Military Credit Cards Lightning Round | Military Money Manual Podcast Episode 81

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Spencer and Jamie tackle reader questions in a lightning round format in this episode. Questions include:

  • If you can only recommend one card, would you choose The Platinum Card from American Express or Chase Sapphire Reserve?
  • Why am I not getting SCRA benefits?
  • Roth TSP or Roth IRA?
  • I'm active duty. Do I need to be an authorized user on my civilian wife's account?
  • How do you cash out Amex points?
  • Do USPHS Commission Officers get MLA or SCRA benefits?
  • How can I get a free copy of the Military Money Manual sent to a deployed location?
  • Gap funds
  • Roth limit is $6,500? Or is it higher?
  • Are Amex business card annual fees waived for military?
  • Amex pop up jail
  • How to get more than one Amex Platinum card

Outline of Episode:

  • Amex Platinum or Chase Sapphire Reserve?
  • Why isn’t Amex applying my SCRA benefits? 
  • Roth TSP or Roth IRA? Which one to max out first? 
  • Can my spouse get their own annual fee waived card? 
  • SCRA or MLA?
  • How to cash out Amex points
  • Do medical students and USPHS get MLA benefits? 
  • Free books to deployed locations and units
  • Accessing funds when hitting FI early
  • TSP and IRA limits
  • Amex fees on personal vs business cards 
  • Amex pop-up jail
  • How to have more than one Amex Platinum card
  • How to get more information about military credit cards

Military Money Manual Podcast Episode #81 Transcript

[00:00:23] Spencer: Hello, and welcome to the Military Money Manual Podcast. I'm your co-host, Spencer, joined by my co-host, Jamie. 

In this episode, we're taking reader questions in a lightning-round format. One of us will read the question and the other one will take the answer. If you'd like a question answered directly or on the podcast, send us a direct message on Instagram @militarymoneymanual or email at podcast@militarymoneymanual.com.

Jamie, are you ready for the lightning round?

[00:00:51] Jamie: Let's do it. 

“Spencer, your website is a bit overwhelming and I'm not interested in opening 20 credit cards. If you can only recommend one card for someone would it be the Platinum Card from American Express or the Chase Sapphire Reserve?”

[00:01:03] Spencer: It's going to have to be the Chase Sapphire Reserve.

I think it's easier to use the points better. Priority Pass lounge access. You get a $300 annual travel credit, it's easy to use. Plus Visas are more widely accepted globally.

[00:01:14] Jamie: I think that's a hot take. I think that's going to rile some people up.

[00:01:17] Spencer: All right, Jamie, here we go.

“Why isn't Amex or Chase applying military SCRA benefits to my account?”

[00:01:23] Jamie: Probably because you opened the account while you or your spouse was on active duty. You want to apply for the Military Lending Act or MLA benefits. But usually, MLA benefits are automatically applied without any application or submitting orders, especially for Amex and Chase, the companies and banks.

Just check the MLA database with your social security number. When you submit the application, when you're approved for the card, it'll identify you as a covered borrower. The easiest way to think about it is that SCRA is for accounts opened before active duty, and the MLA is for accounts opened while on active duty.

So always check the MLA database if you think there may be confusion about your active duty status. It's especially important if you just recently enlisted or commissioned, or you're enrolled at a service academy, or you just got married to a service member, or you received a social security number as an adult, which usually happens for immigrants mostly. Search Military Money Manual for the term “MLA database” to learn more. 

So, Spencer, the next question is Roth TSP or Roth IRA. Which one would you max first?

[00:02:24] Spencer: Jamie, in the words of that taco commercial por que no los dos, why not both? 

I would put 5% into my Roth TSP to earn the full match, and then I would pivot and max out my Vanguard, Fidelity, or Schwab Roth IRA up to the annual limit.

Which is $6,500 in 2023, expected to probably go up in the subsequent years when people are listening to this podcast in 2030. And then go back to your TSP and max that out. So for a six-year 0-3, that'll be 28% of your base pay in 2023 to max out your Roth TSP. If you are a 12-year E-6, it's going to be 48% of your base pay, and you can find all of those percentages to max out your TSP on my website, militarymoneymanual.com.

Okay, Jamie, the next question is, “I'm active duty Navy. If my wife opens her own Amex platinum card, will she get the annual fees waived?”

[00:03:17] Jamie: Yes. Check the MLA database before she applies, just to make sure she's listed as a covered borrower, but you don't need to be an additional user on her account or add her as an additional user on your account. She can get her own account. 

Spencer, next question. “I'm joining the military in a few weeks. Would you recommend opening cards now and applying for SCRA or waiting until active duty orders start?”

[00:03:41] Spencer: I would definitely wait until you're on active duty and then you're in the MLA database, the Military Lending Act Database, and double-check the database before you start applying for your first cards.

