The 6% Interest Rate Cap

SCRA Late Fees and Annual Fees: Both Count Inside the 6% Cap

By Mario Bailey Published September 2, 2026 Cited to the U.S. Code & primary sources

A late fee on a capped account is not a separate charge the SCRA ignores. It is interest, by definition, and it counts against the same 6% as the rate. 50 U.S.C. § 3937(d)(1) reads: “The term ‘interest’ includes service charges, renewal charges, fees, or any other charges (except bona fide insurance) with respect to an obligation or liability” (uscode.house.gov, text in effect September 1, 2026). So on a pre-service account, rate plus fees together cannot exceed 6% per year. A late fee, an annual fee, an over-limit fee, or a returned-payment fee is either forgiven under § 3937(a)(2) or must fit under the 6% with the interest. The cap mechanics (who qualifies, the 180-day window, retroactivity) are in the 6% rate cap guide. This page is about the fees.

The definition that does the work

Three subsections carry the argument, each short enough to quote in a dispute letter.

§ 3937(d)(1) defines interest to include fees and “any other charges,” with one carve-out: bona fide insurance. Not late fees, not annual fees, not “account maintenance.”

§ 3937(a)(2) says interest above 6% “is forgiven.” Forgiven, not deferred and not added to principal.

§ 3937(a)(3) says the periodic payment “shall be reduced by the amount of the interest forgiven.” A creditor that forgives a fee and keeps billing the old payment is collecting principal early, the acceleration (a)(3) forbids.

The DOJ’s rights page says it the same way: the creditor must “forgive interest greater than 6% per year. Interest includes additional charges and fees,” and must “reduce the monthly payment by the amount of interest forgiven” (justice.gov, updated May 14, 2025, read September 2, 2026).

When a fee turns into a late mark, § 3919 applies. It says your application for or receipt of relief under the Act “shall not itself” be the basis for “an adverse report relating to the creditworthiness of the servicemember.” If the creditor never reduced your payment, you paid what (a)(3) says you owe, and it reported you late, that is the fact pattern the credit-impact page walks through.

Fee by fee: inside the SCRA 6%, inside the MLA 36%

The two federal caps treat fees differently and reach different accounts: the SCRA covers pre-service debt, the MLA covers credit extended while you are a covered borrower, and its 36% Military APR folds in some fees and not others (32 CFR 232.4(c), read on ecfr.gov September 2, 2026). The MAPR guide covers the MLA math.

Fee type	Under the SCRA 6% cap?	Inside the MLA 36% MAPR?	Source
Late fee	Yes: “fees, or any other charges”	No. Reg Z excludes “charges for actual unanticipated late payment” from the finance charge	§ 3937(d)(1); 12 CFR 1026.4(c)(2)
Annual or membership fee	Yes	Yes, as a fee “for participation in any plan or arrangement for consumer credit,” unless excluded as a bona fide, reasonable card fee	§ 3937(d)(1); 32 CFR 232.4(c)(1)(iii)(C), (d)
Over-limit fee	Yes	No. Reg Z excludes charges “for exceeding a credit limit”	§ 3937(d)(1); 12 CFR 1026.4(c)(2)
Returned-payment fee	Yes. Amex names it on its SCRA page	No. Official comment 4(c)(2)-2 lists a returned check as a “similar occurrence” charge	§ 3937(d)(1); Supplement I to Part 1026
Cash advance or balance transfer fee	Yes	Yes, as a finance charge (a “transaction” charge under Reg Z), unless excluded as a bona fide card fee	§ 3937(d)(1); 12 CFR 1026.4(b)(2); 32 CFR 232.4(c)(1)(iii)(A)
Credit insurance premium	No, if bona fide insurance: the one carve-out	Yes, always. No bona fide exclusion for credit insurance, debt cancellation, or debt suspension fees	§ 3937(d)(1); 32 CFR 232.4(c)(1)(i), (d)(2)

The MLA column corrects the common claim that the 36% “counts every fee.” 232.4(c)(1)(iv) overrides Regulation Z’s exclusions only for the charges in (c)(1)(i) through (iii); late, over-limit, and returned-payment fees are not among them. A $40 late fee on a during-service card never touches the MAPR; the same $40 on a pre-service card is inside the SCRA’s 6%.

What eight issuers’ SCRA pages say about fees

Every page below was read on September 2, 2026; the gaps are real gaps, not pages that failed to load.

