Consumer Watchdog: Beware the Military STAR Card

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Updated on Wednesday, May 13, 2015


I made a call to Japan a couple of weeks ago to speak with a woman, we’ll call her Kelly, interested in receiving a debt consultation. The MagnifyMoney team offers free, 30-minute financial discussions to help people develop a strategy to pay down debt. The woman on the other end of the line is currently residing on a US military base in Japan.

You would think the products offered exclusive to military members and their families would be top-notch. Unfortunately, they often aren’t.

In the course of our conversation, Kelly asked about paying down some credit card debt. She outlined her existing debt burden and mentioned wanting to specifically target eliminating the debt on her Military STAR card.

“I’m required to carry a balance on this card to keep it active,” Kelly told us.

Something didn’t add up to me. You shouldn’t be required to carry a balance on a card. Either Kelly misunderstood the terms of her credit card or something was very amiss with the Military STAR Card.

There are two versions of this card: the Military STAR Card and the Military STAR Rewards MasterCard, which is issued by Chase. The STAR card is only available to active duty, reservist, retired service members, military spouses and dependents.

The Military STAR Rewards MasterCard is relatively easy to find information on because it’s backed by a large bank that discloses terms and conditions before you apply.

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But then there is a confusing catch:

“Your Rewards credit card has a dual function that allows you to access two credit card accounts with separate lines of credit – a MasterCard® account issued by Chase Bank USA, N.A. and a MILITARY STAR® Private Label Account issued by the Exchange Credit Program.”

So you have to have two credit cards in order to get the rewards perks off one? You can’t simply open the rewards card offering through Chase, but must also have a Military STAR Card through Exchange Credit Program (ECP).

ECP is not particularly forthcoming with details on the Military STAR Card. There is no link to check terms and conditions without first logging in (which we cannot do without military affiliation).

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The card is marketed as a way to establish credit history, have access to a low interest rate, get a military clothing plan and get special offers at the Exchange on base.

The rewards card can be used anywhere a MasterCard is accepted, but the STAR card can only be used on base at exchanges. The military can also garnish wages to make payments on the STAR card.

The Military STAR Card offers plenty of potential traps to lure people into overspending.

  • The first day you shop there is a 10% back offer (Fine print states: The 10% discount will appear in the form of a credit on your first Private Label account monthly billing statement. Certain restrictions and limitations apply.)
  • Military clothing plan as a separate line of credit to fund uniforms
  • Special promotions at the Exchange (brick-and-mortar or online)
  • Advertised low variable APR of 12.24% for Retail Plan purchases, 0% for Military Clothing Plan purchases.
  • There is a reduced interest rate during deployment, but no refund of interest or fees. (The Rewards card does refund interest and fees during deployment).

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Nothing in our research indicates that you’re required to carry a balance on the Military STAR Card, so Kelly may have misunderstood the terms and conditions or they were poorly explained to her. However, the Military STAR Card is certainly not transparent.

We’d recommend those in the military look at applying for cards with Pentagon Federal Credit Union or Navy Federal Credit Union. These are transparent offers with details upfront before you apply. The APR won’t be disclosed until the credit union pulls a credit report to determine creditworthiness.

cashRewards Credit Card from Navy Federal Credit Union
  • 1.5% cash back on purchases.
  • $0 annual fee
  • 11.65% to 18.00% Variable APR

You can find a comprehensive list here.

The men and women in the armed forces deserve the absolute best financial products on the market. These products should be simple, transparent and offer excellent customer service and an understanding about the difficulties that ensue during deployment. We don’t believe the Military STAR Card achieves these criteria.

The information related to the Military STAR Card has been independently collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.