USAA Credit Card Review

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usaa Prelude – I did a credit card survey among personal finance bloggers a while back and found out that many of them rate this card pretty highly. Furthermore, I just got an email from a reader requesting a review of this card. Here is the email

How about a review of USAA credit cards. I realize not everyone could get one,
but for those who can get one might find your website helpful, especially if
they did not know they could get one.

Andrew Genovese

So with that out of the way, let’s look at this card in greater detail.

Introduction – The USAA credit card is only available to

  • Active-duty officers and enlisted personnel.
  • Children whose eligible parents have or had a USAA auto or property insurance product
  • National Guard and Selected Reserve officers and enlisted personnel.
  • Officer candidates in commissioning programs (Academy, ROTC, OCS/OTS)
  • Former military personnel
  • The USAA credit card has a cash back version and a rewards version. Furthermore, they have a MasterCard version and an American Express Version. The Mastercard and Amex version are essentially identical. What we’ll look at is the cash back and reward version.

    Cash Rebate Formula – Let’s start by looking at the cash back card and it’s rebate formula. Turns out it has a tiered system. For the first $2,000 in spending, you will earn 0.35%, for the next $2,000 in spending, you get 0.75% rebates, for the next $11,000 the rebate is 1%. When your spending is over $15,000, the rebate is 1.25%. Rebate checks will be automatically debited or sent to your address every January.

    usaacashrebates

    Total Rewards – Rather than choosing cash rebates, you can also choose to earn reward points instead. You can earn one point for every dollar that you spend on the card. You can redeem points for a variety of rewards like airline tickets, merchandise and gift cards.

    But how good are the rewards? – That is ultimately what will determine whether this will make a good reward card. Let’s look at the different components.

    Airline Travel – The USAA rewards program allows you to exchange points for the value of the airline ticket that you . There are some pros and cons to their method. Firstly you have to book the tickets through their partner agent Traveler’s Advantage Services (the “Airline Rewards”). They reserve the right to exclude an airline for safety or quality purposes. They also do not guaranty the availability of any flight, airline, or seat. Tickets may be booked online at usaa.com or by calling (800) 980-8722.

    The good thing about the program is that tickets can be First Class, Business, or Coach, with no restrictions on dates, times, or seating. They can also be one-way, multi-leg, or round-trip in and out of any airports serviced by the airlines included in the Program. The other plus point is that Reward Value includes any taxes, destination fees, September 11th Security Fee, and any airline-imposed surcharges.

    If the cost of the airline ticket is less than the Reward Value for the amount of Points redeemed, USAA will credit one of your USAA Total Rewards Accounts for the difference.
    If the cost of the airline ticket is more than the Reward Value for the amount of Points you want to redeem, you will have the option of paying the difference with one of your USAA Total Rewards Cards or other card we accept or choosing another flight within the Reward Value.

    usaatravel

    Gift Cards – You can also use points to redeem for gift cards. The number of points required are listed in their program catalog (see below). Their partners are the usual suspects found in most other programs.

    usaagiftcards

    Merchandise – Their website has a “sample catalog” which is where I got all the information for the review. Because it is just a sample, I can’t say for sure how great their selection is.

    usaamerchandise

    Charity – You can use your points and donate to Habitat for Humanity.

    Cash Rebates – You can also exchange your points for cash. But you need to use 10,000 points before you can even get an equivalent of 1%.

    usaacashcharity

    Fees and Rates – There is no annual fee for the USAA card. The APR is varies but could as low as 7.75%.

    My Verdict – Here are my thoughts as far as the reward version goes. There are some good things about their travel rewards. Firstly, the points required for the value of the ticket gets more favorable as the ticket prices go up. Sales taxes etc are counted and you can use your reward points for those. You will also be credited if you do not need as many points.

    However, this system requires that you book with their own travel agent. Hence, though a flight may be available elsewhere, it may not be available with them. Using this system also means they may or may not have the best price and it means you really cannot shop around for the best deal. If this is important to you, then the Discover Miles Card is a much better alternative.

