- Two separate federal laws protect service members from financial harm: the Servicemembers Civil Relief Act (SCRA) covers debt taken out before active duty; the Military Lending Act (MLA) covers debt taken out during active duty.
- The SCRA caps interest rates at 6% on pre-service mortgages, auto loans, credit cards, and student loans — and can save thousands in interest charges during deployment or active duty periods.
- The MLA caps the total cost of credit at 36% Military Annual Percentage Rate (MAPR) on covered products — which is why major banks like Chase, American Express, Citi, and U.S. Bank waive annual fees on premium credit cards for active duty service members.
- The SCRA allows service members to break leases penalty-free with PCS or deployment orders, and protects against foreclosure, eviction, and default court judgments.
- SCRA protections are not automatic — you must notify your lender or landlord in writing and provide a copy of your orders to claim most benefits.
- MLA protections apply to active duty service members, Guard and Reserve members on qualifying orders of 30+ days, and their covered dependents.
Table of Contents
- Why These Laws Matter
- What Is the SCRA?
- SCRA: The 6% Interest Rate Cap
- SCRA: Breaking Leases and Rental Protections
- SCRA: Mortgage and Foreclosure Protections
- SCRA: Other Key Protections
- What Is the MLA?
- MLA: The Credit Card Fee Waiver Benefit
- What the MLA Covers — and What It Doesn’t
- SCRA vs. MLA: Key Differences at a Glance
- How to Claim Your Protections
- What to Do If Your Rights Are Violated
- Frequently Asked Questions
Why These Laws Matter
A service member received an email from their credit card company thanking them for their service and notifying them that all account fees — including annual fees — were being waived under the Military Lending Act. Their reaction: confusion. They had no idea such a benefit existed.
That’s more common than it should be. Two of the most financially valuable federal laws ever passed for service members — the Servicemembers Civil Relief Act (SCRA) and the Military Lending Act (MLA) — are widely unknown, rarely explained at in-processing, and routinely unclaimed. The result is that active duty service members pay interest rates, annual fees, and financial penalties they’re legally entitled to have waived or reduced.
This guide cuts through the legal language and explains exactly what each law does, who qualifies, and how to actually use these protections.
What Is the SCRA?
The Servicemembers Civil Relief Act (SCRA) is a federal law that protects active duty service members from financial and legal obligations they took on before entering military service. Think of it as a legal shield that says: if your military service is making it harder to meet obligations you had as a civilian, you have the right to relief.
The SCRA has roots going back to 1940 — originally called the Soldiers’ and Sailors’ Civil Relief Act — and was modernized and expanded in 2003. Congress has continued to amend it since, most recently in 2023.
The law covers all active duty members of the Army, Navy, Air Force, Marine Corps, Space Force, and Coast Guard. It also covers National Guard and Reserve members called to active duty, as well as active-service officers of the Public Health Service and the National Oceanic and Atmospheric Administration. In some cases, a service member’s dependents are also protected.
A critical point: SCRA protections are not automatic. For most benefits — particularly the interest rate cap — you must proactively notify your lender in writing and provide documentation of your active duty status. If you don’t ask, lenders are under no obligation to offer the protection.
SCRA: The 6% Interest Rate Cap
This is the SCRA’s most financially impactful provision. If you took out a loan, credit card, or mortgage before entering active duty, the SCRA allows you to cap the interest rate on that debt at 6% per year for the duration of your active duty service.
Covered debt types include mortgages, auto loans, credit cards, personal loans, installment loans, student loans (except federally guaranteed student loans, which have their own protections), and most other pre-service obligations.
What makes this particularly valuable is that the interest above 6% is not deferred — it is permanently forgiven. If you’re paying 22% interest on a credit card you opened before enlisting, the lender must reduce your rate to 6% and write off the difference. They cannot collect it later.
How to Request the 6% Cap
To invoke this protection, you must:
- Submit a written request to each lender (a letter or email is sufficient)
- Include a copy of your military orders or a letter from your commanding officer showing the date you began active duty service
- Make the request while on active duty or within 180 days of release from active duty
The rate reduction applies retroactively to the date you entered active duty, not just from when you made the request. So if you’ve been on active duty for six months before learning about this benefit, you can still claim it and the lender must credit back the excess interest charged during that time.
Real Dollar Impact
Consider a service member carrying $10,000 in credit card debt at 22% interest before deployment. Without the SCRA, they’d pay roughly $183/month in interest alone. With the 6% cap, that drops to $50/month — a savings of $133/month, or nearly $1,600 over a 12-month deployment. On a mortgage or larger loan balance, the savings can be far more substantial.
