There are certainly a number of positive attributes involving USAA. It is a common misconception that they are a credit union since they require membership and offer below-average interest rates on loans and credit cards. And for those with bad credit, their secured credit card offers several advantages:
- Reasonable cost: With an annual fee of $35 per year, this is certainly a lot less than what many other banks and card issuers charge for those with impaired credit. For example, First Premier Bank charges upwards of $100 or more per year just to get a card with a credit limit as low as $300.
- No foreign transaction fees: For active military who are deployed overseas, this benefit definitely comes in handy.
- Low APR: As with any credit card, as long as you pay your USAA secured account in full each month, you don’t have to worry about interest charges. But if you carry a balance, your APR will vary based on your credit rating and will change over the life of the card based on the prime rate. The lower end of the APR spectrum for this card is quite a bit below average.
- Visa or AmEx: You can choose a USAA Secured Visa or American Express. But don’t be confused, as AmEx is not the issuer of the card. As discussed here, they are nothing more than a payment network that has contracted with USAA, just like Visa.
- Earns interest:Very few secured credit cards pay interest on the security deposit, but USAA’s card does. The bad news? Interest rates are so low that it’s hardly anything to be excited about, especially if you make the minimum deposit of $250. But something is better than nothing. I wouldn’t let this be a maker or breaker (unless your deposit is a few thousand bucks).
The minimum initial deposit for this card is $250, and you can add additional deposits (and request a credit-limit increase) at any time. This was not the case in the past (previously increased CD deposits did not increase your credit limit), but that’s changed:
As with USAA’s other products, you must be active or retired military (or have a spouse or parent with a USAA account).
The USAA secured card has a lot of advantages (including some not found on other secured cards). However, as with all cards, definitely consider this just a starter card to build your credit. Once you qualify for regular cards, upgrade right away to avoid paying an annual fee on a card with no rewards.
Don’t qualify for USAA’s financial products? Consider this low-cost secured product.
Updated Jan. 2017