Issuer	What its SCRA page says about fees	Checked
American Express	“‘Interest’ for SCRA purposes includes fees such as annual membership fees, late fees, and returned payment fees.” When relief ends, Amex “will resume charging any applicable fees that were not charged.”	Sept 2, 2026
Capital One and Discover	Capital One: “No fees assessed on accounts, except bona-fide insurance,” alongside its 4% rate. Discover’s page says the two programs are “aligned” and routes requests to Capital One.	Sept 2, 2026
Navy Federal	”Navy Federal offers even more protection by capping pre-Active Duty debt at 4% and waiving account fees.”	Sept 2, 2026
U.S. Bank	”SCRA allows a cap of 6% on the interest rate and a waiver of all fees while you are on active military service.”	Sept 2, 2026
USAA	Lists “waived account fees” among the federal SCRA benefits; when benefits end, “any waived fees will be reinstated.”	Sept 2, 2026
Bank of America	Card section: rate cap and reduced payments only. Fees appear as “continued select credit card fees waived for life after military service” and deposit-account waivers. Nothing says card fees are waived during service.	Sept 2, 2026
Chase	Lists “Reduction of Interest Rate,” foreclosure and repossession protection, and auto lease termination. No fee language at all.	Sept 2, 2026

The silence at Chase and Bank of America does not change the law; § 3937(d)(1) binds every creditor. With those two, quote the definition in your notice and ask for written confirmation that fees are inside the 6% computation.

A $3,000 card with a $40 late fee and a $95 annual fee

Take a balance held at $3,000 for a year on a card at 24% APR. Simple interest for the year is $720, or $60 a month (a real card compounds daily, so the true uncapped figure is slightly higher). Add one $40 late fee and a $95 annual fee, and the uncapped year costs $855. Under § 3937:

The ceiling for the year is $180. That is 6% of $3,000, and under (d)(1) it covers interest and fees together.
The $95 annual fee is 53% of that ceiling. The $40 late fee is another 22%. Together, $135 of the $180 is gone before a cent of interest, leaving $45, a 1.5% rate on the balance.
An issuer that “caps you at 6%” and still posts both fees is charging 10.5%. $180 of interest plus $135 of fees is $315 on $3,000.
The forgiven amount is $675 ($855 minus $180), and (a)(2) says forgiven, not deferred.
Your payment must fall too. Interest was $60 a month at 24% and is $15 at 6%, so under (a)(3) the payment drops $45 a month, plus any forgiven fee in the month it would have posted.

At the 4% that Capital One, Navy Federal, and USAA publish, the ceiling is $120 with no fees inside it. The refund calculator runs the numbers on your balance and dates.

What DOJ did about “insufficient” 6% benefits

The DOJ’s 2012 Capital One settlement is the case to cite when an issuer applies the rate and keeps the fees. The press release names, among the violations, “insufficient 6 percent benefits granted on credit cards, car loans and other types of accounts.” The remedy was about $12 million, including “a $5 million fund to compensate service members who did not receive the appropriate amount of SCRA benefits on their credit card accounts, motor vehicle finance loans and consumer loans,” with lookback to July 15, 2006 (justice.gov archive, July 26, 2012, read September 2, 2026). The release does not itemize which charges made the benefits “insufficient”; the DOJ’s rights page supplies the measuring stick, 6% with “additional charges and fees” inside it.

The 2014 Sallie Mae settlement adds the credit-report half: $60 million to about 60,000 servicemembers for rate overcharges, plus an order that Sallie Mae “request that all three major credit bureaus delete negative credit history entries caused by the interest rate overcharges” (justice.gov archive, May 13, 2014, read September 2, 2026). The full list is in the enforcement ledger. Behind it sits § 3937(e): a knowing violation of the cap is a federal misdemeanor, up to a year in prison.

When a fee posts on a capped account

Treat it as a billing error with a statute behind it. Write, do not call.

Dispute a fee on a capped account

Mark every non-principal charge on the statements for the cap period: interest, late, annual, over-limit, returned payment. Total them.
Compare the total to 6% per year of the balance (4% where the issuer publishes 4%). Anything over the line is forgiven under § 3937(a)(2).
Send a written dispute to the issuer’s SCRA desk quoting § 3937(d)(1) in full and demanding recomputation of interest, fees, and the payment under (a)(3), effective at your call to duty under (b)(2). The letter generator drafts it with the citations in place.
If the answer is “fees are not interest,” or there is no answer in 30 days, use the escalation playbook: CFPB complaint, legal assistance, DOJ servicemember complaint.
If a late mark appeared because the payment was never reduced, dispute the tradeline with the bureau and the creditor citing § 3919 and § 3937(a)(3).

