USAA is known for looking after its members by providing excellent service and cost-effective banking products. Named “America’s Good Bank” by The Atlantic in 2012 and ranked on the list of “The World’s Most Admired Companies” by Fortune, USAA’s reputation is second to none.
What’s interesting about USAA is that it’s not officially a bank, but a members’ association. USAA stands for United Services Automobile Association, and many of their banking products are only open to those who have served or are serving in the military, as well as their spouses and children.
Headquartered in San Antonio, Texas, USAA has operated since 1922. USAA has around 12.5 million members with a net worth of $31 billion. While its savings and borrowing rates are not always best-in-market, USAA is a great option for those looking for long-term value and prefer to bank online.
USAA Bank at a glance
|Bank||Minimum Savings Deposit||Maximum Savings APY||1-Year CD Rate||J.D. Power Survey Score||Key Benefit|
|USAA||$0||0.15%||1.78%||5/5||No monthly fee or minimum balance requirements|
What we like about it
One of USAA’s most popular products is its Classic Checking account. With no monthly fees or balance requirements, access to more than 65,000 ATMs, as well as $15 monthly reimbursement for non-network ATM fees, it’s hands-down one of the best deals on the market you can get. It has average interest rates on savings products, but the banking company makes up for it in user convenience, customer service and its array of products.
USAA offers fantastic banking technology, too. You can bank online or use the mobile app to pay bills, deposit checks, transfer money and monitor balances. Security is kept tight with biometrics and cyber code texts. Furthermore, there is a money-management tool to track spending.
There are plenty of additional services it offers, such as youth banking with parental controls, home solutions, car-buying services, travel deals and much more.
Things to consider
The obvious downside to USAA is that its best products require membership, meaning that you must be part of the military community to be eligible. Unfortunately, those not affiliated with the military can only access USAA’s life insurance and investment products.
Since there are only four physical locations in the country, USAA isn’t ideal for someone who prefers to bank in a branch, and with a top APY on savings account of 0.15%, savers will get a better deal elsewhere.
Another drawback is the brokerage on its investing platform: it has relatively high fees compared to other online brokerage firms.
USAA checking accounts
As mentioned, the Classic Checking account is USAA’s flagship product with no monthly fees and access to a large network of USAA Preferred ATM machines. There’s also a $15 ATM refund — a huge benefit when you compare with other online or brick-and-mortar banks. Consistent with others on the market, this account offers a negligible APY.
Another big plus is that once you open the account with $25, there is no minimum balance requirement.
USAA also offers a Cashback Checking Account in some states. You can earn a $0.10 reward on every debit card purchase, but there are no ATM refunds with this account.
While USAA is known for keeping fees low, you’ll incur overdraft charges if you overdraw by more than $5.
USAA savings accounts
USAA’s savings rates are average compared to online providers. However, with no monthly fee or minimum balance requirements, they can be useful for overdraft protection.
Beginner savers will only need $25 to open a standard savings account. APY starts at 0.09% and maxes out at 0.15% for balances of $10,000 or more.
However, those with $10,000 or more would be better off with USAA’s Performance First account as the APY is higher at 0.2%. You can earn a maximum of 1.22% APY depending on your balance.
You’ll get an ATM card for cash withdrawals, but you won’t be able to make purchases online or in-store with it. Transfers are limited to 6 per month.
Funding your savings can be done by transferring from a checking account, mobile check deposits, ATM deposits, mailing in checks and direct deposit.
USAA money market accounts
USAA does not offer money market accounts, also known as MMAs. However, its variable rate CDs works similarly to MMAs as you can make extra deposits, but not withdrawals, until maturity.
For those who prefer to open a MMA, BMO Harris offers a top market rate of 2.35% APY, while TIAA Bank offers slightly less at 2.15% APY. Both require a minimum of $5,000 to get started.
There are three broad types of CDs available: fixed, variable and adjustable-rate, though they’re not available in all states. At 1.78% APY for 1-year, their fixed-rate CDs offer decent rates — but not the best interest rate on the market. USAA’s CD options come with a wide range of maturity options, from 30 days to 7 years. You can get started with a $1,000 deposit.
Variable-rate CDs are great for beginner savers. A minimum deposit of $250 is required, but customers can choose from 1-year or 182-day maturity length. However, the APY is minimal — a measly 0.46% on the 1-year variable rate available.
Adjustable-rate CDs start from $1,000 with a minimum term of 3 years. With these, you can request a one-time rate adjustment during the term if the interest rate increases.
USAA IRA accounts
USAA looks after its members well when it comes to IRAs. Unlike some of the larger brick-and-mortar banks, they charge no setup, annual, maintenance or inactivity fees. However, there is a $35 account closing fee.
You can open a brokerage, CD, managed portfolio and annuities as an IRA account. Types of IRAs available include traditional, Roth, SEP and simple. When investing in an IRA with USAA Bank, customers have the option of depositing $500 at the start of the account or setting up $50 monthly payments.
USAA credit cards
USAA credit cards are known for providing long-term value. They are ideal for someone who values low fees over perks or rewards.
Unlike most card issuers, USAA doesn’t charge foreign transaction fees. Members on active duty also qualify for extra-low APRs during deployment and permanent change of station.
One of its most popular cards is the USAA® Rewards™ American Express® Card. It’s great for everyday spending as you get bonus rewards for spending on groceries, gas and restaurants.
If saving on interest is your priority the USAA® Rate Advantage Visa Platinum® Card comes with exceptionally low rates.
For cashback, USAA® Preferred Cash Rewards Visa Signature® Card offers flat-rate cash back on all purchases.
USAA’s commission on its brokerage account starts at $8.95 per trade – much higher than competitors like Firstrade and Ally Investment – and increases depending on the security and the number of units you buy.
On the other hand, its brokerage account allows you to trade in a wide range of securities, and you won’t be charged setup, maintenance or inactivity fees. You’ll get basic trading tools, a broker’s mobile app and access to research and educational resources.
USAA also offers a Digital Investment Adviser option, where your money can be invested and rebalanced automatically based on your goals and risk appetite. However, its 0.5% annual fees are, again, much higher than the market rate.
The bottom line
You’ll get decent but not top-of-the-market savings or borrowing rates with USAA. However, you’ll enjoy low fees mostly and helpful banking solutions available only to the military community. It’s ideal if you love online banking.
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