Military Credit Cards Questions #2 | Military Money Manual Podcast Episode 7

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Military Money Manual Episode 7 Transcript

[00:00:00] Jamie: All right. Welcome to another episode of The Military Money Manual Podcast. I'm Jamie.

[00:00:05] Spencer: I'm Spencer. 

[00:00:06] Jamie: And today we're going to cover more military travel frequently asked questions. As a quick review, last time in our FAQs, we talked about military travel credit cards. What is it? What banks participate in the deals for military service members? Why is it a good deal? How can you take advantage of it? We talked about some things like credit card debt and your impact on your credit score and expiration dates on miles and points. Today we're going to continue the FAQs and we're just going to go through some more topics that come into the website and the militarymoneymanual.com comment section a lot, or to the email inbox.

So, the first one is from Sam. I'll read this and then let Spencer answer. He says, “My wife is active duty in the military and I'm a civilian. I have the American Express Green Card and my wife is an additional card member. So, the annual fee is waived via SCRA & MLA. I just upgraded to the American Express Platinum after receiving an offer in the mail. I also upgraded the additional card member to Platinum as well. Will the SCRA or MLA continue to waive annual fees on my wife's additional card? I want to avoid paying my annual fee of $695, which it currently is in September 2021, and the additional card member annual fee of $175.” What do you say to Sam?

[00:01:19] Spencer: The biggest thing that changed back in January 2020 was, for American Express, you used to have to add the active duty service member as an additional card member to the account in order to get the annual fees waived. In January 2020, American Express started applying MLA or Military Lending Act benefits to any card opened after active duty, whether you're active duty, military or military spouse married to an active duty service member.

So, to answer Sam's question directly, yes, your annual fees are going to be waived. You don't have to worry about that. But you don't have to have a military service member as an authorized user in the account anymore. So,, if you go to the MLA database, which let me just look it up real quick is mla.dmdc.osd.mill. Or you can just Google “DOD MLA database”. And if you look that up and you go in there, you can create a free account and you can verify that you are in fact eligible for MLA benefits. The only thing that the MLA database is doing is it's checking the Deere's database and seeing if your social security number is in there, and that you are in fact married to an active duty service member.

So, military spouses do get their annual fees waived and it's a very easy process now with American Express and Chase. For Chase, they'll send you a letter in the mail, even before your card arrives saying, “Hey, we ran your social security number against the MLA database. You've been identified as a covered borrower.” That's the term that they use, and your annual fees will be waived. It's the same process for active duty. It's all automated. Now, if you opened up the account before you entered active duty, both Chase and American Express are going to apply SCRA or Service Members Civil Relief Act benefits to your account and they'll waive the annual fees. You just have to go through a different process. 

 If you Google “Chase SCRA” or “American Express SCRA”, usually there's a form you fill out, you submit your active duty orders, and then they'll waive the annual fees. And a lot of times they retroactively waive the annual fees. So, I know some guys who were paying annual fees for 15 years and they got them all waived. So, they got an $8,000 check from American Express. So,, that's pretty cool. 

[00:03:21] Jamie: So, big takeaway there is, you no longer have to have your active duty service member as an additional card holder on your account. If you're a dependent, a spouse that's in Deers and verified in the MLA database, you can get your own account.

And honestly, being an additional card holder, a lot of people will have their American Express Platinum card and then they'll add their spouse as an additional card member. because then they get an American Express Platinum too, but what's even better is get them their own account, which is also free. Then they also get all the benefits of the card, not just having the actual card, they'll get their own sign up bonus and all that as well.

[00:03:55] Spencer: Yeah. The thing that I always encourage military spouses to do, whether you're dual military or you're active duty married to a civilian, civilian married to active duty, is refer each other for your accounts. Once you have the initial account opened up. So, for instance, I opened up an American Express Platinum card a couple of years ago, and then when my wife was ready to open up her American Express Platinum card, I had a referral link on AmericanExpress.com and I was able to refer her for an American Express Platinum card from my American Express Platinum card. 

I earned, I think it was like 20,000 membership reward points, which is worth over $200 depending on how you cash them out or whether you use them for travel or hotels. But yeah, I really encourage people don't just go and open up a Platinum card. Get a referral link from your spouse. That's totally allowed. A lot of times people ask, ” Won't the credit card companies frown on using a referral link from a spouse?” What they frown on is self referrals. So, never ever self refer yourself. That's where you use one of your own referral lengths to open up a new credit card or a charge card with American Express.

