Interest rate reversal may be due to military debt protections


Sally Herigstad is a certified public accountant and the author of “Help! I Can’t Pay My Bills: Surviving a Financial Crisis” (St. Martin’s Press, 2006). She writes “To Her Credit,” a weekly reader Q&A column about issues involving women, credit and debt, for, and also wrote for MSN Money, and, and has guested on Martha Stewart Radio and other programs.

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QuestionDear To Her Credit,
My husband is currently in the military and
deployed. We owed $7,000 on his Chase card, but we paid off the entire balance.
His previous statement showed the balance without a minus sign in front of it.

Now that we’ve paid off the balance, the
statement says there is an interest payment reversal for -$24. When I try to
pay that off it says there is nothing to pay off and that the account is
completely paid.

So what does interest payment reversal mean? And why the
negative sign before it? Does that mean we overpaid and they will refund us?
Thank you for your help!  – Alex


Dear Alex,
You are right. A negative (minus) sign in front of your
balance means that the bank owes you, not the other way around. The minus sign
represents a “credit” balance on your account.

The interest payment reversal, in your case, may be the
result of the Servicemembers Civil Relief Act, or SCRA. The SCRA covers all active-duty service members, reservists and members of the National Guard and
protects them and their spouses from high interest rates on debts, including
credit card debt, federally guaranteed student loans and car loans while they
are on active duty.

The protection begins on the date of entering active duty
and generally terminates within 30 to 90 days after the date of discharge. This
protection applies only to debt balances from before the active duty
began. Lenders must
also waive fees, such as annual fees or late fees, if those charges exceed the 6
percent cap.

The highest rate that credit card companies can charge you and
your husband on protected debt while your husband is deployed is 6 percent.
This is not simply an interest deferment. The interest expense over 6 percent
while the service member is deployed is permanently forgiven.

To request interest reduction, service members generally
send a written request letter, including a copy of military orders, to the
bank. They must send this letter no more than 180 days after the service member
is released from active duty.

If the $24 interest expense reversal was as the result of
the SCRA, you should make sure that the 6 percent maximum rate was applied to
the entire time your husband was deployed and you owed a protected balance.

you owed the entire $7,000 for very long while he was deployed, I would expect
the interest adjustment to be substantially more than $24. If you can’t tell when
or what the interest rate was that you were charged for the period of deployment by
looking at your monthly statements, call the number on the back of your card
and talk to a bank representative.

It’s also possible that the interest expense reversal had
nothing to do with the SCRA rate limitations. The bank may have discovered a
mistake, or made an adjustment for some other reason after you paid off the
balance. As long as it’s an interest adjustment in your favor, I wouldn’t worry
too much.

Banks don’t usually send refund checks right away when there
is a credit balance. If you use the card for a small purchase, you can easily
use the $24 credit and be back to a zero balance. If the balance remains on your account for six months, federal regulations require the bank to try and contact you and refund the money to you.

If you don’t want to use the card now that you have it paid
off, or if you want to close the card, you can call the number on the back of
the card and ask Chase to send you a refund check for the $24.

See related: A guide to credit for service members and their families, Military credit cards: Rewards for service members, What happens if you overpay your credit card bill

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