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How to Reduce Your Interest Rates Before You Deploy


Making sure you pay your bills on time every month can be tricky for anyone. But when you get orders to deploy, it can become even harder to keep track of your bills and maintain your financial goals. Getting financially fit can help ease your stress and allow you to focus on the mission.

A great way to do this is to ensure you are taking advantage of all of the benefits available to you while deployed. Through the Servicemembers Civil Relief Act, or SCRA, you can reduce your interest rates on several key items including your mortgage, credit card bills, car note and more.

Get your finances in order before you deploy

While you are deployed, your bills will continue to come - including things like your rent or mortgage payment, car payment and credit card bills. Before you deploy, you should make arrangements to ensure each of your bills is paid on time. You may consider doing automatic bill pay each month, where the money is removed from your account automatically, or you may wish to appoint your spouse, partner or a trusted family member with power of attorney, so that this person can handle your finances while you are deployed.

Reduce your interest rates

Service members may be able to reduce their interest rate for liabilities incurred before they entered active duty to six percent under the SCRA. This applies to mortgage debt, credit card debt, car loans, business obligations and other debts, as well as fees, service charges and renewal fees. The balance of your obligations may not have interest charged at a rate greater than six percent after the effective date of your orders and the difference in interest as a result of the reduction must be forgiven, not just merely postponed.

However, your debts will not automatically get reduced to six percent when you are called to active duty. If you want to take advantage of this benefit, you must provide written notice and a copy of your military orders to your creditors no later than 180 days after termination or release from active military service. Once you provide proper notice, the creditor must retroactively reduce the interest rate to six percent for the period of active service. To notify your creditors, complete the following steps:

Send a written request to your creditor:

  • Provide your account or loan number.
  • Explain that you have been ordered to active duty and therefore request your monthly obligations be reduced to 6 percent for the period of your active duty service pursuant to your rights under the SCRA.
  • Let the creditor know your entry into service has materially affected your ability to meet this obligation.
  • Encourage the creditor to reduce the interest rate to under six percent as a gesture of good will toward America's military.

Include copies of your military orders

Keep in mind that creditors have the right to challenge this provision if they believe your ability to pay a rate higher than six percent is not materially affected by your military service. In addition, remember that this protection is for debt incurred before you were called to active duty; it does not apply to additional debt incurred while you are on active duty.

Take advantage of other benefits and protections

It's important to know about the SCRA in order to take full advantage of the financial and legal protections it can provide to service members, including stays of certain legal proceedings, protection from eviction and termination of leases without repercussions.

The act protects active duty service members, including National Guard and reserve members who have been activated by the federal government. Many of the SCRA's protections also extend to family members, but this varies from section to section.

Seek assistance

Because details of the SCRA are complicated, service members and their families are encouraged to contact their nearest legal assistance office if they need help meeting their financial obligations.

In addition, your installation's Personal Financial Management Program can help you keep your finances in good shape, save for the future, improve your credit and resolve financial problems. To find the nearest PFMP office, select Personal Financial Management Services on MilitaryINSTALLATIONS. Financial counseling is also available through Military OneSource (800-342-9647) and the Joint Family Support Assistance Program.


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