 What is totally allowable is if you have two separate social security numbers, you're two separate individual people, American Express and Chase don't care that you're married. All they want is new accounts. They want new social security numbers in their database. When you refer your spouse, that's a totally different person and you are totally eligible to earn a referral bonus on that. I really encourage military spouses. That's a great way to rack up a ton of points. Now, American Express, you can't combine points across accounts, but on Chase you can with your household members. Maybe you have one person who has a Chase Sapphire Reserve Card, and you want to move all of your points over there so then you can cash them out for 1.50 cents each through the Chase Ultimate Rewards travel portal. I think that's a great use of Chase points.

[00:05:34] Jamie: Yeah. The points pooling that Chase offers, is that a one time offer or is there a limit on that or is it once per year? 

[00:05:39] Spencer: As far as I know, they haven't changed it recently. As far as I know, you're able to combine your points whenever you want, essentially. So, I have a Chase Freedom Card. I'll rack up some points on that. Occasionally I'll just move them over to my wife's Chase Sapphire reserve card. 

[00:05:52] Jamie: All right. The next question we have is about contracted cadets either at the academies or in ROTC. If they're contracted and they're technically a member of the reserves- you and I were both ROTC commissions so we know how that works- but is there anything that they can do with regards to credit card benefits or travel as a contracted cadet? Either at the academy or in ROTC? 

[00:06:16] Spencer: The most recent data points I have on this, came out of January, 2020. When American Express changed their SCRA and MLA policies. I think before January, 2020, all the academy cadets were eligible to open up cards while they were still in the academy and get the annual fees waived. But after the American Express revised their policy in early 2020, it seems like now you have to wait until you're actually on active duty orders. The easiest way to confirm this is to go to the MLA database and look yourself up. So, even if you think, I entered active duty 30 days ago, I have active duty orders, I'm at my first base, I'm getting my first paychecks. Still go verify yourself in the MLA database. There's a lot of horror stories online of people opening up cards, expecting the annual fees to be waived, but they're not in the MLA database. And it's a pain in the butt after that to apply and get your annual fees waived.

So, I really encourage people before you open up any cards, check yourself in the MLA database, check your spouse in MLA database. And if you're listed as eligible for benefits there, then you should have no problems. Because that's when Chase and American Express, they run your social security number against the data the minute you open the account. So, if it comes back negative, it becomes a pain in the butt to then get MLA benefits retroactively applied. It is possible, but it's a lot more of a process. Whereas if you just check the database and you're good to go in there, then it's a very seamless process. And if you're not good to go, if you're not in the MLA database, then work with your finance office, work with your personnel, whoever controls your personnel records. And it might just be an issue of, you just entered active duty 20 days ago. Give it a bit more time for the database to be updated.

[00:08:00] Jamie: Okay, cool. One of the things I thought about for this question too- first I'll ask this question and I'll come back to it. Is there somewhere where you have good guidance of what cards they should open and in what order as they're starting their journey on travel and their credit cards?

[00:08:13] Spencer: Yeah. Let me just confirm this on my website. I think the article is, “Best Credit Cards for Military Service Members.” And let me just see where the article is. Sorry, I didn't have it pulled up, I think it's, ” Best 14 Credit Cards for Military Service Members.” 

[00:08:35] Jamie: And while you're looking at that, I'll talk about one of my other ideas for this question: one of the good strategies, starting with either a secured or a no annual fee card, especially if you need to build credit, if you have nothing. So, if you need to do that, maybe one other option, if you're waiting for your MLA. Database to show up in the MLA database is you can maybe open a no annual fee card with Navy Federal, or USAA or something like that. Like you talked about last time, you want to keep that first one, that's free, open the longest amount of time and that'll help minimize impact on your credit score. So, that may be somewhere you can start while you're waiting for the MLA process to kick. 

[00:09:10] Spencer: Exactly, so if you're in college, or RTC, or one of the service academies, and you've got the Navy federal bank account, or the USAA bank account, that's a great time to open up one of those, no annual fee cards, start building your credit history. And then by the time you graduate, you'll probably have a 700, 750 credit score, and you'll be eligible to start opening up those Chase cards. So, on my website, it's the “Best Credit Cards for Active Duty Military.” If you go to the search function, you can look that up there. And essentially what I've done is I've laid out the optimal strategy in which to open up a credit card if you just joined the military, so first you have to get that no annual fee starter credit card from USAA or Navy federal. And that gets your foot in the door, starts building up your credit score, and then that allows you to then move on to Chase cards. And it's really important if you want to optimize your military credit card benefits. You want to start with the Chase cards because of the Chase application rules, once you've opened five credit cards from any credit card issuer in the last 24 months, then you're locked out of Chase cards until you dip back below that five cards open in the 24 months period.

