The SCRA 6% Interest Rate Cap: Complete Guide

If you read one page on this site, make it this one. The 6% cap is the single largest recurring dollar benefit in the SCRA, it covers almost every kind of debt, and invoking it takes one letter.

Here is the whole law in one sentence: any debt you had before you started active duty cannot charge you more than 6% per year while you serve, the excess is erased, and you can claim it with written notice and a copy of your orders.

What the cap covers

The cap under 50 U.S.C. § 3937 applies to debts you incurred before military service, including:

• Credit cards
• Auto loans
• Mortgages and home equity loans
• Student loans — federal and private
• Personal loans and installment contracts

Joint debts you hold with your spouse count too. What does not count: anything you opened after your active-duty start date. A balance transfer during service creates a new debt, which is why transferring a capped balance to a new card is the classic way to accidentally forfeit the benefit.

The three rules lenders hope you don’t know

1. The excess is forgiven, not deferred. The statute’s word is “forgiven.” A lender cannot park the difference and collect it after you separate. Gone is gone.

2. Your payment must actually drop. The law requires the lender to reduce your periodic payment by the amount of forgiven interest. A capped rate with an unchanged payment is not compliance.

3. It is retroactive to day one. The cap applies from your first day of active duty no matter when you send the letter — and you have until 180 days after you leave service to send it. If you have been paying 22% for two years of active duty and write the letter today, the lender owes you a recomputation and a refund.

What it is worth

Debt	Balance	Pre-cap APR	Capped	You keep
Credit card	$7,500	24%	6%	~$1,350/yr
Auto loan	$22,000	11%	6%	~$1,100/yr
Private student loan	$30,000	10%	6%	~$1,200/yr
Mortgage	$280,000	7.5%	6%	~$4,200/yr

Those are simple-interest estimates — your exact number depends on the balance over time. The savings calculator does the math for your accounts in ten seconds.

One special case worth knowing: for mortgages, the cap does not end when your service does. It runs through your entire period of service plus one year after.

How to invoke the cap, step by step

There is no form and no fee. The statute requires exactly two things: written notice and a copy of your orders (a letter from your commanding officer also works).

✅ Invoke the 6% cap

1. List every account opened before your active-duty start date with an APR above 6%.
2. Generate a notice letter for each lender with the letter generator — it cites § 3937 and demands retroactive application.
3. Attach a copy of your orders. If you extend or re-up, send the new orders too.
4. Send certified mail with return receipt, or use the lender’s documented SCRA upload channel. Keep copies of everything.
5. Confirm three things on your next statement: rate at or below 6%, payment reduced, and a retroactive adjustment back to your active-duty start date.
6. If any of the three is missing, escalate — politely, in writing, citing the statute. Then your installation legal office, then a CFPB complaint.

SCRA vs. the Military Lending Act

People mix these up constantly, and lenders sometimes count on the confusion.

Feature	SCRA 6% cap	Military Lending Act
Covers	Debt from before active duty	Most new consumer credit during service
Rate limit	6% APR, all-in	36% Military APR ceiling
Action needed	Written notice + orders	Automatic — lender must check
Best use	Slashing existing debt	Floor protection on new credit

The SCRA cuts what you already owe. The MLA stops new credit from gouging you. They stack — but only the SCRA puts money back retroactively.

When lenders do better than 6%

Some lenders voluntarily beat the statute for active-duty members. Navy Federal applies a 4% cap to eligible pre-service balances, and several major card issuers cut APRs to 4% and waive fees outright. Always send the SCRA letter anyway — voluntary programs change; the statute does not.

If a lender refuses

Refusals are rarer than they used to be, because refusing got expensive: the Department of Justice has collected millions in SCRA settlements, including a roughly $12 million settlement with Capital One in 2012 that covered, among other violations, improper denials of the 6% rate. The enforcement playbook exists and lenders know it.

Your escalation path: written demand citing § 3937 → installation legal assistance office (free) → complaint to the CFPB → DOJ Servicemembers and Veterans Initiative. In practice, most disputes die at step one.

📜 The law behind this: 50 U.S.C. § 3937

Maximum rate of interest on debts incurred before military service — read the statute.