One of the best financial decisions I made on active duty was to join USAA. Through the years, I have enjoyed free checking, low interest rates on my mortgage, low insurance premiums, and I haven’t paid an ATM fee in well over a decade. For those not familiar with USAA, it is one of the leading military financial institutions. I have been a member for about 16 years now and I have no plans to leave for another bank or insurance company. Assuming you are eligible for USAA membership, I recommend joining.
What makes USAA special? Quite a bit, actually. But first and foremost is their mission – they exist to serve their members and the military community. They do this by providing best in class financial products and services. The best part – they are member owned. So if you are a member, you’re also a part owner. This is important because as a part owner, you may be eligible to receive a distribution at the end of the year if the insurance premiums USAA collects exceed claims.
USAA Membership – Eligibility & Ownership
USAA membership is limited. USAA membership is not available to everyone. USAA membership is currently open to
- Current military members, including active duty, Guard, Reserve, and Officer Candidates (ROTC, OTS/OCS, and Academy).
- Military veterans and retirees who have served honorably
- Spouses of current and former service members
- Adult children of USAA members
You may also be eligible if you were once a member of USAA.
Finally, it’s important to note that USAA Banking was previously available to anyone from 2009 to 2013. Those who already have accounts are grandfathered in and can retain membership as long as they maintain their accounts. However, access to certain insurance products may be limited.
Are you eligible for USAA? Visit USAA to see if you are eligible.
USAA is member owned. Each USAA member owns a subscriber savings account, which contains money that USAA holds in the member’s name. In years when USAA collects more in premiums than they pay out, USAA actually makes distributions to its members (similar to a dividend). How many insurance companies do you know that would pay you a refund? Not many!
Why You Should Consider Joining USAA
Most Fortune 500 companies have a mission statement. Most of them believe in their mission statement. Then there are organizations like USAA. USAA embodies its mission statement.
I have had the good fortune to visit the USAA headquarters in San Antonio on several occasions for various military blogger conferences and similar events (disclosure: these events were paid for by USAA, but that has no bearing on the contents of this article; I was a happy USAA member long before I ever started a blog or visited the USAA headquarters).
Visiting the USAA HQ is a unique experience. In part, because it’s awesome to see behind the scenes. But also because it’s amazing to see how dedicated USAA is to the military mission. Because USAA is member-owned, they are able to focus on everything they do on their members and the military and veteran communities. They don’t have to worry about answering to shareholders (well, other than the members they serve!).
Here are some of the features that set USAA apart from other organizations or make them worth considering for your financial or insurance needs:
World-Class Customer Service
USAA has the best customer service of any bank or financial institution I have ever dealt with, and I’ve dealt with many. I’ve been a member of several banks and credit unions, and USAA’s customer service is by far the best. Based on customer service alone, I would recommend them to people.
USAA has been an innovative bank for years. They offer many premium services as standard for all accounts. These include free checking and savings accounts with no minimum balance fees, free checks, free rewards debit card, free overdraft protection, free web bill pay, and much more. In addition, you will find these great services:
No ATM Fees. One of my favorite benefits provided by USAA is no ATM fees. USAA doesn’t have many local branches, so they don’t charge fees for members to use ATMs and they refund the fees other banks charge (for the first 10 ATM withdrawals and refunds up to $15 in other banks’ ATM usage fees each month). It’s easy to avoid ATM fees with just a little planning.
Investment Products, Services, and Advice. USAA offers brokerage accounts, Certificates of Deposit (CDs), IRAs, and mutual funds. They also offer financial planning advice through salaried financial advisers (read: no commission-based compensation) to help you understand your investment options.
Internet, Smartphone, tablet, telephone, and mail banking. USAA only has a few physical locations, but they make it easy to bank online or with a smartphone or tablet, a telephone, or the postal service.
Deposit checks from your phone, or your home. You can deposit a check by taking a picture of it with your phone and uploading it to USAA (They have apps for iPhone, Android, Microsoft, and Amazon). You can do the same thing with a scanner from your home. All you need is a home computer and a scanner and you can send in a copy of your check for deposit. If that doesn’t work for you, you can mail your checks to USAA with postage paid envelopes USAA provides members free of charge.
By the way, you know how you can deposit a check by signing it and taking a photo with your smartphone? USAA invented the process and holds the patent. They created this to be able to better serve the military community, which is often in remote locations.
Online tools. USAA members have access to online tools to help them understand their options and make financial decisions. These include free credit scores through USAA, financial health tools, and more.
Industry Leader for Insurance Products
USAA is short for United Services Automobile Association. USAA actually formed in 1922 as a car insurance company when several Army officers got together to self-insure themselves because their demographic was considered too risky to insure! The organization eventually grew. What started as an officer’s only insurance exchange expanded to include enlisted members, family members, other insurance products, and finally other financial products and services. Through the years, USAA has continued to innovate.
They currently offer:
- Auto Insurance
- Life Insurance
- Homeowners Insurance
- Renters Insurance
- Motorcycle, RV & Boat Insurance
- Rental Property Insurance
- and much more.
I have found USAA to be competitive with their insurance premiums and coverage. But it pays to shop around. Insurance rates vary by location and other factors. It’s even possible for insurance rates to vary by moving a few miles across a city or county line. So always shop around. Here are some tips for saving money on military auto insurance.
Have you ever had a company recommend you shop elsewhere for insurance? I have – it was USAA. I bought a motorcycle when I was in my young twenties. I already had my auto insurance through USAA, so I wanted to add my motorcycle to my policy. USAA gave me a quote, which was fairly high. They said it was mostly due to my age and recommended two other insurance companies to get quotes from. Not many companies will refer you elsewhere. They earned my respect that day!