So, online, you'll see it called the Chase 5/24 rule. And that's why it's important to first target the Chase cards and then move on to the American Express cards. And you can mix and match too. If you're really gunning for the American Express Platinum card, go open up the American Express Platinum card, but do know that's going to take away one of your Chase slots. And there's a couple Chase cards that are really good, that you want to make sure that you have in your wallet and that you're getting the MLA fee waivers on. 

[00:10:40] Jamie: Perfect. And one other thing to note while you're maybe in this waiting period, if you're a cadet, is it's a great time to take the free course on militarymoneymanual.com.

That's the “Ultimate Military Credit Cards Course“. It's free and it's militarymoneymanual.com/umc3. And that's another thing: just be ready for when your MLA database is active and then you can kick your strategy into full. Okay, next question: are the credit card bonuses one time only? What do you think? 

[00:11:11] Spencer: The rules vary between the different card issuers. It used to be called churning where you would open up a credit card, earn the bonus, and then close the credit card, a couple weeks later and then reapply for the credit card. Earn the bonus again. That was the strategy back in 2008, 2010. That's since gone away, a lot of the credit card companies have caught onto that behavior. And obviously, that's gaming the system. So, what Chase has done is they've put limits on the amount of time that has to pass between when you get a bonus for the Chase Sapphire card. So, that's a Chase Sapphire Reserve and the Chase Sapphire Preferred. You have to wait 48 months between when you get the bonuses and the account has to be closed as well. I was actually lucky in that I closed my Chase Sapphire reserve account four years ago, because I wasn't getting the annual fee waiver because I had opened it before Chase started applying MLA benefits in 2017.

So, I closed my account, opened up my wife a Chase Sapphire reserve card. She got the fee waiver and I was just an authorized user on her account. Well 48 months later, Chase Sapphire preferred comes out with a hundred thousand point bonus again, and I was eligible to apply for that and get the Chase Sapphire preferred a hundred thousand point bonus. So, credit card bonuses are not one time only. They do spread out and it helps if you keep track of all this stuff into a spreadsheet or set reminders on your phone. American Express is even more stringent than Chase. For a lot of their bonuses, it's once per lifetime. Now, how do they define a lifetime? Once you get the bonus and then close the account, you have to wait seven years from the account closure to then reapply for the bonus. So, really in a reasonable lifetime, you're only going to get an American Express Platinum bonus maybe once or twice. And then you're only going to be eligible if you close the account.

And especially for military service members, when you're getting all these annual benefits every year, it doesn't make sense to close the accounts, you want to keep the accounts open because you're going to be getting all these benefits. 

[00:13:10] Jamie: Yeah. I think that's spot on, very little scenarios where I can see it's worth it to close an account. Wait seven years just to get another sign up bonus. One note about that, for example, with the American Express Platinum, they do offer different cards. So, if you go from what we call the vanilla American Express Platinum to the Schwab American Express Platinum, you can still get the bonus on that one or other variations of the card. For example, when the SPG, the old Marriott card was there with American Express. You could have gotten the bonus on that one and then opened up a Marriott Bonvoy because it was considered a different product. So, you can also take advantage of a product change, or if you've already maxed out the Delta credit card offers with American Express and then come out with a new Delta card two years from now, you would likely be eligible for that. But definitely worth doing some research. If you want that case, anything to add on that? 

[00:13:57] Spencer: No, that's a good point to keep note of product changes. And, a lot of times the credit card market can seem stagnant sometimes where there's not a lot of things changing, month to month. But you'd be surprised at how many times they launch new products and they consider it a completely new product and now you're eligible for the bonus again. It can seem like you've reached the end of the game at times, but they're always refreshing products and coming out with new cards. So, you just have to keep on top of it and keep up with the credit card news. 

[00:14:29] Jamie: Yeah. In the worst case, if you think you're eligible for it, you may lose out on 60,000 or 100,000 points, which would suck. But in reality, then you're going to get all the annual benefits, right away again, which makes it worth maybe taking a gamble and trying it if you're not a hundred percent sure. And can't get customer service to tell you for sure. All right, next question. Can I have more than one card and how many is too many? 

[00:14:51] Spencer: Yes, you can definitely have more than one card. And in fact, if you really want to maximize your benefits, like I was saying, start with that, no annual fee card, that's going to aid your credit history and increase your credit score. And then after that, the sky's really the limit. My wife and I have opened up, I think it's over 43 cards in the last three years. And currently we have 29 cards open and I'm paying over those 29 cards, I'm getting over $7,000 of annual fees waived. Honestly, I know guys who have more cards than that. So, I think you're over 20 now for the cards?

