Review of: USAA Federal Savings Bank
Reviewed by: Christine C. Renee
Last modified: August 22, 2018
USAA is a full-service, mostly online bank that offers checking and savings accounts and CDs for current and former military service members and their families. Although no money market accounts are available, there is a large selection of products. However, USAA offers some of the lowest savings interest rates compared to other online banks.
- Military personnel and their families
- Wide range of CDs
- Interest-paying checking
- Additional products such as insurance
Military families face extra challenges — not the least of which is that they’re often on the move. That can make finding the right bank difficult.
USAA began as an automobile insurer for servicemen. However, during its nearly 100-year history, it has evolved into a financial juggernaut that includes banking and investment services.
But let’s focus on banking. USAA Federal Savings Bank offers checking, savings and CD accounts, along with a sizable number of in-network ATMs.
Is USAA Federal Savings Bank a good choice for your money? We took a look, and this is what we found.
USAA Federal Savings Bank Features
|Access||iOS App, Android App|
|Amount of Branches||4|
|Customer Service||Phone: M-F 6:30A-10P CT, Sat 8A-6P CT|
What Is USAA Federal Savings Bank?
Once upon a time, military service personnel found it all but impossible to get automobile insurance. The insurance companies just wouldn’t cover them because the servicemen were considered too high risk.
In 1922, a group of Army officers in San Antonio, Texas, decided to take matters into their own hands. They started a company that would eventually become the United Services Automobile Association, or USAA.
USAA has a comprehensive list of products and services in the areas of banking, investments, retirement, and insurance. The longer you research its products, the more you realize USAA competes not only with online banks but also with specialty member-only credit unions and seeks to provide the sort of customer experience you’d find at a brick-and-mortar bank.
However, that doesn’t mean you’re likely to find a branch in any given town. USAA has only a few physical locations in Texas, Colorado, Maryland and New York. But it does have an extensive online presence.
How Does USAA Federal Savings Bank Work?
USAA’s target demographic is all members of U.S. military services and their families. According to the USAA website, here’s who can currently sign up:
- Current or former military service members from any branch of the military (Army, Air Force, Navy, Marine, Coast Guard and National Guard, including Reserve Officer Training Corps, cadets and midshipmen at U.S. service academies, or officer candidates).
- Family members of the above servicepeople (spouses, children, legal guardians, parents).
- Immediate family members of someone who is already a USAA member.
USAA Mobile App
USAA offers a mobile app that is honestly the most comprehensive app I’ve ever seen. It’s available on both the Google Play store and the iOS App Store.
The app handles most of USAA’s business. So you won’t find just banking options — here, you’ll also be able to manage insurance and investment accounts, etc. Just about anything that can be done on the USAA website can be done via the app:
- Deposit checks
- Manage transactions
- Transfer money
- Pay bills
- Get/manage insurance
- Get a loan
- Manage investments
- Get real-time stock quotes
- Send money with Zelle
- Explore financial tools
USAA Checking Accounts
USAA offers two types of checking accounts. In order to select the right account for you, ask yourself this question: “Do I prefer to use cash or my debit card?”
If you’re a dedicated debit card user, Classic Checking is the correct choice for you, but if you find yourself frequenting the ATM, check out Cashback Rewards Checking.
You get the following features with both types of accounts:
- iOS and Android mobile app
- No monthly maintenance fees
- Mobile check deposit and deposit by mail
- The ability to open multiple checking accounts within your USAA account (other banks don’t usually let you do this)
- Access to more than 60,000 USAA-preferred ATMs
- Free overdraft protection when you also have a funded savings account
- No minimum balance required to maintain an account
- Free bill pay
- Visa debit card
- Paycheck planner and budgeting tools
This account is for members who are more likely to use their debit cards at the ATM to get cash instead of making purchases at the register or online.
With Classic Checking, you get 10 free ATM withdrawals every month if you use USAA-preferred ATMs (with more than 60,000 ATMs to choose from). USAA will reimburse you up to $15 a month.
