this great country. The two acts that will get your credit card annual fees waived are called the Servicemembers Civil Relief Act (SCRA) and the Military Lending Act (MLA).

The SCRA

Check your SCRA eligibility here (simple account creation required)

The SCRA is one of the best-kept secrets in the Army and we do a terrible job of educating our subordinates on it.  Everyone knows a deployment or PCS orders can get you out of a pesky apartment or auto lease and we have the SCRA to thank for that. But the benefits go so much deeper.  If you had some debt as a civilian and then went into active military service, the SCRA has some rules for lenders to follow.  Any debt you had before joining the ACTIVE military is now capped at 6% interest while you are active.  All you have to do is call and ask for SCRA benefits to be applied to your account and fax/email your orders.  The lenders will even retroactively reduce your interest rates to 6% since you went active and if you’ve been paying a hefty 16-25% interest on credit card accounts, you get a sweet refund check in the mail.  But guess what else also generally gets waived?  Annual fees.

Almost every major bank out there will waive your credit card annual fees if the account was opened prior to your entry into active duty (and retroactively refund all the fees you’ve paid since going active).  Some banks are extremely generous and even waive your fees on ANY account you open at ANY time, regardless of if you’re already active or not.  It is always worth it to ask for your SCRA benefits with any financial institution you do or have done business with. The following is a list of how the banks we care about in the credit card game treat the SCRA:

American Express

Before Jan 2020 Amex applied SCRA (waived annual fee) to any card held by an AD servicemember regardless of when the card account was opened. They even dropped their personal loan interest rates to 0%. Spouses of AD SMs could get SCRA applied by having their AD spouse added as an authorized user OR having a billing address in a community property state (Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin). After Jan 2020, Amex only applies SCRA to accounts opened prior to going on AD (letter of the law). Note that after Jan 2020, Amex no longer waives annual fees for business cards and no longer drops personal loan interest rates to 0%.

Chase

Before Oct 2017 Chase applied SCRA (waived annual fee, interest rate drop to 4%) to AD SMs’ and spouses’ accounts with affiliation to Ohio, Louisiana, and Pennsylvania as these states’ laws add to the SCRA. The affiliation could mean billing address, future orders, residency, etc. After Oct 2017, Chase may still follow this but it is an unnecessary step (see MLA below). Chase will apply SCRA to accounts opened prior to going on AD (letter of the law).

Citi

Who knows. Citi doesn’t even know. It was a shot in the dark getting SCRA (waived annual fee, interest rate drop to 0%) applied to Citi accounts. Maybe it depended on the mood of one particular customer service rep. A large majority were denied SCRA for accounts opened after entering AD. Citi will probably apply SCRA to accounts opened prior to entering AD (letter of the law).

Barclays

Before Nov 2016 Barclays adopted the above Amex policy for SMs and added an interest rate drop to 0%. I am unsure what their spouse policy was. During 2016 we (military churners) flocked to their Luxury Card Gold Card (waived $995 annual fee). Because this card is absurdly not worth the annual fee for those that have to pay it, we were likely a significant portion of their customer base. This caused a Barclays wide reversal of their SCRA policy and after Nov 2016, Barclays became one of the most restrictive banks with SCRA benefits. Barclays will apply SCRA to accounts opened prior to going on AD (letter of the law).

US Bank

I am unsure but I believe US Bank has always only applied SCRA to accounts opened prior to going on AD (letter of the law).

The MLA

Check your MLA eligibility here (simple account creation required)

The MLA was a bill passed around 2008 or something but didn’t take effect for banks until Oct 2017. It’s a very very loosely written bill that in essence states banks cannot charge military members more than 36% interest on any sort of debt to include all the fees associated with debt-bearing accounts.  Now, that may seem like a huge amount of interest but what happens when you have a credit card with a $450 annual fee and you only have a $1 charge on it?  According to the MLA (we think, again it’s open to some serious interpretation) that’s a 450% interest charge.

So to avoid the possibility of major government penalties, most banks are now waiving annual fees on credit cards for all AD SM and spouse accounts opened after Oct 2017 automatically upon application (without having to ask, unlike with SCRA). The following is a list of how the banks we care about in the credit card game treat the MLA:

American Express

Amex started applying MLA (waived annual fee) to SM and spouse personal accounts opened after Oct 2017 despite also applying SCRA if requested. You can check if your account had MLA applied by requesting a cardmember agreement on your Account Services page and looking for the text “You have been identified as a ‘Covered Borrower’ under Military Lending Act.” at the bottom of page 2.

Chase

Chase started applying MLA (waived annual fee) to SM and spouse accounts opened after Oct 2017. I am unsure if there is a way to directly check this aside from not being charged an annual fee.

Citi

Citi hopped on the struggle bus for it’s MLA rollout and continues to ride it to this day. From Oct 2017 to spring-ish 2018 Citi started applying MLA (waived annual fee) to SM and (maybe?) spouse accounts. Between spring-ish 2018 to spring-ish 2019 Citi was a no-mans land of figuring itself out and applying or not applying MLA all willy nilly. After spring-ish 2019 Citi started predictably applying MLA to SM and spouse accounts. Then, in late 2019 Citi started creatively interpreting the MLA and developed what I refer to as the Goldilocks Zone for annual fee waivers. Basically, you must show a statement balance between $1 and your annual fee divided by .36 on the statement your annual fee gets charged to for the fee to be waived. You can read about it here (halfway down the page).

Barclays

Barclays is still salty about the Luxury Card incident. No MLA annual fee waivers here.

US Bank

US Bank started applying MLA (waived annual fee) to SM and spouse accounts opened after Oct 2017. I am unsure if there is a way to directly check this aside from not being charged an annual fee.

 

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