I have used USAA for our auto insurance, life insurance, homeowner’s insurance, and a personal property rider to cover my wife’s wedding ring and our computers. I have made three trouble-free auto insurance claims with USAA in the last 15 years (none of the accidents were my fault).
Competitive Loan Rates – VA Loans, Auto Loans, & More
USAA offers mortgages, VA Loans, home equity loans, auto loans, and more. USAA doesn’t always have the best rates, but they are usually competitive. Since I’ve been a member there for such a long time, I always check USAA first. But I also get multiple quotes. I trust USAA, but I also want to make sure I’m getting the best deal for my money.
I have experience getting two loans through USAA: an auto loan and a VA Loan.
USAA Auto loan: The last time I bought a new car was in 2005. I got my new car loan from USAA. All I did was call them on the phone, complete the application process, and my loan was approved quickly and at a lower rate than the other places I checked. USAA even sent me a dealer check overnight. That made the car-buying process incredibly easy. All I had to do was fill out the check, hand it to the dealer, and drive away in my new car. Check out the USAA Car Buying Service if you are in the market for a new car.
USAA VA Loan: USAA has competitive VA Loan rates, and more importantly, they have experience processing VA Loans. VA Loans have a few extra requirements compared to conventional mortgages, so it’s important to use a company that has a lot of experience processing these loans. That experience makes it easier to get the required documentation submitted and have the loan processed on time.
We purchase our current home with a VA Loan through USAA. I did shop around, and USAA offered very competitive interest rates, and they made it easy to buy our home. We have refinanced our home twice with a VA Loan Streamline Refinance. The Streamline process makes it incredibly quick and easy to refinance a VA Loan. USAA even sent someone to our home to sign the refinance paperwork, which saved us a ton of time!
As always – shop around. Interest rates on loans will vary depending on many factors.
Top-Rated Credit Cards
USAA consistently ranks among the industry leaders in credit cards. They have multiple credit card options, including cards for people who are just starting to build or rebuild their credit, all the way up to those with excellent credit. They offer credit cards with low interest rates, travel rewards, and cash back credit cards. They also have excellent credit card offers for military members, with no foreign transaction fees and reduced interest rates when you deploy.
Their top-tier cash back credit card is one of the best in the industry. It offers 2.5% cash back on all purchases. This card was only recently made available and is slowly being rolled out to all customers (as of early 2017, it still isn’t available in all states). Visit USAA to see if it is available in your state.
Other Services for Military Members and Their Families
USAA Auto Circle makes it very easy to buy a new or used car at a pre-negotiated price, very similar to what you would get if you were to use TrueCar or a similar car buying service. You can log into your USAA account, navigate to the car buying service and search both new and used cars in your local area. Find a car you like, print out the offer, and the price you see on the page will be guaranteed when you arrive at the dealership. It may be possible to find a better deal, but not always. And you would be guaranteed to spend a lot more time and energy doing it on your own!
USAA Home Circle connects home buyers and home sellers with local real estate agents who are part of the USAA Home Circle network. USAA members who go through this service will receive a reduced rate on their buying or selling costs. It’s worth looking into if you are either buying or selling a home.
USAA is Not Always the Best Option
While I am a big fan of USAA and I highly recommend them, they are not always the best option around. Here are some other things to keep in mind:
Few Local Branches. This is good and bad. USAA keeps its costs down by handling transactions from centralized locations. This results in lower overhead costs which enables them to provide better deals to their members (remember, USAA is member owned). However, this can be a hassle if you are used to banking in person.
You will need to do your banking over the internet, by telephone, or via the postal service. I haven’t had any issues with this, but it’s something to keep in mind. A good way around this is to also open an account with a local bank, so you have another option if you need access to a physical banking location (for example, making a large cash deposit or withdrawal, safe deposit box, etc.). I have an account with Chase Bank, which offers a free military checking account and many excellent financial products.
Insurance Rates Vary By Location. When I was stationed in the UK, I purchased auto insurance through USAA. They were still the best option when I returned to the US, at least until I bought a motorcycle. After shopping around, I saved several hundred dollars by switching to another major insurance company. After I sold my bike, I found better auto rates with USAA. Other people find that USAA may not offer the best homeowners or renters insurance where they live (USAA also may not offer insurance everywhere). As with everything else, it pays to shop around.
Savings Account Interest Rates. USAA’s current savings account interest rates leave something to be desired. The highest interest rates at USAA are in the USAA Performance First Savings which requires a minimum of $10,000 to open, and the highest rates don’t kick in until you have $50,000 in savings. You would likely do better to open a high yield savings accounts at an online bank.
Always Shop Around
I have many great things to say about USAA. But there is no one-size-fits-all approach to finances. USAA does many things great, and they make it easy to integrate just about every aspect of your finances into their organization – banking, insurance, investing, etc. In most cases, USAA will be among the industry leaders or at least be very competitive. But in other instances, you may find that USAA’s offers are competitive. The motorcycle insurance example I gave was a specific instance that was based on my age and location. You may or may not have a similar situation.
Speaking on a personal level, if the offers are relatively close, I would probably stick with USAA. I know and trust their organization. But if the difference is a couple of hundred dollars per year (like the motorcycle insurance) or a substantial difference on a mortgage payment, then I don’t have a problem going elsewhere.
I Highly Recommend USAA
With all of these great benefits, it’s no wonder USAA has won so many industry awards. The best part is, once you join, you’re a member for life. Better yet, you can pass on membership to your spouse and children.
For more information about USAA, or to open an account, check out their website.
*Disclosure: This article is based on my personal experiences with USAA and I encourage you to investigate your options before making any major financial decisions.