SCRA: Breaking Leases and Rental Protections
PCS orders and deployments frequently force service members to break leases they can’t fulfill. Under civilian law, this would typically mean paying early termination fees — often two to three months of rent. The SCRA eliminates that penalty entirely under qualifying circumstances.
When You Can Break a Lease Under SCRA
You can terminate a residential lease without financial penalty if you receive:
- PCS orders for a move of 90 days or more
- Deployment orders for 90 days or more
- A stop-movement order (retroactively applicable to March 2020)
- Orders for separation or retirement from service
How to Terminate a Lease Under SCRA
The process is straightforward:
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- Provide written notice to your landlord
- Include a copy of your military orders
- Termination becomes effective 30 days after the next rent payment is due following your notice
The landlord cannot charge an early termination fee, cannot keep your security deposit as a penalty, and cannot report the termination negatively to credit bureaus. Any rent owed through the termination date must be paid, but nothing beyond that.
If you’re shopping for a new lease at your next duty station, read any lease carefully before signing. Some landlords include clauses asking renters to waive SCRA rights. Never sign an SCRA rights waiver. Any waiver signed before entering military service is invalid, and waivers signed during service are highly suspect — consult your installation’s legal assistance office or JAG before agreeing to any such clause.
Eviction Protections
Even if you fall behind on rent due to military service, your landlord cannot evict you without a court order. The SCRA doesn’t excuse unpaid rent, but it does require landlords to go through the courts rather than taking unilateral action — giving you time and legal recourse. A court can also delay eviction proceedings and may adjust your lease obligations during periods of financial hardship tied to military service.
SCRA: Mortgage and Foreclosure Protections
If you purchased a home before entering active duty and your military service has made it difficult to keep up with mortgage payments, the SCRA provides two key protections.
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First, the 6% interest rate cap described above applies to your mortgage, permanently forgiving the difference between your actual rate and 6% for the duration of active duty service.
Second, your lender cannot foreclose on your home without a court order while you are on active duty or within one year after your active duty ends. This protection applies even if you are behind on payments. Foreclosure proceedings can be delayed, and a court can restructure your payment obligations to account for the financial impact of your service.
If you purchased a home before entering the military and are struggling with payments, contact your lender in writing, include your orders, and request SCRA protections. You can also contact your installation legal assistance office or reach out to a Military OneSource financial counselor for guidance at no cost.
SCRA: Other Key Protections
The SCRA extends well beyond interest rates and leases. Other significant protections include:
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Auto and Cell Phone Lease Termination
If you signed a vehicle lease before entering military service, you can terminate it if you receive active duty orders of 180 days or more, or if you are deployed outside the continental United States. Cell phone contracts can be terminated if you are relocated for at least 90 days to an area where your carrier doesn’t provide service.
Protection from Default Court Judgments
If a civil lawsuit is filed against you while you are on active duty and you cannot appear in court because of your military duties, the SCRA protects you from having a default judgment entered against you. The court must appoint an attorney to represent you, and proceedings can be paused for at least 90 days. This applies to debt collection lawsuits, child custody hearings, and other civil proceedings.
Storage Lien Protection
A storage facility cannot foreclose on or place a lien on property you have in storage while you are on active duty or within 90 days of release from active duty.
State Tax Protections
A nonresident service member’s military income and personal property are not subject to state income tax simply because military orders brought them to that state. Military spouses also have flexibility in electing their state of domicile for tax purposes, which can be particularly valuable for families stationed in high-tax states.
Life Insurance Protections
Life insurance companies cannot terminate your coverage, require additional premiums, or restrict coverage for activities required by military service while you are on active duty. If you hold professional liability insurance (for healthcare providers, attorneys, and others called to active duty), you can suspend that policy and stop paying premiums during service, then reinstate it within 30 days of release from active duty.
What Is the MLA?
Where the SCRA focuses on obligations taken on before military service, the Military Lending Act (MLA) governs credit extended during active duty. Its core purpose is to prevent predatory lenders from targeting service members and their families with high-cost, exploitative financial products.
Congress passed the MLA in 2006 after studies showed that payday lenders, car title loan companies, and other high-cost lenders were disproportionately concentrated near military installations, deliberately targeting junior enlisted service members with products carrying annual interest rates of 300% or more. The MLA drew a hard line.