    Because they only show a sample of their merchandise and gift card rewards on the website, I cannot really say how good it is. I suspect though that the American Express Membership Rewards would have a much wider selection of merchandise and that you are also better off with a Discover Card if you are interested in gift card rewards.

    If I look at the big picture, I would say that at best, this is a pretty average reward card just strictly looking at the rewards. But folks who love this card always sight their great customer service.

    As far as the cash back version goes, I do not recommend it. The rebate formula is nothing to shout about. In fact it is a tiered system where you rebate increases as your annual spending increases. There are much better cash back credit cards out there and I would give this card a miss. To find the best cash rebate card for yourself, you can fill your spending in the table below and it will show you the best card for you based on your spending.

    To sum up, strictly on a reward basis, I would say that the USAA credit card is at best an average card. However, given how major issuers like Chase and Bank of America have pissed off their customers by cutting credit lines, jacking rates to ridiculous levels, those who are eligible for this card should at least consider it. I personally do not have this card and so cannot comment on their service and what level of credit you need to get approved. If you have this card, we would appreciate your feedback and comments (especially on the credit score you need to get this card and their travel reward features).


    Enter your approximate monthly spending into the calculator below to see how much you can earn per month if you’re using the USAA Credit Card versus other cards!

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    15 Responses to “USAA Credit Card Review”

    1. Bruce Purcell Says:

      The information here is not 100% accurate. I’ve been a USAA customer now for over 30 years. My MasterCard rate is 6% and has been as low as 5% in recent years. They give different interest to different customers apparently as my sister’s rate is higher. I don’t know the criteria, but I know my credit score is around 800 and I pay my card off monthly. I have carried small balances at times, but have never gone 2 months with a balance.

      Cash advances can be done at no charge (assuming you put the money into your checking account — I cannot speak to ATM advances). The downside is that you pay interest from day 1 until you pay the balance. But no fees for the advance itself. A cash advance is as simple as transferring money from one account to another online. I have used cash advances when needed.

      What is not evaluated here is service. There is none better than USAA. I’ve had issues with USAA and have never been afraid to let them know. In every case, they’ve responded taken care of the problem.

      Bottom line is my money is at USAA whether they give me the most cash back or not and will be until their service level declines. I’m not looking for a freebie nearly as much as I’m looking for proper accounting and outstanding customer service. The paltry rewards that you evaluate just don’t measure up to that.

    2. Mary Bristol Says:

      I don’t have a response yet, as I am just getting started. We have earned enough points now to make it worthwhile redeeming. I went to Travelers Advantage to try to obtain a rental car. Am I wrong or do I have to join Travelers Advantage for a fee in order to participate?

    3. Michael Says:

      I have had this card for a month now and I would agree that this is an average card. The rewards are not amazing. You are basically getting the same value as taking the cash rewards for points when compared to purchasing the item with points. For example, a Digital Camera that retails for just under $100 on Amazon.com is 12,000 points; this is the same as $100 cash reward purchased for 12,000 points. The reward system is basically a 0.8% cash back system. I surfed through the items for a while and everything I could find of interest was not at a discount if you used the formula above to arrive to a dollar value equivalent. To get to the 1% back level, you would have to save 20,000 points and the rewards had a similar formulaic breakdown.

      I applied for a Bank of America card before the USAA card and I was not able to receive an offer immediately, so I applied for the USAA card. I received an 11.9% interest rate (please note this is after the passing of the 2009 Credit Card Reform act) and was able to use the card immediately. Two weeks later I received a Bank of America card in the mail with a letter of approval; it came with a 16.9% interest rate. No opportunity to review or decline the offer, no rates up front, just a card with a 16.9% rate.

      This card is very well integrated into the USAA online banking system. It only takes 3 clicks and no key presses to pay this bill in full at the end of the month using my existing USAA (or Bank of America) accounts that are already set up on the USAA site.

      To date I have been using USAA for Banking and Insurance for 10 years and I am very pleased with their customer service. I am always able to speak with a real person in just a few minutes and they are always polite.

