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USAA Bank - The Willy Wonka of Banks


USAA Bank sort of reminds me of Willy Wonka's chocolate factory in that it has a grand reputation but is somewhat hidden from the general public. Visit its home page, and it appears only certain people can join (with specific military affiliation). And if you're not a member, you can't even see the banks's savings rates or specific features of its accounts. You have to log in to see those details.

What's not apparent from USAA's home page is that anybody in the US can join. Mililtary affiliation is not required. The first step to join is to obtain access into their website. This is done by contacting them by phone at 1-800-531-2265.

I've learned about USAA's impressive reputation from this Fatwallet thread and also from reviews at Epinions. So I decided to call and see for myself this wonderous "chocolate factory". Here is my experience with gaining access into USAA's site:

Gaining Access

I called 1-800-531-2265 and pressed 0 to speak with a customer service representative (CSR). Once connected with the CSR, I said I was interested in joining and wanted to gain access. He then asked me several questions including lots of personal information including name, address, phone numbers, and social security number (I wasn't too thrilled about providing the ss number). The CSR then guided me through the login procedure. Luckily, I was calling near my PC which was still connected to the web. This allowed the CSR to guide me through the registration procedure. He provided a member number and helped me set up a password and a new pin.

So now I have access into their website. I haven't yet opened any bank accounts. According to the CSR, you can open accounts online, however, it does require printing and mailing in signature cards.

Now that I made it inside, I can see for myself the bank deals. A few of the things that make USAA stand out are the following:

Great checking accout features:
  • no minimum or balance requirements
  • no monthly service fees
  • free paper checks for the life of the account
  • no ATM fees or charges (there are a few reasonable limits)
  • Debit Mastercard available with 0.5% rebate on all non-PIN purchases
  • Online ACH transfer system to move money to/from other banks

High CD interest rates on longer terms with only $1K minimum
  • 5% APY CD, 5 year term
  • 4.6% APY CD, 4 year term
  • 4.45% APY CD, 3 year term

Note, you can get about 0.16% higher interest for a Jumbo CD with $95K deposit and 0.26% higher interest for a Super Jumbo CD with a $175 deposit. There's also a 7 year CD that gets about 0.10% higher interest than the 5 year CDs.

In addition to the specific features and rates, USAA is well liked for its customer service. This is mentioned many times at both Fatwallet and Epinions.

Some Downsides

One downside to USAA is that it doesn't have great interest rates on its savings accounts. Even its Performace First Index savings account which requires a minimum $10K deposit only has a maximum rate of 3.31% APY for balances over $50K. For balances between $10K and $25K, the APY is only 2.95%. Its short-term CDs are also not too competitive. For example, the 1 year CD only has an APY of 3.70%.

General Info

USAA Federal Savings Bank is rated 4 out of 5 stars on Bankrate.com which is only one below its top score of 5 stars. The bank is headquartered in San Antonio, Texas and was founded in 1922 as United Services Automobile Association. It also offers other products like insurance (which do require military affiliation). For a detailed description of this bank, check out this Fatwallet thread. Finally, no Oompa Loompas have been reported to work there.
Banking Guy
Banking Guy (anonymous)   |     |   Comment #1
USAA has changed its membership eligibility this year. They use to allow anyone to join. As of June 30, 2006, you must either have a military affiliation, be a current bank customer or be a resident of Bexar County, Texas (includes San Antonio).

I have a new post on USAA focusing on its CDS here.
Anonymous   |     |   Comment #2
Don't trust USAA. It just seems appealing until they slam you with their incompetence. It's not worth the rate benefits. There are other banks that are hidden paradises that can offer the same.
Boatman (anonymous)   |     |   Comment #3
USAA has nothing to hide, just good banking. If you don't have good gredit, then their other products, such as insurance, & loans (if you can even get one) are not at the peak of other competitive banks. Overall, this bank is a great place to be.
Anonymous   |     |   Comment #4
After 18 years of banking and insurance with USAA, we are closing all of our accounts. Sadly, there is no single incident - but a declining pattern of service (with resulting inconvenience and cost) over the last two years. 

The capstone, for us, came while deciding to travel full-time: we deposited an online check that ended up bouncing -- due to a bank error. USAA refused to call the bank to verify the mistake and instead removed our ability to deposit at home (scanning deposits) AND to transfer funds between our accounts. 

So we called - and they told us flat out they would not help. We then offered to wire transfer $20,000 to our account (prior to learning we were prevented from transferring money between the accounts) -- their answer: no. We were told to mail in a deposit. 

So we did. Which they then held for 17 days (and the story changed with each call). 

As the son of a military officer, I was upset and saddened by the decline of this once great bank/insurance institution. But the decline on both sides seems to coincide with their push to raise the number of people who are banking customers. 

I have learned, in life, that when something good, personal and small expands rapidly, they sometimes lose focus. USAA is yet another example of what happens with rapid growth and a focus on "making more customers" as opposed to "making more happy customers."

Everyone will have a different experience, of course; I doubt USAA is significantly worse than other large banks focused on money at the expense of their members. Just figured I'd color the perspective. 
Anonymous   |     |   Comment #6
I've been with USAA since I was in the military (early 90s) and I couldn't be happier.  I've never had a problem with the banking side or insurance side of their business.  I would highly recommend them to anyone and everyone.
Anonymous   |     |   Comment #7
Its great....until you need to cash or deposit a check. The scanning at home and iphone app methods of deposit, arent a great option. Unless you live in San Antonio, it really doesnt have much more to offer than, say, Bank of America.
Anonymous   |     |   Comment #8
Its great....until you need to cash or deposit a check. The scanning at home and iphone app methods of deposit, arent a great option. Unless you live in San Antonio, it really doesnt have much more to offer than, say, Bank of America.

I literally diposited a check using my iPhone 10 minutes ago. It was so easy and took like 30 seconds. The money was in my account immediately as well. I don't understand you're issue with it.
Tom Shelton
Tom Shelton (anonymous)   |     |   Comment #9
I have been a member of USAA since the 80's.  It is my main personal bank, as well as our only insurance provider.  I also own a business and have been pestering them to expand to business services - i.e., business checking / savings accounts.  Why you might ask - SERVICE comparable to none.   I have never lived in Texas but have rather conducted all our personal financial affairs through debit cards, ATMs, and now an iPhone app - great service, secure, and fast -even as we traveled all over the USA, including AK, during my military career.  For the last 2 years or longer I have been depositing checks - those that are not direct deposit - by the iPhone App. Nice, very nice, and they had that option before any of the other big boys were advertising it on TV.  Unfortunately my current business banking account provider does not provide the same level of service with their Apps or Websites, and they are SLOW in getting transfers and deposits processed. But it is secure, and right now, it is the best I can find for the business - if only USAA would come through . . . .  Hope this helps others thinking about USAA. 
Anonymous   |     |   Comment #10
Interesting comments...I have my homeowners with USAA, my father was in the Marines. Long story short, I bought my first home in December of 2007. In May of 2008 we had a tragic house fire. They paid no questions asked...we were completely taken care of in every way. We did not want or need for one thing, my son and I. My house was rebuilt entirely up to code the best standards and everything right down to my toothbrush was replaced-ZERO hassle from USAA. If it hadn't have been for them we would have been out on the street...point is....stay with the insurance company that will assist you financially when disaster stricks. I have and I will not regret it.