The MLA applies to active duty service members, National Guard and Reserve members on qualifying active duty orders of 30 days or more, and their covered dependents — spouses, children under 21, and other financial dependents.
Unlike the SCRA, MLA protections generally apply automatically based on your status in the Department of Defense’s database when a lender checks your eligibility. Lenders are required to check the DoD’s MLA database before extending covered credit to verify whether you are a covered borrower.
MLA: The Credit Card Fee Waiver Benefit
This is the MLA benefit that surprises most service members — and the one referenced in the Reddit post that inspired this article.
The MLA caps the total cost of consumer credit for covered borrowers at 36% Military Annual Percentage Rate (MAPR). The MAPR is calculated differently from a standard APR — it includes not just interest but also fees, including annual fees on credit cards. For premium travel credit cards with annual fees of $250, $550, or even $695, those fees alone can push the MAPR above 36%.
The result: major banks that issue premium credit cards have determined that charging annual fees to active duty service members would violate the MLA. So they waive them.
Banks that currently waive annual fees for active duty service members and their spouses under the MLA include:
- American Express — Waives fees on all personal cards, including the Platinum Card ($695/year), Gold Card, and others
- Chase — Waives fees on all personal credit cards, including the Sapphire Reserve ($550/year) and Sapphire Preferred
- Citi — Waives fees on personal credit cards
- U.S. Bank — Waives fees on personal credit cards including the Altitude Reserve
- Capital One — Waives fees on personal credit cards
- Bank of America — Has been reported to waive fees for qualifying service members
For a service member holding an Amex Platinum and a Chase Sapphire Reserve, that’s $1,245 per year in waived fees — while still earning all the rewards, travel credits, and benefits those cards offer. Over a 4-year active duty contract, that’s nearly $5,000 in fee savings alone, not counting the rewards earned.
Note that some issuers — notably Bilt — have indicated they do not waive annual fees under SCRA or MLA. Always verify the current policy directly with the card issuer before applying or relying on the waiver.
What the MLA Covers — and What It Doesn’t
The MLA’s 36% MAPR cap and other protections apply to most consumer credit products, but there are important exceptions.
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Covered Products (MLA Applies)
- Payday loans and deposit advance products
- Vehicle title loans
- Personal installment loans
- Credit cards (as of October 2017)
- Overdraft lines of credit (but not traditional overdraft services)
- Tax refund anticipation loans
Not Covered (MLA Does Not Apply)
- Residential mortgages (buying, refinancing, home equity loans, HELOCs, reverse mortgages)
- Auto loans secured by the vehicle being purchased
- Personal property loans secured by the property being purchased
- Business, commercial, or agricultural credit
The key distinction is whether the loan is secured by property being purchased with that credit. If the lender can repossess the home or car to cover the debt, the MLA doesn’t apply — the SCRA covers those pre-service obligations instead.
Additional MLA Protections Beyond the Rate Cap
The MLA does more than just cap interest rates. Lenders offering covered credit to service members are also prohibited from:
- Requiring mandatory arbitration clauses or waivers of consumer protection rights
- Requiring repayment through a military allotment (automatic paycheck deduction)
- Charging prepayment penalties
- Rolling over, renewing, or refinancing a loan in ways that keep the borrower stuck paying fees indefinitely
Credit agreements that violate the MLA are void from inception — meaning the entire contract can be invalidated, not just the offending term.
SCRA vs. MLA: Key Differences at a Glance
| Factor | SCRA | MLA |
|---|---|---|
| What debt does it cover? | Debt taken out before active duty | Debt taken out during active duty |
| Interest rate limit | 6% on pre-service debt | 36% MAPR on covered products |
| Are protections automatic? | No — you must notify lenders in writing | Generally yes — lenders check DoD database |
| Covers mortgages? | Yes (pre-service only) | No |
| Covers credit cards? | Yes (pre-service only) | Yes (opened during service) |
| Lease termination | Yes — penalty-free with orders | No |
| Foreclosure protection | Yes | No |
| Who enforces it? | Department of Justice, private right of action | CFPB, federal banking regulators, private right of action |
| When do protections end? | 30–90 days after release from active duty (varies by provision) | When active duty status ends |
How to Claim Your Protections
Claiming SCRA Benefits
Because SCRA protections are not automatic, you need to take action for each benefit you want to use:
- Interest rate reduction: Write to each lender with pre-service debt, state you are invoking SCRA protections, and include a copy of your orders. Keep a copy of everything you send.
