What is the Military Star Card?

The Military Star Credit Card provides many of the same features as you would find with a credit card issued by a department store. This card is accepted at the Army & Air Force Exchange Service (AAFES), Navy, Marine Corps, and Coast Guard Exchanges, in addition to the exchange online store and catalog. It features no annual fee, no late fees, a competitive interest rate, and a 25-day grace period before incurring finance charges. There is no minimum time-in-service requirement and it is available to service members of any rank.

The spending limit is credit-based and may be increased over time if payments are current and on time. No information is sent to your command authority unless you become delinquent. The card does not have to be paid off to enable a Permanent Change of Station (PCS). However, the account must be up to date in order to clear out-processing.

Interest rate

Effective December 1, 2008, the interest rate was reduced from 9.5 percent to 9.0 percent. This is the lowest rate available since the card was introduced and is very competitive compared to other store cards. According to bankrate.com, the average variable rate for a standard credit card is 13.96 percent, a gold card is 12.47 percent, and a platinum card is 11.69 percent. The new rate does not apply to ongoing special promotions, military clothing plans, or other programs offering reduced rates.

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Special rate for JCS deployment

A reduced interest rate and withholding of payments are available for those deployed to a forward area in a foreign country for at least 90 days in conjunction with a Joint Chief of Staff directed order. Known as the Contingency Deployment Policy, this plan affords account holders in good standing the following two options during the period of their deployment:

6% rate and the ability to continue using the card while making no payments.
0% rate while making no payments; however no new charges can be made.

In order to benefit from this special program, notification of deployment must be provided to AAFES < http://www.aafes.com > through command channels. Service members will be defaulted to option 1 unless they specifically request option 2. Once your deployment ends, you'll be required to resume the minimum payments and the interest rate will return to the effective rate.

Other benefits

A separate line of credit called (Uniform Clothing Deferred Payment Plan) UCDPP is available for military clothing only. It is interest free but must be paid off within six months, which makes the payments higher than normal Star card payments. Even if you don't use the Star card, check with your bank and credit union to determine if it offers service members discounted interest rates or payments. There are cases where civilian financial institutions are required to reduce your rate under the Service Members Civil Relief Act < http://www.hud.gov/offices/cpd/about/hudvet/library/scra.cfm > (SCRA). This applies to debts for activated reserve and guard members, as well as debts incurred by active duty forces prior to entering service.

Debt Consolidation

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Debt consolidation is a highly advisable option when existing loan and credit card payments can’t be met. The basic idea is to combine multiple payments on existing accounts into a single, lower payment on one account. Most commercial credit cards carry very high interest rates, so the objective is to transfer this debt to one card with a lower rate, or to a loan to cover the outstanding balances. As part of the loan arrangement, it is possible to extend the payments over a longer term in order to reduce the monthly amount due.

Military members have options open to them in order to help avoid delinquencies on loans and credit cards. These include enforcing their rights under the SCRA, opting for the Star card in lieu of commercial credit cards, financial counseling, and debt consolidation. If problems exist in meeting your financial obligations, you should pursue these options promptly in order to avoid negatively impacting your credit score. If done early enough, you may also be able to avoid such severe consequences as losing your home.

Websites for military benefits and assistance:

Army and Air Force Exchange Service (mentioned in article)
http://www.aafes.com

Military.com
http://www.military.com

Military One Source
http://www.militaryonesource.com/skins/MOS/home.aspx

Military Benefits
http://www.militarybenefits.com

Today’s Military
http://todaysmilitary.com

Special Military Airfares
http://www.militaryfares.com

4 Military Families
http://www.4militaryfamilies.com/index.htm

Military Spot
http://www.militaryspot.com

Military Discounts
http://www.militarydiscounts.com

Valoans.com
http://www.valoans.com/discounts.cfm