Financial readiness is critical to military readiness. That is why the CFPB is working hard to ensure that servicemembers get the protections they are entitled to under the law. Despite our progress, there is still work to be done. Below, we discuss three major protections that the CFPB is working to secure for all servicemembers.
As interest rates remain high, too many companies still fail to provide servicemembers reduced rates
Under the Servicemembers Civil Relief Act (SCRA), active duty servicemembers are entitled to a reduced interest rate on loans they took out before military service. In December 2022, the CFPB did a first-of-its-kind analysis that quantified whether servicemembers were receiving their interest rate reductions on certain loans and made recommendations for financial institutions to increase the use of SCRA reductions. However, recent research on the credit card market suggests that many credit card companies have not adopted the straightforward fixes that could help ensure that servicemembers get interest rate relief.
The CFPB’s 2022 analysis estimated that fewer than 10% of eligible auto loans and 6% of personal loans to activated members of the National Guard and Reserves were receiving interest rate reductions, resulting in nearly $10 million a year in estimated lost savings. This report covered only auto and installment loans, but there is ample evidence to suggest that servicemembers face hurdles in other areas, like credit cards and . The report recommended that companies apply SCRA interest rate reductions for all accounts held at an institution if a servicemember invokes protections for a single account and proactively check servicemembers’ military status to apply these benefits automatically for active duty servicemembers.
The Consumer Financial Protection Bureau (CFPB) is proposing to establish 12 CFR part 1033, to implement section 1033 of the Consumer Financial Protection Act of 2010 (CFPA). The proposed rule would require depository and nondepository entities to make available to consumers and authorized third parties certain data relating to consumers’ transactions and accounts; establish obligations for third parties accessing a consumer’s data, including important privacy protections for that data; provide basic standards for data access; and promote fair, open, and inclusive industry standards.
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