Responsible Credit Resources and Debt Help for Veterans

Brendan Harkness

Brendan Harkness

Updated Aug 01, 2019

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Service members and Veterans are no more immune to debt than anyone else.

In fact, Veterans as a group carry higher than average debt compared to the rest of the population. Several factors contribute to Veterans’ 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 and must learn to survive on just one income. In the time it takes for the spouse to find meaningful work and arrange for trusted childcare, the tour is complete (or nearly) 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 cannot 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.

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

American Express offers a special deal to members of the military who are 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 definitely 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 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 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 being taken, such as foreclosure or eviction, while in service.

These benefits can prove priceless when considering the effects one foreclosure or default can have on your credit. Mentioned below are some of the main perks offered by the SCRA and how they, when taken advantage of, 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%, as well as completely waiving annual service and late payment fees. 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 American Express Centurion Card is covered under the SCRA, meaning that the hefty $2500 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 veterans of the US military, also offers competitive interest rates and benefits to members under the SCRA.  Pre-existing credit card and loan debt qualifies 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 every day use.

Other major lending institutions, such as Bank of America, Capital One, Citi, and Wells Fargo, offer similarly competitive interest rates, eliminate fees, and 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, may not be rescinded or terminated after the servicemember’s entry into military service for a breach of the terms of the contract occurring before or during their military service, or the property repossessed because of the breach without a court order.

Likewise, automobiles leased 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 and, oftentimes, the thought of entering military service is not a factor when making such a purchase.  This can be of huge benefit to those entering the military with an automobile or property lease due to the negative financial repercussions that would normally come along with breaking a lease.

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 with 30 days written notification. This can be a great way to save a ton of 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 during the period of military service or 9 months thereafter without a court order.

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 nations veterans from such consequences.

Even though all lending institutions are required by law to abide by the rules set forth in the Servicemembers Civil Relief Act, 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.

Outside Related Resources for Veterans

If you’re a service member 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.
  • Sharpen Today’s Hands on Banking Program is a partnership between the National Foundation for Credit Counseling and Wells Fargo designed to keep military personnel and their families on a path to financial stability.
  • 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 Veterans with education and employment. They offer a wide range of services including debt relief, employment training and job placement. In the program, service members 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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