Active military personnel 6 percent APR maximum
The little-known Servicemember’s Civil Relief Act (SCRA) prevents credit card issuers from charging individuals entering, called to active duty in the military, or deployed service members more than 6% APR on what they owe the institutions.
Military.com writes the limit applies to other loans besides credit card debt.
The article later clarifies the conditions for the 6% APR maximum.
“The SCRA unambiguously states that no interest above 6 percent can accrue for credit obligations (that were established prior to active duty or activation) while on active duty, nor can that excess interest become due once the servicemember leaves active duty – instead that portion above 6 percent is permanently forgiven.”
“Furthermore, the monthly payment must be reduced by the amount of interest saved during the covered period.”
“Note: This law only covers debt incurred prior to military service.”
“Contrary to beliefs held by many, the SCRA applies to all companies, not just banks. The current law is very broad in scope, providing benefits and protections related to rental agreements, security deposits, prepaid rent, evictions, installment contracts, interest rates on all debt: including home loans, credit cards and student loans, mortgage foreclosure, civil judicial proceedings, automobile leases and repossessions, life insurance, health insurance and income tax payments.”
“On November 2, 2016, DOJ announced a new program, the Servicemembers Civil Relief Act Enforcement Support Pilot Program, to support its enforcement efforts related to protecting the rights of current and former military personnel as part of DOJ’s Servicemembers and Veterans Initiative.”
“The new pilot program funds Assistant U.S. Attorney and trial attorney positions to assist with SCRA enforcement, and also designates military judge advocates currently serving as legal assistance attorneys to serve as Special Assistant U.S. Attorneys to support DOJ’s enforcement efforts related to the SCRA.”
Wells Fargo paid a hefty fine for not following the SCRA guidelines.
“The Justice Department announced that Wells Fargo Bank, doing business as Wells Fargo Dealer Services, has agreed to change its policies and pay more than $4.1 million to resolve allegations that it violated the SCRA by repossessing 413 vehicles owned by protected servicemembers without obtaining a court order.”
“In a separate announcement, the Office of the Comptroller of the Currency (OCC) assessed a $20 million civil money penalty against Wells Fargo for the same infractions.”
The AOG USAA World Mastercard goes one step further for active-duty individuals.
- Special 4% SCRA rate: When you have a balance on your account at the time you enter active military duty, get 4% on that existing balance during the period that you serve your country.
- 100% rebate of finance charges: We’ll rebate all finance charges accrued during a qualified military campaign.
Bank of America has an entire FAQ page on the SCRA.
“For example, the SCRA places a limit on the amount of interest that may be collected on financial obligations of any kind: 6 percent per year during the time of military service. Any amount over and above that 6 percent is permanently forgiven.”
“There are 3 conditions you need to fulfill in order to benefit from the 6 percent interest rate cap provided by the SCRA. You need to have taken out the loan before you began active duty (a loan taken out while on active duty is not eligible for SCRA benefits), you must make a request for benefits within 180 days after the end of your active duty and you must request the benefits by supplying a copy of your active duty orders or other qualifying documentation.”
“If you have a credit card or installment loan amount with Bank of America, we will extend your benefits on those accounts for an additional 6 months. If you have a mortgage account with us, we will extend your benefits for an additional 12 months.”
Wells Fargo Private Student Loan Review
With competitive interest rates and flexible repayment options for struggling borrowers, a Wells Fargo private student loan could be a good option — especially if you’d prefer to borrow from a large, established bank instead of a smaller online lender.
Before you consider borrowing a private student loan, fill out the Free Application for Federal Student Aid, known as the FAFSA, to see what scholarships, grants, work-study opportunities and federal student loans you’re eligible for. Only turn to private student loans if you reach the federal borrowing limits and still need extra cash to cover college expenses.
- Fixed: 6.17% to 12.99% APR. Variable: 4.10% to 11.24% APR.
- 15-year terms (12-year terms for community college loans); six-month grace periods for student borrowers.
