Military Credit Card Interest Rate Caps and Protections

Two federal laws set a military credit card interest rate cap, and which one applies depends on when you opened the account. A credit card you had before going on active duty is capped at 6% per year under the Servicemembers Civil Relief Act. A credit card opened while you were already on active duty is capped at an all-in rate of 36% per year under the Military Lending Act. The 6% cap only kicks in after you ask for it in writing; the 36% cap is automatic.

The 6% Cap on Pre-Service Credit Card Debt

The Servicemembers Civil Relief Act, at 50 U.S.C. § 3937, forces creditors to drop the interest rate to 6% on any debt you took on before entering active duty. Credit cards, auto loans, student loans, and mortgages all qualify. The cap lasts for your entire period of military service. For mortgages, it extends one additional year after discharge.¹

Interest above 6% is forgiven, not deferred. If the card was charging 22%, the 16-point difference disappears for every month you’re on active duty. It doesn’t get tacked onto the principal or pushed to the back of the loan. Your minimum monthly payment also has to shrink by the amount of forgiven interest, so the lender can’t quietly keep collecting the old payment and apply the difference to principal.¹

“Interest” is defined broadly. It includes service charges, renewal charges, and fees tied to the account, with the sole exception of bona fide insurance. A creditor cannot relabel interest as a fee to dodge the cap, and cannot accelerate your principal balance to recover what it loses from the lower rate.¹

A boundary worth knowing: the SCRA covers debts in your name and debts you hold jointly with your spouse. It does not cover a spouse’s individual credit card accounts that aren’t in your name. If both of you carry separate balances, only yours and the joint ones drop to 6%.¹

The 36% Cap on Credit Cards Opened During Service

Consumer credit you take out while already on active duty falls under the Military Lending Act at 10 U.S.C. § 987. The MLA caps the Military Annual Percentage Rate, or MAPR, at 36%. The MAPR is built to capture nearly every cost of borrowing, not just the stated interest rate.²

The MAPR includes fees that ordinary consumer-lending rules would exclude from finance charges: single-premium credit insurance, charges for ancillary products, debt cancellation and suspension fees, application fees, and plan participation fees.³ Late payment fees and required taxes are treated as bona fide charges and don’t count toward the 36%.⁴

The MLA also voids certain contract terms. A covered credit agreement cannot require you to waive legal recourse, submit to mandatory arbitration, or give up the right to join a class action. An agreement that violates these provisions is void from the start, which means you owe nothing under a prohibited contract.²

Two blind spots: traditional checking-account overdraft services are excluded entirely, and installment loans used to buy a vehicle or personal property, where the item itself secures the loan, fall outside the MLA.⁵

Who Qualifies

The two laws draw their eligibility lines slightly differently.

Under the SCRA’s 6% cap: active-duty members of all service branches, reservists called to federal active duty under Title 10 orders, and National Guard members mobilized under Title 10 or Title 32 orders for more than 30 consecutive days in response to a national emergency. Commissioned officers of the Public Health Service and NOAA also qualify during active service.⁶

Under the MLA’s 36% cap: anyone on active duty under orders that don’t specify 30 days or less, and anyone on active Guard and Reserve duty. The MLA also extends coverage to dependents in their own right, so a military spouse or child independently receives MLA protection when taking out consumer credit.²

How to Request the 6% Rate

The SCRA cap is not automatic. You have to send the card issuer two things: written notice asking for the rate reduction, and a copy of military orders showing the date your active duty began. List every account you hold with that lender in the notice so none get missed. Once the creditor has both documents, the 6% rate applies retroactively to the date you entered active duty.¹

Most large banks have a military benefits page with a form or a secure upload portal, and some use dedicated email addresses or mailing addresses staffed by compliance teams. After you submit, you should see a statement credit for the overpaid interest and a lower minimum payment going forward. If your orders aren’t handy, the statute also accepts alternative proof such as a certified letter from a commanding officer.¹

The MLA’s 36% cap is different. Lenders check your military status through the Department of Defense database before approving new credit, so you don’t need to send anything to trigger it.⁷

The 180-Day Deadline That Kills Most Claims

Written notice and a copy of your orders must reach the creditor no later than 180 days after your date of discharge or release from active duty. Miss it, and the retroactive 6% rate is gone.¹

Nothing stops you from sending the request while you’re still serving, and that’s the better move. The reduction starts sooner, the retroactive credit is smaller because less excess interest has accrued, and you don’t have to remember a paperwork deadline during the transition out of the military.

When a Lender Won’t Comply

A creditor that knowingly charges more than 6% on a covered pre-service debt faces a fine under Title 18, imprisonment of up to one year, or both.¹

You also have a private right of action under 50 U.S.C. § 4042. A service member harmed by any SCRA violation can sue for equitable relief, monetary damages, and class status on behalf of other affected members. A prevailing service member can recover attorney fees and litigation costs, which lowers the cost of bringing a case.⁸

Short of a lawsuit, you can file a complaint with the Consumer Financial Protection Bureau through its online portal or by phone at (855) 411-2372. The CFPB reviews complaints for patterns and routes potential SCRA violations to the Department of Justice for enforcement.⁹

Lenders That Go Below 6%

The 6% cap is a ceiling, not a floor. Navy Federal Credit Union caps interest at 4% on eligible pre-service debt rather than the federally required 6%.¹⁰ Some national banks have historically offered 0% on certain accounts during deployment. These voluntary benefits aren’t guaranteed and can change, so call the military support line at any lender you use and ask what they offer beyond the federal minimum. The worst answer is that they’ll honor the statutory 6%, which is still a sharp cut from a typical credit card rate.

1
Office of the Law Revision Counsel. 50 USC 3937 – Maximum Rate of Interest on Debts Incurred Before Military Service
2
Office of the Law Revision Counsel. 10 USC 987 – Terms of Consumer Credit Extended to Members and Dependents: Limitations
3
eCFR. 32 CFR 232.4 – Limitations on Terms of Consumer Credit Extended to Service Members and Dependents
4
Consumer Financial Protection Bureau. Military Lending Act Examination Procedures
5
National Credit Union Administration. Military Lending Act (MLA)
6
Department of Justice. Know Your Rights: A Guide to the Servicemembers Civil Relief Act
7
Military Lending Act. MLA
8
Office of the Law Revision Counsel. 50 USC 4042 – Private Right of Action
9
Consumer Financial Protection Bureau. The CFPB Is Protecting the Military Community and Providing Relief
10
Navy Federal Credit Union. Servicemembers Civil Relief Act (SCRA)