Methodology: U.S. News reviewed hundreds of credit cards to identify those that offer the most value to members of the military, considering factors including rates, SCRA policies, rewards and fees. Each card has its own strengths and drawbacks, so there is no single card that’s ideal for all military members. U.S. News’ selections reflect the best card in each category that may be a good fit for your needs.
How Do Military Credit Cards Work?
Under the Servicemembers Civil Relief Act, commonly known as SCRA, credit card companies must forgive interest greater than 6% per year on financial obligations incurred before military service for active-duty service members.
Eligible service members include full-time active-duty members, reservists on federal active duty and members of the National Guard on federal orders longer than 30 days. SCRA benefits apply during the period of active duty and can be granted retroactively.
Service members must provide creditors with a copy of their military orders and a written notice within 180 days of the end of their military service.
While SCRA benefits are available with any credit card issuer, many lenders have gone beyond these requirements in recent years, says Doug Nordman, author of “The Military Guide to Financial Independence and Retirement” and founder of The Military Guide, a financial blog for service members making a transition from the military.
For example, some Capital One credit cards offer an SCRA rate capped at 4% on existing balances when you enter active duty, which is lower than the required 6%. Additionally, Capital One offer the 4% rate on your balance until one year after completing active duty.
A 4% interest rate is one of the lowest you can expect from a credit card without a 0% APR offer, so it’s a good idea to take advantage of this benefit if you qualify. But regular cards may offer better rewards and perks, so you should also consider cards that don’t offer additional SCRA benefits.
How to Choose a Military Credit Card
Consider all the features offered by credit cards when choosing which is right for you, not just the SCRA rate.
“As with any other customer, military members should be sure the card suits their lifestyle,” says military finance coach Kate Horrell. “If they travel a lot overseas, they definitely want a card with no foreign transaction fees.”
Compare cards based on the annual fee, rewards, sign-up bonus, cardholder benefits, introductory APR and the standard APR that applies after SCRA benefits expire.
For example, many credit cards offer 0% interest rates on purchases and balance transfers for 12 to 18 months. Instead of paying an SCRA rate of 4% to 6%, you can pay 0% for the introductory period.
Nordman encourages service members to use credit cards responsibly, even while on active duty, as debt can affect security clearances if it’s not paid on time. He suggests using credit cards within your budget, then automating payments to avoid disruptions if you’re deployed.