Q&A “When I Leave the Military, Do I Have To Pay Annual Fees on Credit Cards? | Military Money Manual Podcast Episode 54

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Listener Will writes “Will Amex and Chase stop waiving my annual fees on my credit cards when I get out of the militay?”

Spencer has a great article on annual fees on credit cards after you leave the military.

The short answer is no, you will not be immediately charged annual fees on your credit cards when you separate or retire from the military.

The longer answer is American Express takes a while to start charging you annual fees again. Chase usually sends a letter to you 3 months after you leave the military. The Chase letter states that the MLA database shows you no longer on active duty and Chase will start charging you annual fees in 24 months.

So don't panic, relax, you have time to decide which cards you want to keep and which cards you want to close. Even if you need to close a few cards, you shouldn't have much impact on your credit score if you keep your oldest account open and continue to pay your bills on time.

If you have a question you would like us to answer on the podcast or just need some extra guidance and help with your military money, please reach out on instagram.com/militarymoneymanual or email mmm@militarymoneymanual.com

Military Money Manual Podcast Episode #54 Links

Outline of episode: 

  • Question and answer session addressing what happens to credit card annual fee waivers and accounts when you leave the military 
  • Annual fee waivers for Guard and Reservists

Military Money Manual Podcast Episode #54 Transcript

Jamie: Welcome to another Q&A episode of the Military Money Manual podcast. I'm Jamie, and I'm here with Spencer Reese, the founder of militarymoneymanual.com and author of the book, The Military Money Manual. Today we have a question that came in from Will via email, and Will wants to know, “Will they stop waving the annual fee on credit cards once I get out of the military?”

Spencer: That's a great question. I get that one a lot. If you Google “Credit card, annual fee waivers after the military”, militarymoneymanual.com should pop up as the first or second result, and I walk through basically all the issuers that waive annual fees for military service members and spouses under the Military Lending Act or MLA.

[00:01:00] I explain what happens to those cards, to those accounts after you get out of the military. For the big ones, Chase and American Express, actually take two different strategies. 

On Chase, our recent data points are that when you separate or leave the military and retire, within three months, with the data point that we of one guy's retirement, he got a letter from Chase saying, “We show that you're no longer in active duty If you still are, provide us some evidence.” 

You could send them in orders. If you're in the reserves and you're reactivated, and the letter from Chase said “we're going to start charging the annual fee within 24 months.”

[00:02:00] Basically, your fee waiver will expire in 24 months.

Jamie: So, it came pretty quickly. You have a buffer period to decide what to do with a card if you want to keep it or downgrade. Whatever you want to do. You got 24 months to figure it out, basically. 

Spencer: Exactly. Yeah. A lot of people are like, “Oh my gosh, they're going to charge the annual fee right away.”

And even if they did, if it's a Chase Sapphire Reserve card, I mean, you've been getting a lot of benefits from that card. If the credit card company is going to charge you straight away, then ouch. But it's okay. You should have enough of an emergency fund right to cover it. The good news is that they warn you and you know you're going to have two years.

Jamie: Usually you have 30 days after the annual fee is charged to close it. So if you saw the fee was charged and you didn't want to keep the card, then just call them up and say, “Hey, I just saw the annual fee. I'd like to close the card, or I'd like to downgrade.” Before we move on to Amex, a lot of times there's an assumption that the day I leave active duty or retire, I'm going to get hit with thousands of dollars of bills or a $700 bill.

What about Amex?

[00:03:00] Spencer: American Express is, this is interesting, and I'm a real little reluctant to talk about it, so, everybody listening to the podcast, keep it on the down low. 

Apparently, they don't check the MLA database that often. They seem to continue to waive your annual fees. So I know a lot of guys who have been out of active duty service for 5, or 10 years, and American Express just keeps waving the annual fees for veterans. So that's great. 

That should be a great motivator that if you are ever interested in travel hacking, get the cards while you're on active duty, even if you're not maximizing the full benefits and you're going to focus on traveling or staying at these lux hotels and using your free annual nights after you separate from active duty or after you retire.

But open up the accounts at least while you're on active duty, especially for American Express, because they're going to keep waving those annual fees after you leave the service. 

 [00:04:00] Jamie: As we said before, this could change any day. The whole Amex MLA thing could go away any day. But that's the current model, basically.

Again, to summarize, don't panic about either of them. It's not going to be a big bill the day you separate. That would really suck in the middle of your retirement ceremony. It's like, “here's your bill.” It's not like that.  

