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What military credit card features do you need to know?

By , CardRatings contributor
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    military familyMilitary families face unique challenges - physically, emotionally, logistically and financially.

    Long separations. Multiple moves. One or both parents working amid hostile environments and cycles of rapid redeployment.

    According to the 2015 Blue Star Annual Military Family Lifestyle Survey, 56 percent of active duty military personnel said stress over financial issues was a "Top 5" stressor for them, with that figure ticking up to 57 percent for their spouses.

    So should military families seek out financial products specific to their non-civilian status?

    The answer appears to be yes.

    Products designed for the military generally offer features that go beyond standard issue, especially when it comes to credit cards. Further, these companies often go beyond basic federal guidelines around credit and lending to the military.

    But one problem is that potential credit card applicants may not know exactly what benefits are available to them or what to look for.

    To help, CardRatings examined the fine print of several credit products geared toward servicemen and women to find out what really matters.

    Finding the Best Military Credit Cards

    There are several major players in the world of military credit cards, most notably USAA; PenFed, short for Pentagon Federal Credit Union; and the Navy Federal Credit Union. Each company centers its service on military families, but also (to varying degrees) seeks a broader customer base, such as through civilian members of defense agencies. In all cases, products and services are made available to family members of those in active duty, retired or with some related status.

    These are the first cards you'll want to investigate, but don't forget all credit card issuers will offer some benefit to members of the military. It never hurts to ask. At a bare minimum you should insist upon:

    • Waivers on many, or all, fees, especially foreign transaction fees for overseas deployment (See our best picks for cards in this category). One key note here is that American Express waives the annual fee for military personnel and their spouses. That means even the The Platinum Card® from American Express with its $550 annual fee is free for servicemembers and/or their spouses to carry. Learn more about this Amex-specific fee waiver.

    • Extended grace periods during deployment

    • Very low interest rates on balances overall

    Military Credit Card Act and Additional Benefits

    All military families should become familiar with the Servicemember Civil Relief Act, or SCRA, which requires financial institutions to cap rates at 6 percent for all debt during military service, from consumer loans to mortgages and credit cards. Some issuers go beyond this, with even better terms.

    You will need to know a few details in order to take full advantage of this benefit. According to the Consumer Financial Protection Bureau, to get the SCRA benefit you must:

    • Let your credit card company know of your active-duty status in writing. This applies to any issuer.

    • Request the interest-rate reduction to 6 percent while on active duty.

    • Include a copy of your orders.

    Important: This only applies to credit cards received or loans made before you begin active duty and only applies to the "period of military service," or additionally one year after in the case of "an obligation or liability consisting of a mortgage, trust deed, or other security in the nature of a mortgage," according to the law.

    Some credit card issuers may be willing to reduce your interest rate further than the SCRA requires. USAA is one company that does. Here's more according to USAA:

    • USAA caps rates lower, at 4 percent instead of 6 percent, for all debt including, consumer loans, home equity loans, credit cards and mortgages. This is only for loans made before members began active duty and only applies for the time that the member is serving in active duty.

    • USAA applies the benefit for credit card balances incurred during active duty as well, as long as the account was opened prior to active duty.

    Added USAA benefits for those who are deployed or receive PCS (Permanent Change of Station) orders:

    • A 4-percent cap on their credit card APR for 12 months. The lower rate applies to the entire balance of the account and new purchases as well as cash advances.

    • USAA waives or refunds fees for balance transfers and convenience checks.

    • For eligible military campaigns, USAA provides a 100-percent rebate on finance charges accrued during a member's participation in a military campaign.

    >>> Jump to: Am I Eligible?

    What Military Card Benefits to Ask For

    Scott Young, PenFed's Vice President, Payment Operations and Innovation, says the most requested card-related service by members of the military and their families is no foreign transaction fees on credit cards.

    "PenFed waives these fees for all of our cardholders," he said. "We were actually one of the first credit unions to waive these fees, and the decision came out of providing the best value to our core membership, which includes military personnel, defense contractors and their families."

