Mr Credit Card
USAA offers a whole line of credit cards not just with different rewards (cash back and points), but they also offer credit cards based on your credit worthiness. For example, they have a range of secured cards as well as cash rewards and points cards. Interestingly, they also have a series of credit cards called the Classic, that is geared specifically towards those with "average credit". There are three version: An American Express, MasterCard and Visa. Let us take a look at these cards right now.
Card Details
Annual Fee : $35 - Yes, these cards come with an annual fee.
APR : 17.90% to 23.90%
Penalty APR : No Penalty APR - Like the secured cards, there is no penalty APR.
Cash Advance APR : You cannot do a cash advance with these cards (having said that, we never advocate doing cash advances with credit cards).
Balance Transfer APR : You are also not allowed to transfer a balance to this card.
Reward Program : There is no reward program with this card.
Definition of Average Credit
There are some cards (like these ones) that specifically target those with average credit. However, nobody really specifies what is the definition of average credit. Most folks would assume that if you have scores in the mid 600s that it will qualify as "average or fair". Luckily for us, USAA (on their website has given us a more precise definition of what they consider to be "average credit". Though they do not list down the score range, it is very helpful. Below are their criteria to be considered 'average".
- You have not declared bankruptcy during the last 5 years - fair enough, though if you have, it does not mean you cannot have a 700 plus score after 5 years.
- You cannot be more than 30 late on any credit card or loan period
- You cannot have been late more than 60 days on credit card or other loans during the last 2 years
- You have not have credit for more than 2 years
- Your total credit limit is less than $5,000 (including non credit card debt like loans).
From the looks of it, it appears that as long as you are relatively new (within 2 years) and have not been through BK and you have been paying your bills on time, you would be the sort of consumer USAA is targeting with these cards.
Peer Comparison
Like I mentioned earlier, there are a few cards that specifically target those with average. Let's see how USAA stack up against it.
Capital One - Capital One has got a couple of cards that that target those with average credit. One of them is the Quicksilver Rewards card. It comes with an annual fee of $39 (slightly higher than USAA) but you can earn 1.5% cash back for all your purchases. You can also transfer a balance and do cash advances with Capital One.
Capital One also has a "Platinum Card" with no annual that is targeted at average credit folks. It has no reward program.
At the margin, Capital One seems to have the slightly better offering.
BarclayCard - Barclays has a card calle the BarclayCard Rewards MasterCard that has no annual fee. You can earn 1X for every dollar you spend on the card and 2X for gasoline, grocery and utility spending. This card definitely beats the USAA offering in terms of annual fee and rewards.
Credit One - Credit One issues cards for bad to average credit folks. Their cards have an annual fee that ranges from $35 to 99 (chances are that you will get a $35 if your credit profile is clean and your scores are not terribly low). They also allow you to earn reward points for gasoline and grocery shopping.
Opinion and Verdict
After looking at the features that their peers offer, I think that it is safe to say that USAA faces tough competition in this niche. Their competitors have cards that have no annual fee, or if they do, they offer reward programs which USAA does not for these cards.
Having said that, if you are considering any of these cards, chances are that you are already a USAA member and already have some relationships with their other products. You probably love their customer service. You might also have one of their secured cards and are considering getting one of their unsecured cards (since their secured cards do not graduate automatically to an unsecured card). If this describes you, we would recommend that you consider one of their prime cards with either cash back or reward points since they come with no annual fee and with rewards as well.
If you are not approved for one of their prime cards, you might just want to check out the competition as well as some have better cards in this category than USAA.
