USAA Bank started in 1922 after 25 army officers came together to insure each other’s automobiles. Today, it’s an association that offers insurance, banking and loans for active military, retired military and qualifying family members of military personnel. When it comes to rates, USAA offers rates that are lower than average for an online banking system. While some of its CDs are competitive, other accounts are only slightly above average in comparison to brick-and-mortar banks. Compared to other online-only banks, rates are considerably lower. However, for military members and veterans who want a financial institution that understands military life and needs, USAA is a good option.
USAA Bank at a Glance
- Free checking account with no monthly fees
- Help during deployment
- Youth and college accounts available
- Low savings and checking account rates
- No business accounts
- Only available to eligible members
What’s interesting about USAA
USAA was created for military people, by military people, and these days it serves around 12.5 million members. USAA provides several benefits to its members, including shopping discounts, financial advice, competitive credit card rates, and a rewards program. USAA is a convenient option for military members who need to move or travel often because it offers an easy-to-use website and smartphone apps, 24/7 support, and over 60,000 available ATMs. Because USAA is military-focused, it also provides services like deployment help and advanced military pay through direct deposit.
Things to consider
While USAA does have quite a few benefits, there are some things to consider. For one thing, If you’re looking for high-interest savings or checking accounts, you’re better off searching elsewhere. USAA’s rates are lower than average in comparison with other online banking options. Another consideration with USAA is the lack of many brick-and-mortar locations. If you’re looking for an actual building where you can talk to a person face-to-face, you’re probably out of luck. USAA is only located in seven states in the US and two international locations in England and Germany.
Checking and savings accounts
USAA’s checking and savings accounts have some inherent benefits as well as some drawbacks.
USAA’s members can receive a free basic checking account with no extra fees. The checking accounts require no minimum balance, and USAA sends out text alerts about things like low balances. The checking account also comes with free online and mobile banking. There are also special accounts designed for new recruits, and members who are serving active duty have access to tailor-made checking accounts to benefit them and their families.
There are accounts available specifically for children nine to 17 and accounts for college students. The youth checking accounts include spending limits that can be set by parents. The college checking account comes with a free bill-paying app. In order to receive interest on a USAA checking account, there is a $1,000 minimum balance. Once that minimum balance is reached, the member will receive a minimal return interest.
USAA makes it easy to access your accounts remotely with over 66,000 approved ATM locations. ATM transactions performed through approved third-party locations will be refunded up to $15 a month in ATM fees for the first 10 withdrawals each month. However, it should be noted that there is a 1% fee for all international transactions.
USAA’s savings accounts are lacking in terms of return investment. Its interest rates are lower than the average for online banking systems, which is a definite disadvantage with USAA. The basic savings account requires a minimum $25 deposit and has 24/7 fraud protection.
A youth savings account is also available. Like the adult savings account, the youth savings account does not have a minimum balance or fees. The account has limited ATM withdrawals, and a parent can choose whether a child can transfer money and make deposits.
Money market accounts
USAA offers a higher savings account called the USAA Performance First Savings Account. There is a minimum balance of $10,000 to open this account. Like the basic savings account, there are no monthly service fees, and there is 24/7 fraud protection. It offers automatic transfers and mobile check deposits.
While the money market account rates are higher than the basic savings account, they still aren’t competitive when compared to other banks.
USAA’s CD rates are more competitive than its savings and checking accounts. Terms vary from 30 days to 7 years. The standard CD requires a minimum deposit of $1,000, and the next level is the jumbo CD, with a minimum deposit of $95,000. The final option is the super jumbo CD, which requires a minimum deposit of $175,000. Once the account is opened, you can only make deposits during the 10 days after it matures.
All CDs are insured up to FDIC limits. Early withdrawal is allowed, but there are fees for withdrawing early. With 30 or fewer days left until the CD matures, there is a fee equivalent to 30 days worth of interest. Those who withdraw more than five years early can expect to pay a penalty that amounts to the equivalent of a full year worth of interest.
USAA offers a variety of credit cards to meet the needs of its members. Each card has slightly different perks, but they all offer rewards. All reward points can be redeemed on airline travel, merchandise, cash, cruises and charitable contribution. There is no annual fee for any of these cards. If you want to do a balance transfer or cash advance, it will cost you 3% of the amount in fees.
- The USAA Rewards Visa Signature Card offers 2X points on gas and dining purchases, 1X points on other purchases, and a 2,500-point bonus after first purchase. Variable APR rates range from 11.90% to 27.90%.
- The Preferred Cash Rewards Visa Signature Card offers 1.5% cash back on all purchases. It also has a slightly higher starting interest rate of 13.9%.
- The USAA Rate Advantage Visa Platinum Card has the lowest starting interest rate being 8.90%.
- The USAA Military Affiliate Visa Signature Card offers 1X points on all purchases and a variable interest rate starting at 12.90%.
- The USAA Cashback Rewards Plus American Express Card offers 5% cash back on your first $3,000 worth of purchases, 2% cash back on the first $3,000 of your grocery charges and unlimited 1% cash back on all other purchases. Variable APR rates range from 13.90% to 27.90%.
Like many of USAA’s products, you must be an eligible member to access its low rates and flexible payments for personal loans. Those with excellent credit can enjoy rates as low as 8.99%, but those who could use credit history improvements can still find extremely low rates for personal loans. Even if you have poor credit, USAA may still lend you some cash for 17.65% interest. That’s even lower than some credit cards. However, personal loans cannot be used for education costs.
Although its first-time homebuyer loans are attached to rates over 4%, USAA certainly caters to its members looking for a new home. With only 3% down required, the first-time home buying mortgage product is a great alternative to a traditional FHA loan or a standard loan. Because USAA specializes in financial services for active and retired military members, it also offers VA loans with no down payment or mortgage insurance necessary.
USAA offers a number of mortgage refinancing options, but what sets them apart from other banks is that because this bank centers around military members, it offers the option to refinance with a VA loan. These 30-year fixed loans come with a low APY (under 4%) and you’re allowed to finance up to 100 percent of your home as well as the funding fee. USAA also offers conventional mortgage refinancing, but as with most of its products, where USAA stands out is in its military related offerings.
Home equity loans and HELOCs
USAA doesn’t offer its members home equity loans or HELOCs, but there are plenty of banks that do. Fifth Third Bank and Flagstar Bank both offer HELOCs with bottom rung interest rates — under 3.5% APY for customers with excellent credit — and Bank of America offers HELOCs with affordable rates, too. If you need quick funding, check out Figure, although be aware that their interest rates can be pretty high in return for that quick funding.
USAA’s car-buying services matches customers with available cars at dealerships in their area and then preapproves those customers for a certain amount. If you can use USAA’s car buying service, expect discounts for automatic payments, MRSP reductions for using the service and a speedy checkout at the dealership once you find your new vehicle. Even if the vehicle you had your eye on ends up being a bust, your preapproval offer is active for 45 days. Rates can be as low as 2.74% for 2018 vehicles or newer bought through the car buying service.
The final word
New recruits, active military members, and veterans may like using USAA for their banking needs for the sense of community alone. And for those who travel or move often, an online banking option is a major benefit.
For those looking to invest and get a large return on their investment, USAA’s interest rates do leave something be desired. The bank also has very few physical locations, which can make communication more difficult in some cases. But, USAA does offer 24/7 customer support and a huge selection of ATM locations that make up for its lack of brick-and-mortar locations.