This article by Jim Absher first appeared on Military.com, the premier resource for the military and veteran community.
Did you know that you may be able to lower the interest rate you pay on credit card debt to as low as 6%?
This isn't one of those shady websites, deals that require you to pay for "financial counseling" or a debt consolidation loan. It is a program created by the federal government designed specifically to protect active-duty members known as the Servicemembers Civil Relief Act (SCRA).
Besides giving military members protection from foreclosure or from being taken to court while they are serving the country, a provision of the law limits interest on all loans taken out before joining the military to 6%.
To get the interest rate reduction, you just need to notify your credit card or mortgage company that you are in the military. Most large credit card companies even let you do this online. Some of them include:
American Express -- Apply Here
Bank of America -- Apply Here
Capital One -- Apply Here
Chase -- Apply here
Discover -- Apply Here
If your credit card company doesn't have an online process to apply for the interest rate reduction, you can simply send it an email or letter requesting the rate reduction.
[RELATED: MOAA's Financial Resources Page]
The Justice Department, which is charged with enforcing the SCRA, says that you should provide the creditor with written notice and a copy of your military orders or letter from your commanding officer. Make sure you include your account number and phone number.
In response, the lender is required to forgive any interest your were charged in error and pay it back to you. For mortgages, interest is capped at 6% during your entire period of military service and for one year after you get out. For all other debts, interest is capped at 6% only while you are on active duty.
Besides credit cards and mortgages, the SCRA reduces interest on vehicle and boat loans, home equity loans and student loans.
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