The only exception to this would be a card like the Capital One Venture X Card because Capital One waives annual fees under SCRA, but it doesn't under MLA. So if you can handle the annual fee before you join active duty service go ahead and apply for the Capital One Venture X card, and then once you're on active duty, apply for SCRA benefits, and get the annual fees waived while you're active duty, and that's a great travel tip.

Okay, Jamie, the next question is, “You guys talk about cashing out Amex points, but how can you do this? I don't see that option on AmericanExpress.com.”

[00:04:23] Jamie: The best way to cash out your Amex points is to open a platinum card from American Express for Charles Schwab, also known as the Schwab Amex Platinum Card.

If you hear us talk about that, once you have a Schwab account and you have that card, you can cash out points at 1.10 cents per point. 

“Spencer, do military medical school students in the Army Reserve qualify for MLA benefits? What about the commission core of the US Public Health Service or USPHS?”

[00:04:52] Spencer: For all these random services and branches out there. First of all, I do thank you for your service, but it gets very complicated. So the easiest thing to do for every individual situation, whether you are a military spouse or you are a medical school student, or you're in the commission core of the USPHS is to check the MLA database before you apply for the card.

Also, check the SCRA database because different people are covered by the Military Lending Act that are covered by the service member Civil Relief Act. So for example, USPHS, the US Public Health Service Commission Core are covered by the Service Member Civil Relief Act, but they are not covered by the Military Lending Act as it's currently written and as it's currently implemented in May, 2023. 

I do have a data point from a USPHS officer who did qualify for SCRA, but not for MLA, and he was able to get several annual fees waived on both personal and business cards with Chase and Amex under their SCRA policy. So that's pretty interesting. Nice. 

Okay, Jamie, the next question is for you.

What about annual fee-waived cards for divorced military spouses? What happens after you drop out of DEERS?

[00:06:02] Jamie: So the same MLA and SCRA rules are going to apply as if you separated from the military or retired yourself. So look at the militarymoneymanual.com on the subject. You can Google military credit cards when you leave the military and see some of the guidance there about what to do with your cards after you leave active duty.

Spencer, do you ever send free books to deployed locations or units?

[00:06:27] Spencer: Absolutely, just send me your deployed APO or FPO address and I'll send you a free copy of my book. I love to support deployed military troops, whether that's on a boat or you're on the shore. Just let me know and I'll send you a copy of the book.

[00:08:12] Spencer: Jamie, we often talk about achieving FI early, usually within 15 to 20 years, but how is that going to be possible if we don't have access to all of our retirement savings, such as in the Roth IRA or Roth TSP?

It usually takes until 59 and a half before you can access those funds. So what do you do?

[00:08:38] Jamie: Okay, Spencer, a few ideas here. I'm going to give an overview of all of these and then you're going to have to do some more research on militarymoneymanual.com to dig into these because they can get complex.

The first thing to look at is a Roth IRA conversion. So you can convert your traditional IRA to a Roth IRA. You'll pay income tax on that amount. So check with your tax Pro if that's the right move for you. Five years later, you can pull out that entire converted amount. As if it was a contribution because Roth IRA contributions can be withdrawn anytime without penalty.

So over the years, if you contribute $60,000 to your Roth IRA over the last 10 years or whatever, you can pull out all of those contributions without penalty because you already paid taxes on them. Also, you're going to want to look into having a gap fund, which is just a taxable brokerage account with whatever investment you want, that's taxable money, but it'll be there to bridge the gap, hence the name gap fund.

And then lastly, hopefully, you have some additional sources of income, whether it's VA benefits, a retirement or pension plan, military retirement, things like that, or rental properties if you're into rental stuff. 

Spencer, next question. In order to get her card for free, would I need to add her to my account or would she need to create a separate account in her own name?

I think we know we're talking about spouses and their own credit cards and annual fee-waived cards.

[00:09:55] Spencer: Yep. So this is a frequent question I get, and basically, the answer is she can get her own account in her own name. It's not an authorized user or an additional card. It's your spouse applying for their own account with all the same benefits that you have, including the annual fee waiver, as long as they're properly listed in the MLA database.

So once again, You hear this a lot of answers to our question but check the MLA database. If you're applying for your first annual fee wave card, once you know that you're going to get the fee waiver, then just go hog wild. But always just check the MLA database before you apply for that first card and make sure there are no issues with the MLA database or with DEERS or with your social security number or something.

And then that's going to enable you to unlock double the benefits. So now you're going to get all the benefits, annual benefits of the Amex Platinum card. In this case, I think the question was about, and then you're going to be able to double your benefits. 

Okay, Jamie, next question. “I thought the Roth limit was $6,500, but you guys make it seem like there's a way to do more.”