[00:15:25] Jamie: Yeah. We're at 21 or 22. 

[00:15:26] Spencer: How much are you paying annually? 

[00:15:28] Jamie: Zero dollars for 22 of them, most of them premium benefits. And it's cool too, because you can figure out like Spencer mentioned earlier, depending on how you value each of the points, you can assign a worth to your American Express, Chase or Hilton points. And when it adds up, it could be several thousand dollars worth of points, depending on how well you redeem them. So, that's cool.

[00:15:52] Spencer: Yeah. So, right now I've got over a million Hilton points and we're not traveling that much due to COVID and being busy at work. But that could be $10,000 worth of value right there. That is just stored up for a future vacation. So, it can be really valuable opening up multiple cards and for the right person who can keep track of this stuff and isn't going to go into credit card debt, it's extremely valuable. If you're not that person again, we always have to caveat that it's not worth it, credit card debt is not worth it. And if you can't play the game by the rules that are set out- and actually, I include a list of rules in my ultimate military credit cards course- if you can't stick by those rules and you're going to start paying interest, it's not worth it. You're going to lose the game and the credit card companies are going to win. So, it's really important to stay focused, keep track of your cards, set up auto payments, so you don't have to worry about that, and be honestly assessed, like if I have to spend $6,000 in three months, can I do that? Do I have that flexibility in my budget to spend that money or do I live leaner than that? And that's not reasonable. And I have to weigh a little bit to open up that card and earn that bonus. 

[00:16:59] Jamie: That's a really good point. All right, the next question is another good one that comes up a lot. What's my exit strategy? If I retire or get out, what do I do with the cards when I leave active duty, whether it's retirement, separation, or an unplanned discharge, medical issue, etcetera? And does it vary from bank to bank what the policy is? 

[00:17:19] Spencer: This is a question that comes up a lot. You've got 29 credit cards. What are you going to do when you get out of the military? The good thing is the credit card companies they're businesses, they want to make money. And so they want to keep you as a customer. So, they're not just going to drop an annual fee on you without any warning, Chase from what I can see online, they check the MLA database once a month or once every two months. And once they see that you're no longer eligible for benefits, they just send you a letter in the mail and they say, “we show that you're not eligible for benefits anymore. If this isn't true, if you can provide active duty orders, please do so. And if you can't, then you'll be charging an annual fee on this date.” 

So, you have some warning there for Chase. American Express from what I hear, they don't check as often. So, I know a lot of guys who are retired or are separated and they're still getting their annual fees waived on their cards. And that can happen sometimes for years after they leave active duty and they're in the guard or the reserves, but they're not on title 10 orders anymore, and they're still getting their annual fees waived. So, it just depends on the bank. Depends on how often they check the MLA database. So,me guys, because they're on the guard or reserve, when they do go active, they submit an SER request, and then they get the annual fees wave that they did pay, reimbursed. I think worrying about the credit card exit strategy isn't healthy. To worry about it, but to have a good plan and to know that, if I do get charged an annual fee, a lot of times, if you close the account within 30 days, they'll refund the entire annual fee. For myself, my exit strategy, I'm not going to keep eight American Express Platinum cards open after I get out of the military. But I'm definitely going to keep one open. And, if they charge the annual fee on it, with the benefits that they're offering now, I definitely think that the American Express Platinum card is worth paying the $695 annual fee. But if you're not paying the annual fee, then it's definitely worth it. 

[00:18:59] Jamie: Another one that comes up a lot is about the SCRA versus MLA and it came up a little bit today as well. One frequent question is “American Express says I'm not eligible for SCRA. Why is that? And what do I do?” 

[00:19:17] Spencer: A lot of people, they're reading old information about American Express, and it used to be that you really had to apply for the SCRA benefits through their website. Now if you do that, you apply for SCRA benefits and you open up the card on active duty. Then it's just a computer, it runs a script, and it's essentially going to say, you're not eligible for SCRA because you opened up the card on active duty. It doesn't explain that very well in the letter though. So, what they get in the mail is a letter that says you've been denied for SCRA benefits and they freak out and they're like I'm going to be charged the annual fee, but they're not charged the annual fee. American Express checked the MLA database and they applied MLA benefits to your account. So, there's a couple ways to verify this, you can just go to the MLA database and if you're good in there, then you should be good in American Express. You can also look at your card member agreement. It's that long legal document that they have to send you in the mail or it's available, there's a place you can go on the website under card member agreement on americanexpress.com.

