Press Releases

This week, U.S. Representative Matt Cartwright (PA-08) introduced the Improving SCRA Benefit Utilization Act, a bipartisan bill that would improve awareness and modernize an interest rate reduction benefit currently underutilized by active-duty military servicemembers.

The Servicemembers Civil Relief Act (SCRA) provides critical protections to military personnel, including National Guard and Reserve members, and their families, in the event that legal or financial transactions adversely affect their rights during military or uniformed service. These protections include the ability to reduce the interest rate to a maximum of six percent on any pre-service obligations or liabilities during the period of active-duty service, including for personal, auto and student loans, as well as mortgages and credit cards.

The SCRA interest rate reduction represents a substantial financial benefit and one that increases in value in a higher interest rate environment, where the servicemember has taken out a larger loan or is on active duty for a longer period of time. However, recent research by the Consumer Financial Protection Bureau (CFPB) revealed that the interest rate reduction benefit is significantly underutilized.

“It is unacceptable that members of our nation’s military personnel aren’t able to utilize SCRA interest rate reductions – a benefit they earned – due to lack of awareness and barriers to usage,” said Congressman Matt Cartwright. “Financial issues should not distract our brave men and women in uniform from their mission. My bipartisan legislation identifies commonsense opportunities to improve benefit awareness and utility, increase the likelihood of substantial financial savings, and enhance the overall readiness of our armed forces.”

One reason for underutilization is a lack of servicemember awareness about the benefit and eligibility, which in turn impacts access. Additionally, even if they are aware of the benefit, the burden falls solely on individual servicemembers to notify their lender, in writing, with a copy of their active-duty service orders. Furthermore, it is not currently possible for creditors to automatically apply SCRA interest rate reductions for all accounts held at an institution if a servicemember invokes the benefit for a single account.

With interest rates of auto and mortgage loans commonly exceeding six percent, in addition to credit cards, the SCRA interest rate reduction benefit provides considerable value.

Specifically, the Improving SCRA Benefit Utilization Act would:

  ·  Expand existing military financial literacy programs to include information about financial protections available under the SCRA;

  ·  Require the Department of Defense’s annual Status of Forces Survey to include questions about servicemember awareness of SCRA interest rate protections;

  ·  Include SCRA benefit information and eligibility on all activation orders, including Guard and Reserve components serving in a federal active-duty status; and

  ·  Require creditors to apply the SCRA’s six percent interest rate cap to all applicable accounts held at that financial institution once the servicemember invokes their rights for a single account.

This legislation has been endorsed by The American Legion and the U.S. Army Warrant Officers Association.

The full text of the legislation can be found HERE.

Cosponsors in the U.S. House are U.S. Reps. André D. Carson (D-IN-07), Don Davis (D-NC-01), Chris Deluzio (D-PA-17), Brian Fitzpatrick (R-PA-01), Josh Gottheimer (D-NJ-05), Chrissy Houlahan (D-PA-06), Mike Lawler (R-NY-17), Morgan McGarvey (D-KY-03), Jared Moskowitz (D-FL-23), James Moylan (R-Guam), Dina Titus (D-NV-01), and Jill Tokuda (D-HI-02).