You’ll also earn a small amount of interest depending on your balance. If you have more than $1,000 in the bank, you’ll earn 0.01%. While that’s better than nothing, this rate isn’t as good as Ally Bank, which pays 0.60% on accounts over $15,000 and 0.10% for all others with no minimum.
Cashback Rewards Checking
This account is for members who are more likely to use their debit cards for purchases rather than hitting up the ATM for cash.
This checking account lets you earn $0.10 cash back on each debit card transaction (not dollar amount), and there is no limit to the number of rewards you can earn in a year.
However, the following types of purchases do not count toward a cashback reward:
- Cash advances
- USAA bill pay
- ATM withdrawals
- Tax payments
- Cash equivalents (money orders and cashier’s checks)
- P2P payments (Zelle, PayPal, etc.)
- Gaming and gambling transactions
Cashback Rewards Checking accounts do not reimburse you for ATM withdrawals or offer interest on accounts.
Have Both Types of Accounts
The best part about having a USAA bank account is being able to have multiple checking and savings accounts. Use your Cashback Rewards Checking card to make purchases at the store or online so you can get cash rewards, and if you ever need cash, use the card from a Classic Checking account so you don’t have to pay ATM fees, ever.
USAA Savings Accounts
As with USAA’s hassle-free checking, savings accounts have no monthly service fee and no minimum balance requirements.
In addition to those features, you get:
- iOS and Android mobile app
- The ability to open multiple savings accounts to meet your savings goals
- Deposit checks by mobile or by mail
- The ability to set up recurring transfers to save more money
- Optional ATM card
- 10 free ATM withdrawals from USAA-preferred banks or a refund of up to $15 per month of other U.S. banks’ ATM usage fees (however, federal regulation caps withdrawals from a savings account to only six per month)
- Fraud protection
- Online security tools
- Text Savings, a microsavings app that monitors your checking and automatically saves money in increments of $1 to $9 without affecting your spending or causing overdrafts (similar to the Digit app).
There are two types of FDIC-insured savings accounts:
- USAA Savings – For members who are just starting to save toward a goal
- USAA Performance First – For members who have $10,000 or more already saved
USAA Federal Savings Bank Savings Account
This savings account is best for people who want to start saving toward a goal. You can open an account with as little as $25.
Available For Taxable Account Fees None Savings Rates
- Minimum Deposit $0 — 0.09% APY
- Minimum Deposit $1,000 — 0.10% APY
- Minimum Deposit $10,000 — 0.15% APY
USAA Performance First
This account is for people who have already saved a significant amount of money. The minimum amount to open is $10,000, but there's no minimum required to maintain an account.
However, the interest rates are low compared to other banks. For a comparative measure, as of this writing, the best competitive savings rates among other online banks is 1.30% for lower balances and 1.50% for higher balances.
Available For Taxable Account Fees None Savings Rates
- Minimum Deposit $0 — 0.05% APY
- Minimum Deposit $10,000 — 0.20% APY
- Minimum Deposit $25,000 — 0.25% APY
- Minimum Deposit $50,000 — 0.30% APY
USAA offers certificates of deposit (CDs), but the interest rates are much lower than what you’ll find at other banks.
Comparatively, USAA’s rates range from 0.56% to 1.11% while (as of this writing) attractive CD rates online range from 0.40% to 2.65%.
However, while it lacks in competitive interest rates, USAA makes up for that with options.
USAA offers the most flexible CD features of most banks that I’ve researched. There three CD options and a flexible term window that most banks don’t have. And while most CDs lock you into a rate and one-time deposit, USAA offers options where you can add money throughout the term depending on the type of CD you choose.
Here’s a breakdown of current CD terms:
USAA Federal Savings Bank CD Rates
Standard Fixed Rate CDs
With these CDs, you can earn a guaranteed rate of return. However, no additional deposits are allowed until maturation. The minimum required is $1,000.
