USAA has three different cash rewards and rewards cards. They come in the Visa, MasterCard and American Express version. In this review, we will be looking at the American Express version. The rewards are nearly identical among the three cards (the Amex version having the most pronounced difference in the cash back category). But the main differences will lie in the benefits provided by MasterCard, which is slightly different from Visa and Amex.

I normally do this towards the end, but for USAA cards, I will start by showing you how to apply for the card. The reason is that you will be shown a list of cards and you have to pick the correct one. And on top of that, you have to pick either the rewards version or the cash back version.

When you click the apply button above, you will be taken to this page where they show all the available USAA Cards.




You will have to choose card second from the left. Once you click the "learn more" button at the bottom, you will be taken to the following page. At the top right, you can choose between rewards or cash back. Let's look at the cash back features first.
 

As you can see from the table above, the cash back formula is a tiered one. That means that it will increase based on your annual spending. Some of you might be just tempted to quit reading because of this. But I urge you to just be patient and go through the whole review because you will find that at a certain level of spending, this card is perhaps one of the best out there.

For those who spend very little on the card (ie $10,000 or below), this card would not make sense. In you look at the formula, you only get 0.48% cash back when your annual spending is less than $5,000. If you spend exactly $10,000, the cash back would be 1.075%. Once your annual spending exceeds $10,000, the math becomes more interesting. For example, when you spend $12,000 annually on the card, the cash back is 1.54% (which already beats the Capital One Cash Back Card). But it is when you spend exactly $17,000 a year on the card that you hit the magical sweet spot. At that spending level, your cash back is 2.04%. Yes, you hit the magical 2%. In fact, once you hit on the magical 2% and $17,000 in annual spending, you should stop using the card and use others because the percentage of cash back you earn starts to slowly decline (though you would not go below 1.25%).

Extra 1% on Gas and Groceries - But you could also earn more cash back with this card from gasoline and grocery spending. Spending in these categories gets you an additional percentage points in rebates. So if you annual spending gets you 1% cash back, then for these expense categories, you will earn 2% cash back. This will add to your rebates depending on how large a portion of this is to your overall spending levels.

Now let's look at the reward points side should you decide that this is the route you want to go. For every dollar that you spend on the card, you will earn one reward points. This is pretty much standard and simple enough. The question is how valuable are the reward points. Fortunately for us, USAA does provide us with some very information about their program. Like most programs, you can redeem them for travel, gift cards, merchandise, cash back and even donate to charities.

As far as airline rewards goes, the return that you get from the points is 1% (which is standard for almost all programs including the ones by Membership Rewards, Ultimate Rewards, Citi ThankYou). You would have to book your travel with ALG Travel (which is their designated travel agent). You can book any ticket and any class tickets.



You can also redeem your points for gift cards and merchandise that are on their catalog. The screen shot below shows you to reward points to value ratio. As you can see, the return is slightly less than 1%. Hence, we would not recommend using your points either gift cards or merchandises.



Though you have the option to earn "cash back" rather than "rewards", part of their rewards is to offer you the chance to convert the points back to cash! The reward ratio at max is 1% and below 20,000 points, the return is less than 1%.



Rewards or Cash Back? - After looking at both the reward system and the cash back formula, it is pretty clear your spending level will influence whether you should get the rewards or cash back version. If you spend $10,000 or less and want to use points for airline tickets, then you might just want to consider getting the rewards version since that level of spending will get you 1% or less in cash back.

However, if your annual spending exceeds $12,000, then the cash back would be the better option. The sweet spot for annual spending is at $17,000, where you can earn slightly more than 2% cash back (which very few cards can offer).
 

Someone who looks at the cash back formula for the first time is likely to dismiss it because there is a tier structure. Furthermore, at the higher spending level, it does not explicitly say 2% cash back. Rather, the formula is a combination of percentage terms plus a dollar amount. Hence, you do have to do a little work yourself and figure out the exact cash rebates in percentage terms. However, once you have looked through the number, you would realize that this is a great card when your annual spending is at around the $17,000 level because you will earn a magical 2% cash back. And when you add the grocery and gasoline spending to this, you are talking about a rebate percentage that very few cards can match.

For those of you who just spend about this amount on all your credit cards, this will make a great card. For those who are high spenders and have a couple of other cash back cards, adding this to your wallet will make a lot of sense. Here's how. Many of the better cash back credit cards pay more than 1% on certain categories. For example, you may earn 3% on gasoline and 2% on travel. But the base rate for other "ordinary purchases" is set at 1%. For those who are savvy, you can combine your other cards with this one and use this one exclusively for those other purchases that would ordinarily earn 1% cash back. Back shifting those expenditures to this card, you could end up earning more than 1% and even up to 2% as we have seen.

Aside from the cash back you can earn, USAA is known for their excellent customer service and many folks simply get this card for that. If you are are looking for a cash back card, we would urge you to consider this one. It is one of the most underrated cards that is not often talked about.

To get this card, you have to be a USAA member. Below is a chart showing who is eligible. If you are, definitely consider this gem.