The Credit Card Field Manual for Military Families


While most Americans have endured some measure of financial hardship in recent years, things have been especially tough for military families given the myriad added pressures that come with service -- overseas deployment in particular.

The consequences of financial mismanagement are also particularly high for military personnel, according to Capt. Samuel F. Wright, a retired Navy JAG Corps officer who now directs the Service Members Law Center.

"Financial problems in the military can lead to problems in holding security clearances, and thus can adversely affect military readiness as well as the careers of servicemembers," Wright told CardHub in a recent interview. While Wright notes that payday loans are a particularly big problem in the military, it's also very important for servicemembers -- and all consumers, in truth -- to know their way around the credit card market. In fact, using credit responsibly will enable you to avoid predatory loans and otherwise save a ton of money throughout daily life.

CardHub recently conducted a special Veterans Day Report on the best military credit card offerings, comparing more than 1,000 different credit cards and surveying the largest issuers about special military-oriented programs. The results identify savings opportunities for military families at different stages in their financial lives.

Military-Oriented Credit Cards

The type of credit card that will best suit your needs depends on your credit standing as well as your spending and payment habits. 

Credit Building

If you don't have at least good credit, your top priority should be getting approved for a credit card with the lowest possible fees. Credit cards are the most efficient credit building tools available to us, as they report information to the major credit bureaus each month and don't require that we actually spend any money to benefit (simply having an open card with no balance will help your score). 

With that in mind, military personnel who wish to improve their credit standing should check out the Navy Federal Credit Union nRewards Secured Credit Card. Approval is essentially guaranteed as long as you place a refundable security deposit of at least $500 -- which will serve as your credit line. Not only does this card come sans annual fee, but it also offers 1 rewards point per $1 spent across all purchases.

Avoiding Interest

The average U.S. household has nearly $6,900 in credit card debt, according to CardHub research. If your situation is anywhere close to that, figuring out a way to gradually chip away at what you owe is essential. And while costly interest charges stand to make that difficult, you can reduce the cost of your debt by transferring what you owe to a credit card with a low interest rate.

The PenFed Promise Credit Card is a good choice for military families that may need a couple of years to pay off their balance, as it offers a 4.99% balance transfer interest rate for the life of your transferred balance and charges neither an annual fee nor a balance transfer fee. The Slate Card from Chase is also a great option if you can pay off what you owe in a little over a year, as it offers 0% on transfers for 15 months and also does not charge any fees.

Earning Rewards

There are a variety of great rewards credit cards on the market right now, and taking advantage of the right one can save you hundreds of dollars.

The PenFed Platinum Rewards Card, for example, offers 5 points per $1 on gas and 3 points per $1 on groceries through Dec. 31 and does not charge an annual fee. In addition, the ROA PenFed Defender Credit Card offers 1.5% cash back across all purchases with no annual fee.

If you want to branch out from military-oriented credit cards, the Barclaycard Arrival Card and the Chase Sapphire Preferred Card are both excellent choices, as they offer initial bonuses worth up to $500 if you meet initial spending thresholds.

Special Military Programs

At the end of the day, it's only natural for credit card companies to roll out the red carpet for military personnel given all that they do for this country.

"Congress and the nation have recognized as far back as the Civil War that the demands of military service can make it difficult to fulfill financial obligations incurred before service, and can interfere with a servicemember's ability to protect their legal rights," Lt. Col. Dru Brenner-Beck, a retired Army JAG Corps officer recently told CardHub. "Without the legal protections provided by the Servicemembers Civil Relief Act, many servicemembers would be placed in a worse position than their civilian counterparts." 

With that in mind, a number of major credit card issuers -- including Bank of America, Capital One, Chase, Navy Federal, PenFed, and USAA have taken it upon themselves to augment a number of the SCRA's most important provisions. For example, according to CardHub's report, Chase will refund 100% of the credit card fees and interest charged while military customers are on active duty, and a number of other issuers extend SCRA protections for months after active duty concludes.

As a result, it's important to not only gravitate to the best possible credit card offers, but also to determine which banks and credit unions are the most understanding about the unique needs of their military customers, especially if active deployment is in your future.

-- Odysseas Papadimitriou is the CEO of the personal finance websites CardHub & WalletHub.

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