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Responsible Credit Resources and Debt Help for Veterans and Servicemembers

6 min read
By Brendan Harkness
Expert reviewed by Michelle Black
Updated Mar 27, 2020
At a glance

U.S. military servicemembers and veterans receive a variety of federally mandated credit- and debt-related protections, though many credit card issuers and financial institutions go above and beyond what these laws require.

Servicemembers and veterans are no more immune to debt than anyone else.

In fact, some reports indicate that servicemembers and veterans as a group carry higher than average debt compared to the rest of the population. Several factors contribute to these financial difficulties. Military members are often young and financially inexperienced. Upon joining, many servicemen and women suddenly earn more money than they ever have before. Some receive five-figure signing bonuses but have no solid plan for managing the windfall.

Even the most financially savvy military families relocate frequently. Many families must also learn to survive on just one income. Often, by the time the non-enlisted spouse finds meaningful work and arranges for trusted childcare, the tour is complete (or nearly so) and the family is on their way to yet another new city.

Further complicating the veteran’s financial situation is the reality of a tough job market. Veterans often struggle to find employment in the private sector upon completion of their military service. Many members of the armed forces train and work in a very narrow field, with no guarantee of finding a similar job upon discharge.

Managing finances is no easy task. It requires discipline and sacrifice on a daily basis. Planning for emergencies and saving for a rainy day are challenges for us all. And once debt begins to rise, it usually won’t fall without a specific and directed plan of attack.

To learn how to better manage your debt check out our resources on debt management.

Military and Veteran Credit Cards

USAA offers a line of credit cards that are exclusively available to members of the military, active and honorably discharged, as well as certain members of their families. Click here for details on USAA eligibility. See the full details of these card picks here.

USAA Cashback Rewards Plus American Express® Card

Our rating
Min. credit levelExcellent
Details
Annual Fee$0
Regular APR13.90%–27.90% Variable
Apply Now

securely on the issuer's website

  • Earn 5% cash back on your first $3,000 in gas and military base purchases annually on these categories combined
  • Earn 2% on your first $3,000 on supermarket purchases per year
  • Unlimited 1% cash back on all other purchases
  • USAA membership is available to active and former military and their eligible family members

USAA Preferred Cash Rewards Visa Signature®

Our rating
Min. credit levelGood
Details
Annual Fee$0
Regular APR13.90%–27.90% Variable
Apply Now

securely on the issuer's website

  • Earn 1.5% cash back on every purchase with no limits or category restrictions
  • Pay no annual fee, no penalty APR and no foreign transaction fees
  • USAA membership is available to active and former military and their eligible family members.

USAA Rewards™ American Express® Card

Our rating
Min. credit levelGood
Details
Annual Fee$0
Regular APR9.90%–25.90% Variable
Apply Now

securely on the issuer's website

  • Earn 3X points per dollar spent on dining
  • Earn 2X points per dollar spent on gas and groceries
  • Earn 1X points for every dollar spent on all other purchases
  • Get 2,500 bonus points with your first purchase
  • Redeem points for cash, merchandise, gift cards and more.
  • USAA membership is available to active and former military and their eligible family members

You can take a look at our reviews of the USAA credit cards here:

 

Insider tip

American Express offers a special deal to members of the military who are serving on active duty. If you’re eligible, you can apply online to have the annual fee on any American Express card waived, along with other benefits granted by the Servicemembers Civil Relief Act.

If you’re on active duty or will be, it could pay to check out some of the high-end cards from Amex, which have pretty high fees. Some of these have the annual fee waived for the first year already, so if you’re not on active duty yet but will be next year, you’ll be able to get the card now for free and have the fee waived when you go on duty. Just be sure to check the eligibility requirements carefully, and call customer service if you have any questions about whether you’ll be eligible.

Some of the most valuable and rewarding Amex cards, with the highest fees and best rewards and benefits, include:

You may be able to get similar waivers on other cards that have annual fees, like high end travel cards.

Credit Card and Other Loan Benefits for US Active Military and Veterans

For many years, servicemembers and veterans of the US military have been thanked for their selfless service with various benefits, discounts, and privileges for a range of services and products. Every year countless military servicemembers and veterans take advantage of various programs offered by the US government. These programs range from healthcare and insurance policies to education and employment assistance.

The Servicemembers Civil Relief Act of 2003 (“SCRA”), previously called the Soldiers’ and Sailors’ Civil Relief Act of 1940, has proven to be of great benefit to those active in the military. The SCRA aims to relieve financial and legal stress on active duty military members by reducing interest rates, providing assistance with loans and leases, and preventing adverse actions from being taken, such as foreclosure or eviction, while in service.

These benefits can prove priceless when you consider the effects just one foreclosure or default can have on your credit. Mentioned below are some of the main perks offered by the SCRA and how, when taken advantage of, they can help lighten the financial burden while in service.

Maximum Rate of Interest on Loans and Mortgages

Upon receiving a written request for relief and a copy of the servicemember’s military orders, creditors must reduce the interest rate on debts incurred prior to service to no more than 6% per year.  This relief also applies to debts incurred jointly with a spouse.