- Lease termination: Provide written notice to your landlord with a copy of your orders. Keep the certified mail receipt or email confirmation.
- Mortgage protection: Contact your servicer in writing and request SCRA relief. They are required to honor it.
- Court proceedings: Notify the court of your active duty status through your legal assistance office or JAG.
You can verify your active duty status for lenders at the DoD SCRA website, which allows lenders and individuals to confirm covered status. Many lenders will ask you to provide this verification alongside your written request.
Claiming MLA Benefits
MLA protections are largely automatic — lenders are required to check the DoD database before extending covered credit. However, there are steps you should take:
- Credit card fee waivers: Contact your card issuer directly and let them know you are on active duty. Provide your orders if requested. Some issuers require you to proactively notify them rather than waiting for the automatic database check.
- New credit applications: When applying for any new credit while on active duty, your lender should automatically check your MLA status. If you believe a product you were offered violates the 36% MAPR cap, do not sign — contact your JAG office first.
Free Legal Help Is Available
Every military installation has a legal assistance office staffed by JAG attorneys who can help you invoke SCRA protections, review contracts, and address any lender violations — at no cost to you. Military OneSource also provides free financial counseling for service members and their families, including help navigating both SCRA and MLA issues.
What to Do If Your Rights Are Violated
Both laws carry real enforcement teeth. If a lender refuses to honor your SCRA or MLA rights, you have options.
For SCRA violations, the Department of Justice’s Servicemembers and Veterans Initiative investigates and prosecutes violations. You can also bring a private civil action against a lender that willfully violates the SCRA, and courts can award actual damages, punitive damages, and attorney’s fees.
For MLA violations, file a complaint with the Consumer Financial Protection Bureau (CFPB) online or by calling (855) 411-2372. Credit agreements that violate the MLA are void from inception — a lender cannot enforce a contract that breaks MLA rules. Knowing violations can carry criminal penalties.
In either case, your first call should be to your installation’s JAG office. They deal with these issues regularly and can advise on your specific situation before you take any formal action.
This article is provided by USMilitary.org, an independent educational resource. We are not affiliated with the Department of Defense, the VA, or any government agency. The information above is for educational purposes only and does not constitute legal or financial advice. For help with specific SCRA or MLA situations, contact your installation legal assistance office, a JAG attorney, or Military OneSource at 1-800-342-9647.
Frequently Asked Questions
The SCRA covers debt and obligations you took on before entering active duty — it caps pre-service interest rates at 6%, allows penalty-free lease termination with orders, and protects against foreclosure and default court judgments. The MLA covers credit extended during active duty — it caps the total cost of covered loans at 36% MAPR and prevents predatory lending practices. Both laws can apply simultaneously to a service member, but they cover different financial products and time periods.
No. Most SCRA benefits — especially the 6% interest rate cap — require you to proactively notify your lender in writing and provide a copy of your military orders. If you don’t request the protection, lenders are not required to offer it. The one exception is mortgage foreclosure protection, which applies regardless of whether you’ve given notice, but even there it’s best practice to notify your servicer in writing.
Yes, in several ways. Debt that a service member took on jointly with a spouse before active duty qualifies for the SCRA 6% interest rate cap. Spouses are protected from eviction under the SCRA even in their own right. Under the MLA, spouses and covered dependents of active duty service members are considered covered borrowers and receive MLA protections on new credit — including credit card annual fee waivers at participating banks.
Yes, when they are called to active duty. National Guard and Reserve members activated under federal orders are covered by both the SCRA and the MLA during the period of their activation. For the MLA, Guard and Reserve members on qualifying active duty orders of 30 days or more are covered. SCRA coverage generally begins when orders are received, even before the service member reports for duty.
Under the MLA, major issuers including American Express, Chase, Citi, U.S. Bank, and Capital One currently waive annual fees on personal credit cards for active duty service members and their spouses. This can represent significant savings — the Amex Platinum carries a $695 annual fee and the Chase Sapphire Reserve carries a $550 annual fee, both of which are waived. Always verify the current policy with your specific card issuer, as policies can change and some issuers — notably Bilt — have indicated they do not waive fees.
Most SCRA protections end between 30 and 90 days after you are released from active duty, depending on the specific provision. The 6% interest rate cap ends when your active duty period ends. Lease termination rights end with active duty status. Foreclosure protection extends one year after the end of active duty. If you separate or retire, update your lenders promptly — continuing to claim SCRA benefits after your coverage ends is not appropriate and could create legal complications.