Two timing notes. Amex calls its annual fee nonrefundable 30 days after billing, so with any issuer, send the notice before the fee’s billing date. And the cap ends with service (a year later for a mortgage), so a fee for a month after your release is an ordinary fee again.

The law behind this: 50 U.S.C. § 3937

Maximum rate of interest on debts incurred before military service: read the statute , or see where it sits in the whole Act .

Frequently asked questions

Does the SCRA cover late fees?

Yes. 50 U.S.C. § 3937(d)(1) says the term "interest" includes "service charges, renewal charges, fees, or any other charges (except bona fide insurance) with respect to an obligation or liability." A late fee on a pre-service debt is a fee with respect to that obligation, so it counts against the 6% per year limit in § 3937(a)(1) and any excess is forgiven under § 3937(a)(2). The DOJ says the same on its servicemember rights page: the creditor must "forgive interest greater than 6% per year," and "interest includes additional charges and fees" (read September 2, 2026). A creditor that charges 6% interest and then adds a $40 late fee has exceeded the cap.

Are credit card annual fees waived under the SCRA?

The statute does not use the word "waived," but the result is close to it. An annual fee is a fee "with respect to an obligation or liability," so § 3937(d)(1) counts it as interest, and interest plus fees cannot exceed 6% per year on a pre-service account. A creditor can technically keep the annual fee and cut the interest rate to fit under 6% all-in; most large issuers simply stop charging fees. American Express states that "interest" for SCRA purposes includes annual membership fees, and Capital One states "no fees assessed on accounts, except bona-fide insurance" (both read September 2, 2026). Ask before the fee posts: Amex calls its annual fee nonrefundable 30 days after billing.

Do late fees count toward the MLA 36% cap?

No, and this is the main difference between the two laws. The MLA Military APR includes finance charges, application fees, participation fees, credit insurance premiums, and add-on product fees (32 CFR 232.4(c)(1)). A late fee is not a finance charge: Regulation Z, 12 CFR 1026.4(c)(2), excludes "charges for actual unanticipated late payment, for exceeding a credit limit, or for delinquency, default, or a similar occurrence," and 232.4(c)(1) has no line that pulls those back in. So on a card opened during service, a late fee sits outside the 36% and is still allowed. On a pre-service account under the SCRA, the same late fee sits inside the 6%. Different accounts, different rules.

What happens to fees when my SCRA benefits end?

They come back. § 3937(a)(1)(B) runs the cap for the period of military service (one year longer for a mortgage under (a)(1)(A)), and the forgiveness in (a)(2) covers only the interest that would have been charged during that period. Issuers say this plainly: American Express states that when relief ends it "will resume charging any applicable fees that were not charged while your account was eligible for relief," and USAA states "any waived fees will be reinstated" (both read September 2, 2026). Fees forgiven during the cap period are not billed later. Fees for months after the period are ordinary fees again.

Can a late fee on a capped account be reported to the credit bureaus?

The fee itself is a billing error to dispute, not a reportable event. The reporting risk comes from the payment: § 3937(a)(3) requires the creditor to reduce your periodic payment by the interest it forgave, so if the creditor kept billing the old amount, you paid the reduced amount, and it reported you late, that is the question § 3919 answers. That section says your application for or receipt of relief under the Act cannot itself be the basis for "an adverse report relating to the creditworthiness of the servicemember." Dispute the tradeline in writing with the bureau and the creditor, and cite both sections.

What is the penalty for a creditor that charges fees above the 6% cap?

Two tracks. § 3937(e) makes a knowing violation of the cap a federal crime: a fine under title 18, imprisonment for not more than one year, or both. Civilly, the DOJ has used the cap to extract refunds at portfolio scale. Its 2012 Capital One settlement was about $12 million and included a $5 million fund for servicemembers "who did not receive the appropriate amount of SCRA benefits on their credit card accounts, motor vehicle finance loans and consumer loans" (DOJ press release, July 26, 2012, read September 2, 2026). You can also sue directly under § 4042 for damages and attorney fees.

Sources

Heads up: SCRA Saver publishes general information, not legal or financial advice. Laws change and every situation differs. Confirm details with your installation legal assistance office (free for service members) or a licensed professional.