- Deferment and forbearance options for borrowers who go back to school or into the military.
You’ll get a small interest rate discount of 0.25% if you already have another Wells Fargo account, such as a checking account. However, it’s worth comparing other private student loan options to make sure you’re getting the best possible rate.
Wells Fargo lends to undergraduate and graduate students, as well as to parents helping their kids pay for college. If you don’t meet the minimum credit requirements, which Wells Fargo declined to disclose to NerdWallet, you can apply with a co-signer who does in order to qualify. You can release your co-signer after you make on-time payments for the first 24 consecutive months.
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There are limits to how much you can borrow in Wells Fargo student loans. The limits depend on what type of degree you’re pursuing and the amount of student debt you’ve taken on from other sources, including the federal government. Students in four-year undergraduate programs and some graduate school programs can borrow up to $120,000 in Wells Fargo student loans throughout their lifetime — less if they’ve taken out student loans from another lender. Graduate students in law and business programs can borrow up to $180,000, and medical students can borrow up to $250,000.
Unlike some lenders, which hire third-party companies to process payments, Wells Fargo services its own loans. Between 2010 and 2013, Wells Fargo’s loan servicing practices illegally “increased costs and unfairly penalized certain student loan borrowers,” according to the Consumer Financial Protection Bureau. The lender has cleared up most of the issues the CFPB raised and is in the process of addressing the others, Wells Fargo spokesman Jason Vasquez says.
Generous repayment flexibility for struggling borrowers: Wells Fargo offers several options for borrowers who can’t afford their monthly payments, including its Loan Modification Program. The program gives financially distressed borrowers a lower interest rate — as low as 1 percent — for five years or more, depending on their financial situation, Vasquez says.
If you’re in the program and still can’t afford your monthly payment, Wells Fargo will extend the loan term to lower your payment even more, Vasquez says. The lender will check in with you after five years; if you’re still struggling to make payments, Wells Fargo will let you keep your lower payment for the rest of your loan term. If you can afford to pay more, it will slowly increase your interest rate, by 0.25% a year, until you’re back to your original interest rate.
Customer support: Unlike some private lenders, Wells Fargo services its own loans, and student loan customers get a dedicated customer service specialist they can call when they have questions. So even if you call five different times in a month, you’ll always talk to the same person, Vasquez says.
No term length or repayment plan options: Although it offers generous options for struggling borrowers, Wells Fargo doesn’t initially offer the flexibility that many other lenders do, such as the ability to choose among various term lengths and in-school repayment schedules. Some lenders give lower interest rates to borrowers who choose a shorter term length or opt to start making payments while they’re in school instead of waiting until their grace period ends.
Of course, you can always choose to save money by making payments on your Wells Fargo loan before your grace period ends, or repay your loan in fewer than 15 years — you just won’t get a lower interest rate for doing so.
History of illegal student loan servicing practices: In August 2016, the Consumer Financial Protection Bureau found that between 2010 and 2013, Wells Fargo violated consumer laws by charging some borrowers illegal student loan late fees, processing loan payments “in a way that maximized fees” and neglecting to update information it incorrectly reported to credit bureaus.
The CFPB’s findings are “related to legacy payment procedures that were retired or improved many years ago,” Vasquez says. The issues impacted a “small number” of borrowers, and Wells Fargo is “in the process” of refunding $410,000 in illegal fees to those borrowers affected, he adds.
Fewer borrower protections than federal loans: While Wells Fargo offers more generous repayment options for struggling borrowers than some other private lenders, private loans are generally still not as favorable as having a federal student loan. With federal loans, you can switch to an income-driven repayment plan to lower your monthly payment; qualify for loan forgiveness after making payments for a certain period; or, if they’re subsidized loans, you can defer your loans without accruing interest.
It’s generally a good idea to compare multiple private student loan options before choosing one. If you’re ready to borrow from Wells Fargo, you can apply directly on its website.
Teddy Nykiel is a staff writer at NerdWallet, a personal finance website.
Wells Fargo Platinum Visa® Card
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