Military debt reliefs under the Servicemembers Civil Relief Act (SCRA) now include waived annual fees and set interest rates at 6%.

Military debt reliefs under the Servicemembers Civil Relief Act (SCRA) now include waived annual fees and set interest rates at 6%.

The Servicemembers Civil Relief Act (SCRA) and the Military Lending Act (MLA) are two important pieces of legislation that provide financial protections for military members. While they share similar goals, they cover different types of debts and apply under different conditions.

The SCRA, initially published in 1940, aims to help relieve financial distress for active-duty military personnel. It primarily offers protections on debts incurred before military service. The Act caps interest rates on pre-service obligations, such as credit cards, mortgages, and loans, at 6% while the service member is on active duty. To benefit from this cap, the service member must provide military orders and written notice to the creditor; interest above 6% must be forgiven retroactively and cannot be deferred. The SCRA also protects against foreclosure, eviction, and certain rental agreements during active duty.

On the other hand, the MLA applies to certain types of debt incurred during active duty service. It limits the military member's interest rate on covered loans to a maximum of 36% APR (including all fees) and mandates specific disclosure requirements. The MLA covers consumer credit such as payday loans, vehicle title loans, tax refund anticipation loans, and certain credit card loans made during active duty. It does not cover mortgage loans or debts incurred before service. The MLA also prohibits mandatory arbitration clauses and requires lenders to comply to provide loans to servicemembers.

In summary, the SCRA covers financial obligations incurred before entering active military service and caps interest at 6% during active duty. It applies broadly to debts like credit cards, mortgages, and rental agreements. The MLA covers certain types of consumer credit incurred during active duty and caps interest at 36%, with additional protections on disclosures and lending practices.

As for credit cards, some of the best options for servicemembers eligible for SCRA benefits are the best credit cards available, offering annual credits, top-tier elite status, lounge access, and more. For instance, the Hilton Honors American Express Aspire Card offers automatic Hilton Diamond status, an annual free night, and a travel and resort credit. It charges a $550 annual fee, but the statement credits and benefits provided can outweigh the cost. Another popular choice is the Marriott Bonvoy Brilliant card, which charges a $650 annual fee and provides statement credits, a free night certificate, and elite status.

In contrast, if you've already activated and accrued new debt, it will be subject to the Military Lending Act (MLA), a similar but less comprehensive regulation. If you're a military member looking for financial protection, understanding the differences between the SCRA and the MLA can help you navigate your financial obligations more effectively.

[1] Department of Justice. (n.d.). Servicemembers Civil Relief Act (SCRA). Retrieved from https://www.justice.gov/crt/servicemembers-civil-relief-act-scra

[2] Consumer Financial Protection Bureau. (n.d.). Military Lending Act. Retrieved from https://www.consumerfinance.gov/regulations/rules-and-guidance/military-lending-act/

[3] Department of Defense. (n.d.). Military Lending Act. Retrieved from https://www.defense.gov/Newsroom/MILITARY-LENDING-ACT/

1. Military members can find relief from financial distress with the Servicemembers Civil Relief Act (SCRA) and the Military Lending Act (MLA), both offering protection for different types of debts.
2. The SCRA, enacted in 1940, offers protections on debts incurred before military service, such as credit cards, mortgages, and loans, capping interest rates at 6% during active duty.
3. The MLA, on the other hand, caps interest rate on covered loans incurred during active duty service, like payday loans, vehicle title loans, and certain credit card loans, at a maximum of 36% APR.
4. Understanding the differences between the SCRA and the MLA is crucial for military members navigating their financial obligations effectively.
5. Some of the best credit cards with SCRA benefits include the Hilton Honors American Express Aspire Card and the Marriott Bonvoy Brilliant card, providing benefits like annual credits, status, and free nights.
6. Financial protection for military members doesn't end there; other important aspects include news, education, self-development, technology, business, personal-finance, sports, entertainment, health, food, travel, and investing.
7. To learn more about the SCRA, the MLA, financial protection options, and various aspects of life as a military member, resources are available from the Department of Justice, Consumer Financial Protection Bureau, and Department of Defense.

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