The interest rate reduction is applicable for the entire period of active duty service.  In the case of a mortgage or trust deed, the interest rate reduction extends for one year after the end of military service. “Interest” is defined in the SCRA to include service and renewal charges or any other fees or charges.

Many credit card companies go above and beyond the required reductions by law and offer interest rates as low as 4%. Some card issuers completely waive annual service and late payment fees, as well.

Elizabeth Crosta, VP of Public Affairs for American Express, stated that American Express abides by the SCRA and “waives membership and late payment fees for cardmembers who are Servicemembers and notify us of their active duty status.”  She went on to confirm that even the coveted Centurion® Card from American Express (Review) is covered under the SCRA, meaning that the hefty $5,000 annual fee is waived for active servicemembers.

Emelie Calbick, general manager of Chase Card Services, stated “At Chase we are committed to supporting our country’s Servicemembers and their families with a credit card designed specifically for their needs. With no annual fee and a rewarding cash back program, Chase works to provide financial peace of mind to those serving our country every day.” Details regarding the Chase Blue Star Deployment benefits can be found here.

USAA, a group of companies that offer financial services to servicemembers and veterans of the US military, also offers competitive interest rates and benefits to members under the SCRA. Pre-existing credit card and loan debt qualify for an even lower interest rate of 4%. USAA also offers low interest rates for those not on active duty, along with many valuable benefits.  The USAA Cash Rewards cards they offer are great for everyday use.

Other major lending institutions, such as Bank of America, Capital One, Citi, and Wells Fargo, offer similarly competitive interest rates and eliminate fees. They may also provide benefits like refunding previously paid interest and dedicated support lines for active military members.

Residential and Motor Vehicle Purchases and Leases

Contracts for the purchase of real or personal property, for which the servicemember has paid a deposit or made a payment before the servicemember enters military service are also covered under the SCRA. Many such contracts cannot be rescinded or terminated after the servicemember’s entry into military service for a breach of terms occurring before or during their military service. Property generally cannot be repossessed from an active-duty servicemember because of a breach without a court order.

Likewise, automobile leases for personal or business use by the servicemember or their dependent may be terminated if the servicemember, after the lease is executed, enters military service for a period of 180 days or more.

A vehicle is a necessity for most. Yet the thought of entering military service often isn’t considered as a factor when making such a purchase. The ability to break an auto lease without the typical negative financial repercussions may be a huge benefit to those entering the military.

If you receive PCS (permanent move), TDY/TAD (temporary duty), or deployment orders that last longer than 90 days, you are eligible to break any housing lease agreements you have in place. However, you will need to provide your landlord or apartment complex a 30-day written notification to exercise this benefit. Breaking a housing lease can be a great way to save money while deployed, as you can still receive a housing stipend overseas without having a rent payment.

Foreclosure, Eviction from Bank-Owned Property

Real or personal property owned by a servicemember before the servicemember’s military service cannot be sold, foreclosed upon, or seized based on a breach of obligation — at least not without a court order. This protection is available during the period of military service or nine months thereafter.

Additionally, a landlord may not evict a servicemember or the dependent of a servicemember from premises that are occupied as a primary residence during a period of military service except by court order.  Having peace of mind in knowing that your family is safe during deployment is a benefit that most would consider priceless.

Adverse Action

The fact that a servicemember applies for or receives a stay, postponement, or suspension of his or her obligations or liabilities pursuant to the SCRA may not in itself provide the basis for adverse action against the servicemember.

Adverse actions, like a denial or revocation of credit, reporting negative information to the credit bureaus, or refusal to insure can be extremely harmful to those on active duty as well as their family members. The SCRA takes various steps to protect our nation’s servicemembers from such consequences.

All lending institutions are required by law to abide by the rules set forth in the Servicemembers Civil Relief Act. Still, many go beyond these requirements and offer even lower rates and valuable benefits. Adding to those mentioned above, most major lenders, along with many local banks and credit unions, go out of their way to extend a hand of thanks to those who are serving our country.

If you’re a servicemember or veteran in need of counseling or other financial management assistance, check out these links.

  • The Department of Veterans Affairs offers an abundance of information with regard to paying and managing VA debt of all varieties.
  • Army Emergency Relief is a non-profit organization that helps soldiers and their dependents. They offer all types of assistance, from emergency financial help to counseling and financial management education.
  • Leave No Veteran Behind is a non-profit organization that helps financially struggling servicemembers and veterans with education and employment. They offer a wide range of services including debt relief, employment training and job placement. In the program, servicemembers perform community service in exchange for financial assistance. Money is donated by the community at large.
  • The Defense Finance and Accounting Service processes military pay, issues travel pay, manages retirement and health benefits and handles numerous other administrative duties with regard to DoD pay. Their website includes information about requesting deferments, waivers, and other information related to financial hardship.
  • Military Saves, the military offshoot of America Saves, is a marketing campaign to persuade and encourage military families to save regularly, and to persuade organizations to aggressively promote automatic savings. The organization provides education and support for managing finances, staying out of debt and building savings.

Kimberly Rotter contributed to this post.

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