What is the SCRA and How Does it Help Military Service Members?Updated: May 2, 2019

Members of the American uniformed services face challenges that uproot their lives, cause them massive amounts of stress and take their focus from more mundane aspects of life like personal finance. That’s why, in 2003, the U.S. government enacted the Servicemembers Civil Relief Act, or SCRA, to help active-duty service members ease their monetary burdens. The SCRA gives service members extra rights and leeway in financial matters while they’re called to duty, providing benefits and protections that most Americans would probably find exceptionally useful. Since we already detailed the credit card laws impacting all consumers, we decided now’s the time to dig into the SCRA and explain how it impacts service members’ finances. To find out what the SCRA can do for you, and if you qualify for it, keep reading.

Who does the SCRA cover?

The SCRA applies to active-duty members of all seven branches of the U.S. uniformed services: Army, Marine Corps, Navy, Air Force, Coast Guard, Public Health Service Commissioned Corps, as well as National Oceanic and Atmospheric Administration Commissioned Officer Corps. Reservists on federal active duty, as well as members of the National Guard who are on federal orders for more than 30 days, also qualify. If you’re absent from duty for a lawful cause or because of injury, illness or leave, you are still covered by the SCRA. Certain SCRA benefits can also extend to your dependents, including your spouse, children and any person for whom you have contributed more than half of their financial support for at least the past 180 days. Reservists and National Guard members who are not on active duty, or who are on duty under state orders, do not receive SCRA benefits.

What does the SCRA provide?

This is a summary of the features that all companies must provide to active duty service members at a minimum. However, many financial institutions go above and beyond in the SCRA benefits they provide. For example, American Express (a NextAdvisor advertiser) waives annual fees for its credit cards to anyone eligible for the SCRA, letting service members carry premium cards without paying hundreds of dollars in annual fees per year.

Interest rate caps

One of the biggest perks the SCRA provides is that it limits the APR for loans you took out before starting your military service to 6%. This applies to credit cards, mortgages, student loans, vehicle loans and home equity loans. To claim this benefit, you have to supply your creditors with a written notice and military orders to prove your active duty status within 180 days of finishing your service. Once you do that, the rate cap will be applied to your eligible loans if you are still serving, and it will work retroactively, so your creditors must forgive any interest above 6% that they charged you during your active duty. Once you finish active duty, the 6% APR benefit will stop covering all of your loans except mortgages, which remain covered by the 6% APR maximum for up to one year after your service.

Be aware that if you refinance or consolidate your loans while you are serving, your new loan will not benefit from the interest rate cap, since you originated it during active duty.

Eviction, foreclosure and repossession protection

Rental agreements, mortgages and leases are all protected by the SCRA, requiring landlords and creditors to obtain a court order before evicting you from a rental property, foreclosing on your home or repossessing property you have as part of an installment contract, such as a leased car. For mortgages and leased property, you must have begun your contract or obligation before entering active duty to qualify for SCRA protections. Eviction protection applies to rental agreements regardless of when you entered into the agreement, as long as the property meets two conditions. One, the rental property must be occupied or used as a primary residence for you or your dependents, and two, the monthly rental payment must be below a certain amount (currently $3,716.73 per month, but this number changes each year to account for inflation).

Related to these protections, the SCRA also provides protection against default judgements in civil court cases. If you are involved in a court proceeding and are unable to make an appearance, the court must appoint an attorney to represent your interests. If that attorney can’t get in contact with you, or there is a defense that requires your presence in court, the court must stay the proceeding for at least 90 days.

Contract termination rights

Since service members sometimes get reassigned or called to active service with little notice, the SCRA lets you terminate your leases for premises and motor vehicles, as well as your cell phone contract, early. You may terminate leases for premises only after entering into military service, receiving a permanent change of station order or receiving a deployment order that lasts at least 90 days. For vehicles, you may terminate your leases if you’re called to active duty or deployed with a military unit for at least 180 days, or you receive a permanent change of station order that takes you outside of the continental U.S. In both cases, you have to deliver a written termination notice and a copy of your orders to your landlord, lessor or agent in person or by mail. For vehicles, you must return the vehicle within 15 days of delivering your termination notice.

To get out of a cell phone contract without having to pay early termination fees, you must have orders to relocate somewhere for at least 90 days that doesn’t receive service supported by the contract. If you’re on a family plan, you can only terminate the plan for other family members if they are relocating with you. Unlike early termination for leases, you can deliver your termination notice to your cell phone provider electronically as well as by mail, but it still must come with a copy of your orders.

Tax deferment

If your military service affects your ability to pay taxes, you can request a tax deferment that lasts the duration of that service plus an additional 180 days. Requests must be sent via written notice to the relevant tax authorities, such as the IRS and state taxation boards, and include proof that your active duty is affecting your ability to pay. Importantly, this protection cannot apply to your dependents, but the SCRA does prevent your income from being added to your non-military spouse’s income for tax purposes.

As a final note, the SCRA prohibits anyone from negatively affecting your credit as a consequence of you exercising your SCRA rights. Additionally, according to the 1948 Supreme Court decision Le Maistre v. Leffers, all SCRA provisions “must be read with an eye friendly to those who dropped their affairs to answer their country’s call.” In other words, financial institutions must interpret SCRA protections to favor you.

The SCRA only grants its benefits to people who apply for them, so take advantage of your rights as a brave member of the uniformed services. To see more ways you can optimize your finances, follow our personal finance blog.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.