    4. Dorsey Says:

      USAA provides a suite of excellent life insurance products at competitive prices. Unlike its auto insurance products, however, USAA life insurance products are open to the general public. Among the products provided by USAA are level term life insurance, whole life insurance and universal life insurance.

    5. gonavy Says:

      I agree with previous posters regarding the rewards and cash back perks being very low on my list of ‘what i want’ in a credit card/bank relationship. Some people are willing to bank with terrible banks who have rude customer service, constant rate hikes, constant limit cuts, in order to get some specific perk. I am not. Personally I would 100% rather have a credit card that has outstanding customer service that is friendly knowledgeable and respectful when I call for service or questions, then a credit card that is going to give me $10 cash back for every $1,000 I spend, but for the remainder of the year you put up with subpar rude service and constant headaches trying to deal with your bank or account.
      .
      With that being said, I have had my USAA MCPlatinum for about 3 years. 8.9% w/8k credit line as my beginning offer. When I applied my FICO was in the 650 range. I have never asked them for a limit increase because frankly I dont need it nor do I want it. I have paid off and closed all credit cards keeping only this one, and only use for emergencies. All of my banking, finances and insurance are now in one convenient place where I can call and always hear a friendly knowledgeable willing to help with anything CSR on the other end of the line.
      .
      If your eligable, I would definately recommend any and all of USAA products and services. Sometimes the respect & treatment you receive as a customer far outweighs $10 cash back for every $1,000 spent (which is what 1% equates too).

    6. Gigi Says:

      My husband and I have a USAA World Mastercard with a $35K limit and 7.75% interest. We have never had our limit lowered or our interest increased (not that it matters as we pay off balance every month).

      Rewards are OK, but like what everyone else has said, customer service has always been a pleasant experience. We also bank with them, have brokerage accounts, home owners insurance, and automobile insurance. They have one of the best rates on top of excellent customer service. I always get a live person from the US on the phone almost immediately with very little wait time and they are knowledgable and nice. USAA has one of the highest retention rates of employees – that says something about a company and how they value their employees and customers.

      We travelled to europe last year and all our ATM withdrawals had no fees (at least I couldn’t find any… and I tried looking at our statement to see).

      If you qualify for any of their products, I highly recommend you go with USAA. They are a company that values their customers and provides very affordable services.

    7. Jeff Says:

      I am a longtime USAA member. As a college student I received so many pre-approved card offers it was ridiculous. Being young and stupid I opened many accounts and got into a bit of trouble. I had 1 card from Bank of America with a $500 limit which I would use up almost every month even though I paid my bill in full. I would use the card for $20 of gas that would put me slightly over the limit, and BOA would approve the transaction and charge me a $35 over the limit fee. This really ticked me off. I didn’t understand if I was over the limit why they simply wouldn’t decline the charge! So I’d buy $20 of gas, and it would cost me $55!

      Other companies would raise my interest rate without me ever even being late on a payment! BOA also one time gave me a 4.9% rate on a balance transfer, and again approved a transaction that put me over my limit by pennies, and promptly raised my 4.9 bal transfer rate, to 25.99!!!

      In short the following companies which I had cards with played these kinds of games: Chase, Bank of America, MBNA, Citibank, GE Money Bank, First Union and others I can’t remember.

      Now that I am older, wiser, and more responsible I have cancelled ALL of these cards, but one card in my wallet remains, because they never played games with me or screwed me over even when I screwed up a little bit. That company was USAA. I will always remember that, and they have earned my business as a long term customer. I now trust them with not just a credit card, but also a savings account, auto-insurance policy, boat insurance policy, property insurance policy, and my mortgage.

      After hurricane Wilma/Katrina many people were so scared their insurance companies would not pay their claims. I wasn’t worried at all. In fact while some people were painting things on their roof tarps like “Your in Bad Hands with All State”. And “State Farm please help!” USAA members painted “Not worried- USAA Insured” on the tops of their battered houses.

