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5.32% 7-Year CD at USAA Federal Savings Bank - Nationally Available but Membership Restrictions

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USAA Federal Savings Bank continues to offer some competitive long-term CD rates. The highest rate is the Super Jumbo 7-year CD which has an APY of 5.32%. This requires a minimum deposit of $175,000. An APY of 5% is available for a $1,000 minimum deposit. Below is a list of all of the CDs with terms of 3 years and more. I didn't list the shorter terms since those rates are not as competitive. These are based on the bank's rate table as of 1/19/2009:


USAA's Certificate of Deposit rates as of 1/19/2009:

APY APY APY
Term $1K-$95K $95K-$175K $175K+
------- -------- ---------- -------
3 years 3.25% 3.35% 3.61%
4 years 3.45% 3.55% 3.80%
5 years 3.75% 3.86% 4.12%
7 years 5.00% 5.05% 5.32%

Except for the 7-year term, all of the CD rates are down from early December when the 5-year CD was paying up to 5.32% APY.

Membership Restrictions: You can join USAA online, however, to be eligible to join, you must have some military connection. Here are the full eligiblity details.

The bank's CD page describes the features of the CDs. A link to the Depository Agreement is on the bottom of this page. Some of the details of these CDs include:
  • Interest can be added back to the CD balance or credited to another account monthly
  • For CDs with a term over one year, interest may only be paid monthly, quarterly or annually.
  • Grace period is 10 calendar days at maturity when you can close the CD without penalty
  • Early withdrawal penalty for terms of 7 years is 365 days of interest on the amount withdrawn. For terms of over 1 year to 5 years it's 180 days of interests (if they consent on the withdrawal)
In addition to competitive CD rates, USAA offers a free checking account with many perks including free worldwide ATM use, free checks and Deposit@Home that allows customers to deposit checks using their home scanner and PC.

In addition to banking services, USAA is well known for providing top services in auto insurance and mutual funds. The consumer advocate, Clark Howard, has mentioned USAA many times. You can read some of his commentary here.

USAA Federal Savings Bank is headquartered in San Antonio, Texas. It has been FDIC insured since 1983 (FDIC Certificate # 32188). The bank has solid financial ratings for soundness: 5 stars (superior) at BauerFinancial and 4 stars (sound) at Bankrate.com. Both ratings are based on 9/30/08 data.

Thanks to the reader who emailed me news of these CD rates.

Other 5% CD Rates

It's getting hard just to find 4% CD rates. The only other placd offering 5% CDs is Navy Federal Credit Union which is offering a 5.10% APY 7-year CD for a minimum deposit of $20,000. Like USAA, you must have some military connection to join (see post). For other CD deals, refer to my weekly rate summary.

Reason Behind USAA Membership Restrictions

I can understand Navy Federal limiting membership due to its credit union status. Credit unions must restrict membership as defined in their charter. However, banks don't have this legal limitation so I'm not sure why USAA restricts membership. When I first reported on USAA in 2005, there were ways to join even without military connections, but in recent years, USAA has made it so only those with military connections can join.

  Tags: USAA Bank, CD rates, Texas

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Comments
3 Comments.
Comment #1 by Anonymous posted on
Anonymous
I have been with USAA for 30 years. It has been a great insurance co. and bank to deal with.They have great rates and exceptional customer service. USAA has 2 separate banks-one in Texas and the other in Nevada. I have been able to extend my FDIC coverage by puting jumbo cds at both banks with the same high rate. They also do POD accounts.

1
Comment #2 by Anonymous posted on
Anonymous
With all the inflation inciting efforts of today's government, you'd have to insane to lock in a rate this low for 7 years.

1
Comment #3 by Anonymous posted on
Anonymous
Only time will tell.

Deflation and depression, anybody?
Or will it be Stagflation?

Just like the stock market. It's all a gamble. Who knows anything for sure!

1