$250. $450. $550. The annual fees for top travel rewards cards keep creeping up. But active duty military service members don’t have to pay those fees at all. That hefty discount is thanks to the Military Lending Act (MLA) and the Servicemembers Civil Relief Act (SCRA), the laws designed to protect military service members from unfair credit and lending practices.
The most recent iteration of the MLA provides these rights to active-duty servicemembers, including those on active Guard and active Reserve duty:
- A 36% interest cap, which includes finance charges, credit insurance premiums or fees, or “participation fees” (this is called the Military Annual Percentage Rate, or MAPR)
- Exemption from mandatory arbitration rules from creditors
- No mandatory allotments taken from paychecks to pay back a loan
- No penalty for prepayment of all or part of a loan.
Spouses and other dependents are included in these benefits, too.
“That military APR can make a big difference on servicemembers’ bottom line,” Spencer Reese, an active duty Air Force officer who writes the blog Military Money Manual, said.
Interest rates on traditional loans and credit cards typically aren’t as high as the specified 36%, but keep in mind that the military APR extends to all the fees you might encounter beyond interest, Reese explained. That 36% includes late fees, annual fees, and other extras that lenders tack on. “There’s this complicated formula you can find online,” he said, but some credit card issuers have decided it’s easier to simply eliminate fees altogether for military personnel.
Reese broke down a few of the major rewards players for us.
American Express waives all fees on personal and business credit cards for active duty military servicemembers and their spouses.
Chase waives all annual fees on personal credit cards for active duty military and their spouses. When you apply, select “military” as your source of income and Chase will confirm your status for you.
Capital One waives annual fees only if you opened your account before starting active duty service. If you start active duty service, you can apply for SCRA benefits for that time period to have your fee waived. Barclays and Citi have similar rules.
How MLA benefits change the rewards math for servicemembers
“Because [military members] can get the fees waived on these cards, it really changes the calculation of benefits,” Reese explained. Without the annual fee, then benefits like free hotel stays, incidental airfare costs, ride share credits, or upgrades are better than free. The dollar value of these rewards can quickly climb to more than $1,000, he wrote in one blog post.
Those benefits can make traveling more comfortable, whether your travel is personal or for business. “When we fly commercial, we’re typically on the cheapest flight with the worst connections, at the worst times. So it’s nice to be able to go to the lounge, get some free food, get a free drink, and kind of get away from the crowd while we’re waiting for our next flight.”
Combine the fringe perks with the ability to earn points to redeem for free or discounted travel, and you make out like a bandit—but, you know, legally.
How to check your status before you apply for a new card
Credit card issuers run applications through two federal databases to confirm your active duty status. But you can run the same check yourself before applying for a new credit card.
But this move isn’t required on your part. If you don’t check your status before applying, you might find that you get charged an annual fee in your first month. You can log into your account for your new credit card to request military SCRA benefits, and in most cases, the fee gets wiped away and you never see it again.
“You don’t have to get crazy with it,” Reese said. “You don’t need to open up 40 cards like I have.” But your unique status as a service member is something you can take advantage of, he said. “You’re only going to be on active duty for a certain number of years. While you are, this is a real tangible benefit that you can e