      Their customer service is #1 the best ANYWHERE! All their call center agents are HERE in this country! Not India, not the Philippines, or any other damn place where you can’t even understand what they are talking about…

      USAA = #1

    8. Susan Says:

      We have owned a USAA Credit card for 20 years. We have a USAA Gold Master card with a $40 annual fee. With changes effective April 1, 2010, it will cost us 30,000 points for a domestic airline ticket with a value up to $500. We also get 1% cash back starting at 25,000 points.
      The USAA World Master Card requires 30,000 for airline redemption and you only get a $300 voucher. The cash back feature is not as favorable.
      Maybe I am wrong, but we have decided to continue paying the annual fee for this card as it makes redemption more favorable.
      Any commnents otherwise?

    9. Susan Says:

      Adding to my previous post as it may have been misleading for cash back rewards. We can redeem our points for 1% cash back with any amount of points. We do not have to wait until we have accumulated 25,000 points.

    10. David Says:

      We have a USAA Master Card and when redeeming for an airline ticket, we research which airline and flight we want then call USAA with the information and they immediately book it.

    11. Alex Says:

      I was looking for a new card for some time. I spent days researching all the various CC issuers (i.e Chase, Amex, Citi, etc.) I preferred an Amex over the rest. I came across USAA Amex, and I was approved for $2k limit at 15% APR. That is half of what my older cards were. I had WaMu (now purchased by Chase). I had a FICO score at that time of 645. So I’m not entirely sure what criteria they were looking at. But so far no complaints. Quick and easy payments every month. This is my card of choice. I think eventually once my score goes a lot higher, I would like to have the Amex Plat or Gold in addition to this one.

    12. Mr Credit Card Says:

      congrats. And I’m sure in time, the amex gold or plat will be within reach.

    13. chris Says:

      I inherited USAA from my dad who was in the military. As previous posters have said, their service is outstanding. Ive had some dealings with other banks and insurance companies and they don’t hold a candle to the respectful, courteous, and knowledgeable people who answer the phone when I call USAA. On several occasions Ive been the victim of fraudulent activity on my checking account and credit cards. With my checking account, I just made one phone call and pointed out the error and it was fixed, no hassle. The funds were replaced immediately. With my credit card, USAA called and asked if I authorized charges in New York one time and in Paris France another. I said no and they said, OK thank you. We will send you a new card. Again, no hassle, no missing funds, no charges. I have uses their cash advance and they will call and verify that it is indeed ME who authorized it. The ATM rebate is also very nice. Ive been with friends who have to pay 2 or 3 dollars every time they use an atm machine. I get the fees credited back to my account.
      Ive also made insurance claims for my vehicle. My stolen stereo was replaced the same day while my neighbor had to wait weeks for it to be approved by their company.
      While their rewards and incentives may be average, the way they treat their customers is what really maintains their reputation.

    14. Geoff Says:

      So. A little late to the discussion but great post Mr. Credit Card. Helped me a lot as i was reviewing my USAA Platinum Mastercard. I was getting frustrated by seeing offers for free flights and, in particular, the new southwest rewards that roll out on March 1st. I’m a big fan of customer service and can agree that USAA is the best organization that i’ve ever dealt with.
      However, when i called their rewards department to see what range i was in for the previous year they struggled to get me an answer. While they had me on hold for 20 minutes i calculated my cash back to be about 1%. Again, no surprise, i was on the cash back program. I switched over to the “reward point” program because you can achieve the same rate or, if you’re lucky, find a decent flight deal. Mostly. these points are distributed monthly so you don’t have to wait to collect annually.
      Besides getting a slow customer rep (which is infrequent) i’m a little unhappy with my credit limit. I was making 60K a year and operating with a 2500 limit. It didn’t make any sense to me until today when i realize that i signed up for the card while in college. It made big purchases annoying but because my direct deposit was already setup through them it wasn’t too bad. My question to anyone who sees this: Does asking for an increased credit limit hurt your credit score?

      If may offset in the future as a high limit with a low balance is considered better then a higher balance on a lower limit card. Right?

    15. Mr Credit Card Says:

      That is a low credit limit. You should ask for one. You might get a pull on your report (minus a few points – so no big deal), but eventually having a higher credit limit means you should have a lower utilization rate. So it should offset any temporary hit (if any at all).

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