What about other banks?

Spencer: I don't really have a lot of good data points.

On Citi, the most recent thing that I've heard is it's kinda like Chase, where they're like, “Hey, you're not an MLA anymore. You're not eligible for MLA anymore.”

Jamie: If you can get into the Citi system in the first place.

Spencer: Yeah. You've had your own frustrations with that. 

Jamie: Actually, just today, I put a donation on my Citi Premier card because my one-year anniversary of getting charged the annual fee erroneously is coming up this month. So I'm going to let the statement close with the charge on there, and report back to you guys and see if Citi is back in my good graces or not.

Spencer: Did you set up auto-pay so you don't forget to pay it?

Jamie: All of them. Thanks to you actually, Spencer. Yes, autopay is there.

 [00:05:00] Spencer: Great. Yeah, great question. This is a question I get frequently and some people are always like, “Oh, you have 35 cards open. You're going to get hit with like $15,000 annual fees when you get out.”

And, “Your credit score is going to plummet when you close all those accounts.” Well, if you're getting value from the cards, I'm going to keep a Chase Sapphire Reserve card open for the rest of my life, probably. It’s a great card. 

The other thing to remember about all this, especially if you're into the travel hacking game, people make this work without the annual fee waivers.

Jamie: Yes. There's a whole community of non-military travel hackers.

Spencer: There's this website abbreviated TPG, where they make millions of dollars a year teaching people how to travel hack and recommending the best cards. 

Jamie: It’s like the website that shall not be named like Voldemort.

Spencer: Yeah, the Voldemort website. That's true. Yeah. So, long story long. Well, again, thanks for the great question, but relax. It's okay. 

[00:06:00] It's like so many things in life, just having a little bit of information, just knowing that you're going to get that grace period with Chase and that Amex doesn't check very often, and maybe that’s on them to check. You don't have to let them know that you left active duty. 

There are plenty of databases out there. There's the SCRA (Service Civil Relief Act) database and the MLA (Military Lending Act) database, and you can just go check those. Credit card companies check them frequently, and that's how they know whether you're on active duty or not.

The same thing applies to military spouses as well. Chase is going to be a little bit more strict, and Amex is going to be a little bit more lenient.  Those are the two big players out there. 

One more data point that I'll offer, and maybe I'll have to update this shortly is, I left active duty in June and it is now September, and I haven't gotten a letter yet.

Jamie: See if you get it by the end of the month, three months. 

Spencer: Let’s see if by the end of September, end of October if I get a letter.

[00:07:00] Jamie: Quick side note, if you're separating from active duty and joining the Guard or Reserves, anytime you get those 31-day or longer orders, you can resubmit. We talked about that with Rob Shay a lot back in a previous episode, who is a Coast Guard reservist.

So, go back and listen to that episode. If you didn't get that one, that was one of our longer ones with an hour and a half. So you, you may not have gotten to the point where we talked about that, but he comes at the travel hacking game from a reservist perspective as well as with a military spouse. His wife is on active duty, so he's got a unique angle there. 

But if you get those long-term orders, for Guard or Reserve, then you're eligible for the waiver as well. Some of the data points from reservists and part-timers is that if they get it once, they're usually good for a year, or a couple of years. So again, you don't have to worry about it as much as you think you do probably.

Spencer: That was episode #50 where we talked about Rob Shay. 

Well, thanks again for the question. As always, listeners, if you have any questions, we love getting them and we love this new Q&A format that we're trying with a little bit shorter episodes.

[00:08:00] Jamie: Let us know what you think. If you like the shorter ones.

Spencer: You can reach us for more info at militarymoneymanual.com. Also on Twitter now, at milmoneymaual, and then @militarymoneymanual on Instagram. If you're getting value out of the podcast, share it with a friend, or family member, especially if they're in the military.

Share it with your spouse and leave us a review on Spotify or Apple. We really appreciate it and it helps gets the word out about all the military benefits that are out there, and people just don't know about them. They don't know how to maximize them. 

Jamie: It means a lot to us. We appreciate it, too. We do take a little pat on the back.

Spencer: We do. Yeah. I'd be lying if we didn't check our Spotify reviews every week or so. It's a nice little thing. Thank you all for those who have left reviews. 

Jamie: Thank you Spencer's dad for the nice note on Apple, too.

Spencer: Yes. One of our biggest fans for sure!

[00:09:00] We'll catch you on the next episode of the Military Money Manual Podcast. 

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