Term Minimum Deposit APY 3 months $1,000 0.30% 6 months $1,000 0.56% 7 months $1,000 0.56% 9 months $1,000 0.66% 1 years $1,000 0.71% 15 months $1,000 0.71% 18 months $1,000 0.76% 2 years $1,000 1.51% 30 months $1,000 1.54% 3 years $1,000 1.71% 4 years $1,000 1.87% 5 years $1,000 2.12% 7 years $1,000 2.17%
Jumbo Fixed Rate CDs
Take advantage of a bumped rate for deposits of $95,000 to $174,000.
Term Minimum Deposit APY 1 months $95,000 0.22% 3 months $95,000 0.35% 4 months $95,000 0.45% 5 months $95,000 0.50% 6 months $95,000 0.61% 7 months $95,000 0.61% 9 months $95,000 0.71% 1 years $95,000 0.76% 15 months $95,000 0.76% 18 months $95,000 0.81% 2 years $95,000 1.56% 30 months $95,000 1.59% 3 years $95,000 1.76% 4 years $95,000 1.92% 5 years $95,000 2.17% 7 years $95,000 2.22%
Super Jumbo Fixed Rate CDs
Receive an additional rate boost for CDs with $175,000 or more deposited.
Term Minimum Deposit APY 1 months $175,000 0.22% 3 months $175,000 0.35% 4 months $175,000 0.45% 5 months $175,000 0.50% 6 months $175,000 0.61% 7 months $175,000 0.61% 9 months $175,000 0.71% 1 years $175,000 0.76% 15 months $175,000 0.76% 18 months $175,000 0.81% 2 years $175,000 1.56% 30 months $175,000 1.59% 4 years $175,000 1.92% 5 years $175,000 2.17% 7 years $175,000 2.22%
Adjustable Rate CDs
With these CDs, you can request a one-time rate adjustment of up to 2% if rates rise. You can also make one additional deposit at that time.
Term Minimum Deposit APY 3 years $1,000 0.91% 4 years $1,000 1.22% 5 years $1,000 1.49% 7 years $1,000 1.54%
Jumbo Adjustable Rate CDs
Receive a boost with a deposit between $95,000 and $174,999.
Term Minimum Deposit APY 3 years $95,000 0.96% 4 years $95,000 1.27% 5 years $95,000 1.54% 7 years $95,000 1.59%
Super Jumbo Adjustable Rate CDs
Super Jumbo CDs are available for amounts over $175,000.
Term Minimum Deposit APY 3 years $175,000 0.96% 4 years $175,000 1.27% 5 years $175,000 1.54% 7 years $175,000 1.59%
Variable Rate CDs
Variable Rate CDs require a deposit of only $250. Interest rates are subject to change often, and you can make additional deposits whenever you like.
Pros and Cons
- Free to Join — USAA is free to join if you qualify, and the checking and savings accounts are free to open with zero maintenance fees and no minimum balance required.
- Great App — The USAA banking app is among the best we've seen.
- Additional Services — Members can take advantage of additional services such as insurance, investments and shopping discounts.
- Free Bill Pay — Pay your bills with out paying fees for the privilege.
- Direct Deposit Benefit — If you receive a direct deposit, you'll get paid a day early.
- Built-in Microsavings App — The USAA microsavings app is similar to Digit, but it's free.
- You Must Qualify — You must qualify as a full member to enjoy all the benefits of the USAA products and services.
- Weak Interest Rates — Interest rates are not competitive compared to other online banks.
- Website Is Awkward — The USAA website is navigable but takes time to get used to. There are simply too many features on each page.
- Only Four Branch Locations — If you want to talk to a financial professional face-to-face, there are only four locations.
USAA Federal Savings Bank Alternatives
USAA is undoubtedly unique. In addition to all of the above banking services, it also offers a full menu of personal, mortgage and auto loans, insurance, investment accounts and even shopping discounts.
If you qualify as a full-service member, you can’t beat free savings and checking, free ATMs and all the investment and loan services you could ever need.
But if you’re looking for non-investment savings, shop around. USAA offers a paltry interest rate for savings, even for high-balance CDs. And I was surprised that the bank doesn’t provide a money market savings account for high-balance savers.
Have you tried USAA? Let us know your experience in the comment section!