[00:10:53] Jamie: Yes, there is. The Roth TSP is separate from a Roth IRA, so you can choose traditional or Roth contributions in both your TSP and your IRA. And each type of account has its own limits. For an employer-sponsored retirement plan, like the TSP, the contribution limit in 2023 is $22,500. For an IRA, it's $6,500 per person in 2023, but you and your spouse can each have an IRA with that $6,500 limit if you're married.

So they're completely separate. IRA, TSP, Roth, traditional doesn't matter. Completely separate limits between individual retirement account and an employer-sponsored retirement account. 

Spencer, this question says, “I think I'm seeing conflicting info online. Does Amex waive the fees for their business cards also, or only personal cards?”

[00:11:47] Spencer: So the way that Amex is currently interpreting the Military Lending Act is are only waiving annual fees on their personal credit and charge cards. So cards like the Business Platinum Card is not annual fee waived under the Military Lending Act. 

However, I do have data points that if you open the card before active duty and then apply for Service Member Civil Relief Act benefits or SCRA benefits they are going to waive the annual fees on the AMEX business cards only under SCRA though, so you can't establish the account while you're active duty.

There are several no annual fee business cards from Amex and Chase that have really good benefits and can earn a lot of Chase ultimate reward points or American Express membership reward points. But none of the ones with annual fees would be waived under the Military Lending Act, but potentially under SCRA, just to make things a little bit more confusing.

Okay, Jamie, next question. “I tried to apply for an Amex card this week, but I got an alert that I would not get the welcome bonus, but I could still get the card. I don't want that. What is happening?”

[00:12:48] Jamie: It's called Amex Popup Jail. It's usually due to either a lot of cards recently or inactivity on some or most of your accounts.

There really isn't a surefire way to know exactly what landed you in jail or how to get out of it, but the top recommendations are to wait a few weeks and try again and spend money across all of your open Amex accounts before trying again. You can look up “popup jail military”, and you'll find Spencer's article on this topic as well.

Spencer, the last question for this lightning round episode is, “how do you have more than one platinum card?”

[00:13:22] Spencer: Oh, I love that question. I was actually out at the bar the other day talking with some guys and they were like, why would you have multiple Amex platinum cards? And I was like, you know that $15 a month Uber credit? If you have more than one, they start stacking on top of each other. And they were like, oh, that makes sense. The easiest way to do it is open up lower-tier cards like the American Express Gold Card or the American Express Green Card, which at the time of this recording is offering a really big welcome bonus on the Amex Green Card.

All you have to do is keep that card open for a year, and then you can go and upgrade it. And there's a whole process to do that. But you can upgrade it to an Amex platinum card. The other thing you can do is apply for one of the other “flavors” of the Amex Platinum card. So there's a Schwab Platinum card, there's a Morgan Stanley Platinum card, and I think there might be one or two other flavors out there as well.

And finally, the last way that you can add more platinum cards to your collection is you can just do a direct application. You'll probably never be eligible for the welcome bonus again, especially as long as you keep an Amex Platinum card open. But you can just do a direct application for another platinum card.

It'll say you're not eligible for the bonus. You just say, okay, and you can open up the card. The other thing to note with upgrading the Amex Green card and the Amex Gold card to another platinum card is once they're upgraded, you can just go back and open up another Amex Gold card or Amex screen card, and that's great to have those cards in your wallet because the Amex Gold card is earning 4X points on groceries and dining, and the Amex Green card earns extra points on travel.

Okay. Jamie, I know you said the last question, but I actually have one bonus question for you. 

If you're just hearing about military credit cards for the first time, where would you point the listener to learn more about this topic?

[00:15:21] Jamie: The best thing you can do. If you are interested in travel credit cards, go to the militarymoneymanual.com/umc3.

That's the Ultimate Military Credit Cards Course. That's Spencer's free course, free five-day course, no spam unsubscribe at any time, and it'll walk you through from zero knowledge to travel expert maybe not expert, but a travel novice after five days. Highly recommend that course.

Over 10,000 people have given it rave reviews basically now, over the last five years of taking that, if you're looking for more of the personal finance content of some of the questions we talked about, obviously the militarymoneymanual.com and our podcast covers a lot of these questions we talked about in this lightning round, Spencer's book, the The Military Money Manual is going to be a great resource for you.

A lot of these questions I just answered with some of my students this week as well, and a lot of the same answers were, check the website, check the podcast, check the book. So if you have more questions, definitely hit us up on Instagram @MilitaryMoneyManual. Or you can email us at podcast@militarymoneymanual.com.

We hope you enjoyed this lightning round answer and if it added value to your life and your personal finance journey, if you would do us a quick favor and leave us a five-star review on Apple Podcast, Spotify, or wherever you're listening to the show, we would appreciate it greatly and it helps our content reach more of the people that need to hear about military credit cards, personal finance, and achieving financial freedom while serving in the military.

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