    Preventing ID Theft

    Identity theft is a major issue for military families. The Federal Trade Commission has estimated that nearly one-third of consumer complaints to their agency from active-duty military, veterans and their spouses involved identity theft.

    The FTC recommends all active-duty military who don't expect to seek out credit use an "active-duty alert" on their credit report. This flag will stop any new credit application and trigger fraud review.

    The great news here is you don't have to call all three credit reporting bureaus - TransUnion, Experian and Equifax. Just contact one and request the alert; that bureau must let the others know.

    PenFed's Young highlighted what features Penfed believes service members of the military should look for when it comes to staying safe from fraud, all of which are offered by PenFed (as well as other card providers).

    • EMV chip-enabled cards with both signature and PIN capabilities

    • $0 liability on unauthorized charges

    • Reliable mobile transactions and digital wallet compatibility with Apple Pay, Samsung Pay and Android Pay. "When using these mobile wallets, the member's account number is never shared with the merchant; instead a one-use token is created and shared with the merchant, making mobile wallet payments is the safest way to use a PenFed account," according to Young.

    • Visa Checkout: Allows cardholders to "click and pay" online or use in-app payment functionality without entering their account information each time.

    • Secure electronic statements with truncated account numbers.

    Related:

    Other perks that matter to military families

    For families that move frequently, there are additional benefits that can make this disruption at least a little easier. USAA offers the following benefits:

    • A "Real Estate Rewards Network" that provides members rewards of $350 to $6,000 plus access to USAA's network of real estate agents and rewards when they buy or sell within the rewards network.

    • Free access to an Experian® credit report, score and alerts for key changes.

    • Rebates on finance charges accrued during military campaigns.

    • No higher APR for cash advances (same as regular charges).

    • Special benefit when you shop on base. With the Cashback Rewards Plus American Express® Card, members earn 5 percent cash back on their first $3,000 in gas and purchases at military bases annually on these categories combined.

    • Special affiliations. For instance, USAA Rewards™ American Express® Card cardholders can choose to redeem their reward points as donations to some 50 different military-affiliated organizations.

    Credit card products from Navy Federal Credit Union are also quite popular with members of the military. Benefits such as rapid accrual of points with its "Go Rewards" program - many exchange points for gift cards - are among the top cited on navyfederal.org, the company website. Members also cite the credit union's keen attention to combating fraud and excellent customer service. Only one of six cards has any fee of any kind, a $49 annual fee. The rest are:

    • No annual fee

    • No balance transfer fee

    • No cash advance fee

    • No foreign transaction fee

    >>> Interesting fact: A qualified military campaign is any war or military conflict in which the President of the United States issues an executive order establishing a campaign medal.

    -- Source: USAA

    Who is Eligible?

    As much as members of the military need - and should use - the perks available to them, civilians have benefited from specialized companies broadening their user base. Further, secondary cardholders and authorized users should also pay attention to all benefits.

    Here's a quick guide to help see if you are eligible:

    USAA

    PenFed

    Navy Federal Credit Union

    To be eligible for USAA:
    • Active, retired and honorably separated officers and enlisted personnel of the U.S. military.
    • Officer candidates in commissioning programs such as military academies and ROTC (Reserve Officer Training Corps), OCS/OTS).
    • Adult children of USAA members who have or had a USAA auto or property insurance policy.
    • Widows and widowers of USAA members who have or had a USAA auto or property insurance policy.

    Source: USAA

    PenFed membership is more open. You can join through your employment, association membership, or volunteerism. This includes:
    • All active duty, retired and honorably separated military and their family members
    • Federal employees (regardless of military status) or their family member
    • Housemate of eligible person
    • By joining a group like National Military Family Organization (you can sign up as a "concerned citizen") for a small one-time membership fee.
    • Red Cross volunteer

    Source: PenFed

    Navy Federal Credit Union is among the more restrictive in terms of membership. You must be affiliated with the:
    • Armed Forces, DoD, Coast Guard or National Guard or a family member.
    • This includes regular Active Duty and reservists, and Army and Air National Guard personnel.

    Source: Navy Federal Credit Union

     

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