CFPB highlights low SCRA benefit utilization among military reserves and guard

On December 7, 2022, the Consumer Financial Protection Bureau (CFPB) released a report detailing how few active duty reservists or active duty national guard members take advantage of the Servicemembers Civil Relief Act (SCRA) benefits. The CFPB found that reservists and national guard members called to active duty are missing out on $9 million in interest savings every year. This is because the SCRA provides active duty servicemembers the right to a cap on interest on their loans. As the CFPB notes, with the rise in interest rates, this right is becoming more and more relevant.

 What is the SCRA?

The SCRA, which was enacted in 2003 and has been amended since, is a law designed to ease financial burdens on servicemembers during periods of military service. The SCRA provides protections for military members as they enter active duty. The SCRA covers a variety of issues including several that are of particular interest to credit unions such as: security deposits; installment contracts; credit card interest rates; mortgage interest rates; mortgage foreclosures; civil judicial proceedings; and automobile leases.

The key thing to remember is that the SCRA generally applies to members in military service. The SCRA defines military service as a member of the Army, Navy, Air Force, Marine Corp, or Coast Guard that is on active duty. For members of the National Guard, military service includes a call to active service (authorized by either the President or the Secretary of Defense) in response to a national emergency and lasts for more than 30 consecutive days. One thing to note is that the SCRA does not include protections for members of the National Guard that were mobilized by their state governor or for less than 30 consecutive days.


continue reading »