And if you click on that on the bottom of the second page, there's a line that says you have been identified as a covered borrower under the military lending act. If you see that on your card member agreement. That means that they've applied MLA benefits to your account and you will not be charged an annual fee. Again, I've got a whole page on my website if you just Google “American Express SCRA denial” it should pop right up and you can read all the information about that. Don't worry about it too much, if you do get charged an annual fee and you have the SCRA denial, the first thing to check is, are you in the MLA database? I can't emphasize that enough. Everybody who gets SCRA denied and gets charged an annual fee while they're on active duty. It's because something's screwed up with their record, and essentially American Express has no way to verify that you are in fact active duty. That's what I have to say about that.

[00:21:03] Jamie: Great. The next one is a little bit of a repeat, but I just want to hit it again. Which card should I start with? 

[00:21:10] Spencer: So, again, it's a question that comes up very often. If you're just getting started, you don't have a credit score or you have a very, low credit score, you're in college, you're at one of the service academies, no annual fee card from Navy federal. They have a Navy federal cash rewards card, which is pretty good. and then after that, move on to a Chase, no annual fee card, maybe the Chase freedom. So, you establish that relationship with Chase bank. And then after that you can move right on to the Chase Sapphire preferred. The bonus is really big right now in September, 2021. It's bigger than the Chase Sapphire reserve. And then, after a year you can upgrade that Chase Sapphire preferred to a Chase Sapphire reserve. I think that's definitely the place to start. And if you're waiting to come on active duty, start building up your credit score now and making those on time payments and showing the banks that you could be responsible with credit.

[00:22:02] Jamie: Cool. All right. I have one more question here in our FAQ section for now. The next one is can you use points and miles to upgrade when traveling, on government orders? 

[00:22:14] Spencer: Yes, definitely. This is sometimes a point of confusion for people and- it was right before COVID. I flew to Korea from Hawaii for a conference and the guy I was flying with was back in economy and I was up in first class in a live flat seat. And he was like, how the heck did you get the travel company to book you that on a government ticket? And my answer was, they didn't, they booked me an economy ticket and then I upgraded it with some cash and some points. So,, you can definitely upgrade your hotel rooms, as long as it doesn't cost the government anything extra. If you book the government rate room at the, at the Hilton and then you show up and you're a diamond member because you have the Hilton honors aspire card and they upgrade you to a suite, as long as it's still the government rate, and it's not going to cost any the government, anything additional, that's fine, you can take that upgrade. The other thing too is the joint travel regulations that JTR makes very clear, any points and miles that you earn while traveling on, government official travel are yours to keep.

So, you can add your frequent flyer miles number to any airline ticket that you buy. When you stay at a Hilton or a Marriott, you can add your loyalty number to the booking and you can earn all those points and then you can cash them in later and get yourself a nice vacation. Essentially not paid for by the government, but, due to your government travel, you can earn those benefits.

[00:23:40] Jamie: Yeah, I think that ‘s a great use of the JTR the joint travel regulation, like you mentioned, has some pretty restrictive verbiage on trying to book a better class, but if you're using your own points for it, and that makes the TDY a lot better, especially if it's a red eye, or a long flight, or something like that, where the live flat would be a really nice upgrade. All right. Any other thoughts you want to share, from these FAQs? Any big inspiration that sparked? 

[00:24:06] Spencer: No, but I think it's really good. A lot of good questions I get on the website. If you go to my website and you go under the about tab, there's a contact me link there. Or you can just always send an email to podcast@militarymoneymanual.com. I usually get a question or two every other day, and a lot of them are addressed in the course. So, I really recommend that you sign up for the ultimate military credit cards course on my website, militarymoneymanual.com/UMC3. You can sign up for the course there. All I need is your email address, you don't even have to give me your name, and I'll send you the course for free. It's over five days and it'll walk you through what is travel ? How do I sign up for these cards? How do I get my annual fees waived? And it lays it all out there for you. Keep the questions coming and I'm happy to answer them especially when I do have a good answer. If you look online, there's not a lot of good information out there about this stuff so I'm happy to be a resource for the military community.

[00:25:03] Jamie: Cool. Thanks for listening to this podcast, guys. We hope you enjoyed the second round of FAQs and as always check out militarymoneymanual.com for the most current offers and specials. Anything we address today, bonuses or benefits of a card are current as of September 2021. So, double check the website, make sure you get the most current information on that as well.

[00:25:24]Spencer: Thanks for listening. We'll see you next time.