SCRA Interest Rate Cap

What the SCRA actually requires

Section 207 of the Servicemembers Civil Relief Act (SCRA), codified at 50 U.S.C. § 3937, caps the interest rate on consumer obligations entered into before the service member began active duty at 6% per yearduring the period of military service.

Critically, § 3937(a)(2) requires that any interest above the 6% cap be forgiven — not deferred. The lender cannot simply pause your high rate and restart it after you're done; they must permanently waive the excess. That language is what makes SCRA a true financial benefit, not just a temporary breather.

The cap applies retroactively to the start date of military service, even if you notify the lender months later. Once they receive your written notice and a copy of your orders, they must reapply the cap from the original service-entry date and refund any excess interest already paid during that window.

Who qualifies

The SCRA covers, among others:

• All members of the regular components on active duty (Army, Marine Corps, Navy, Air Force, Space Force, Coast Guard).
• Reserve and National Guard members called to active service under Title 10 federal orders.
• National Guard members on Title 32 full-time duty for 30 or more days, called by the Governor under federal authority and federally funded for emergency purposes.
• Commissioned officers of the Public Health Service or NOAA on active service.

The protection generally extends 365 days after the qualifying service ends for some provisions (eviction, default judgments) but the interest-rate cap itself is limited to the period of active service.

What debts are covered

• Credit cards (probably the highest-impact use — typical card APRs are 18–28% vs. SCRA's 6%).
• Mortgages on the primary residence (a major saver if you locked in 7%+ recently and are about to deploy).
• Auto loans for vehicles owned before service began.
• Personal loans and lines of credit signed before service.
• Private student loans originated before service. Note: federal student loans have a separate, more generous SCRA-related benefit at 0% interest during qualifying combat-zone service under 20 USC § 1078(d).

Debts incurred after entering active duty do NOT qualify. Auto-loan refinances, balance transfers, and new credit accounts opened post-service-entry don't get the cap.

How to invoke the cap

1. Send a written notice to the lender requesting SCRA interest rate cap. Include account number, your name, and a request that the cap be applied retroactively to your service-entry date.
2. Attach a copy of your military orders (or a Statement of Service from your commander confirming active-duty status). Most lenders accept either; some accept the DoD's official SCRA Centralized Verification Service confirmation.
3. Allow up to 30 days for the lender to process. They are required by § 3937(b) to apply the cap once notice is received; a refusal is a federal violation and can be enforced through the U.S. Department of Justice or a private cause of action under § 4042.
4. Request a written confirmation showing the new effective rate, the retroactive adjustment, and any refund of excess interest already paid. Keep copies for your records.

If a lender refuses or delays beyond a reasonable period, escalate to your installation legal assistance office (free for service members) and consider filing a complaint with the DOJ Servicemembers and Veterans Initiative or your state attorney general.

Other SCRA benefits worth knowing

The interest-rate cap is one of about a dozen SCRA protections. Others commonly used:

• Lease termination for residential and auto leases when ordered to PCS or deploy 90+ days (50 USC § 3955).
• Eviction protection from family-residence rentals where rent is below an annually adjusted threshold (50 USC § 3951).
• Foreclosure protection on mortgages: lender must obtain court order for foreclosure during qualifying service, and for one year after, on mortgages signed pre-service (50 USC § 3953).
• Default judgment protection: courts cannot enter default judgment without an affidavit confirming the defendant is not in active service (50 USC § 3931).
• Stay of proceedings: 90-day automatic stay on civil cases when service member's duties materially affect their ability to appear (50 USC § 3932).
• State residency for taxes: members and qualifying spouses may keep their pre-service state of residence for income-tax purposes regardless of where they are stationed (50 USC §§ 4001, 4002 — Military Spouses Residency Relief Act).

Free legal advice on every SCRA matter is available at any Department of Defense installation legal assistance office. Use it before signing anything that might waive an SCRA right.