USAA Credit Card Review 2014

Posted by CreditCardGuru

If you or a family member serves in the military, there’s a good chance you are familiar with USAA, the financial services company offering everything from auto insurance to bank accounts. They offer a number of different credit cards. In this review we will take a look at the pros and cons associated with them.

Part 1: Cash-Back Credit Cards

Due to its flexibility, many people seem to prefer cash back, so let’s start with the USAA credit card offers for this category. Unfortunately their cash back program has a major drawback…
USAA cash rewards table

As you can see from the above table, you start out by earning less than 0.5 percent cash back. Only yearly spending above $10,000 will be earning 1 percent or more (and the amount below never will). Most other mainstream cards offer at least 1 percent back on all purchases.

Because of this tricky tier system, you might be better off with a more straight-forward cash back card such as these:
All of the cards from USAA that offer cash rewards use the aforementioned tiered system:

  • USAA Cash Rewards MasterCard or Visa
  • USAA Cash Rewards American Express

While the benefits differ slightly between them, their rewards all operate the same way:

  • You earn “up to” 1.25 percent cash back on all purchases, without any cap on the amount that can be earned (the AmEx version also earns double cash back at gas stations and grocery stores).
  • In January the account will be credited with all the cash back earned over the past 12 months. Therefore you only get your cash rebate once per year.
  • Neither version has an annual fee.

The other drawback is that they don’t offer any higher reward categories. Depending on your spending patterns, you may want to compare these 5 percent cash rebate credit card offers.

The APRs on all of USAA’s offers can be low if you have good credit. When it comes to benefits, the American Express version offers purchase protection, extended warranty and other perks for no additional cost (as you would find on any American Express card). The World MasterCard version also offers similar benefits but in my opinion, they aren’t as good.

Verdict? The USAA cash back credit card program is not very attractive with this tiered rewards structure. These days you should expect at least 1 percent on all your spending, if not more. Therefore, the application only makes sense if it is the other benefits you are after instead.

Part 2: Cards With Reward Points

The majority of the USAA credit cards are for programs that offer reward points. These don’t have an annual fee either:

  • USAA Rewards (World MasterCard or American Express)
  • USAA Military affiliate credit cards (available for 16 different military associations such as Air Force Association, Veterans of Foreign Wars, Wounded Warrior Project and others)
  • USAA Active Military MasterCard with rewards

All of these credit cards operate on the same points program. Here’s how it works:

  • You earn 1 point per dollar spent. The cards have no bonus categories, with the exception of the AmEx which gives double points on gas and groceries.
  • No cap to the number of points that can be earned
  • Points can be redeem for cash back, as well as the other usual options credit cards offer these days: merchandise, gift cards, travel, charitable donations

USAA cash back programHow much are the points worth? Well that depends on how you redeem them.

If you do it at lower tiers you usually won’t get a good deal in terms of point value.

The table on the right shows the cash rebate option and as you can see, it takes 20,000 points to get the full 1 cent value per point. If you go below that, your value per point goes down. If you use your points for charitable donations it’s the same $200 threshold for maximum value.

The worst value comes with the merchandise and gift certificate/card rewards. Based on the tiers shown in the fine print, it appears you will never get a full penny per point. For example, it shows a $25 gift card costing 3,500 points (about 7/10th of a cent per point). Even the highest tier shown, a $500 gift card, costs 70,000 points (also around the same conversion).

The best value appears to be when points are used for cruise rewards. It’s possible to get about 1.18 cents per point, but the drawback is you need to redeem hundreds of dollars worth to get that big of a boost. Airline rewards do not give a boost in value but are still a good deal, because you get 1 cent per point with as little as 15,000 points ($150 worth) redeemed.

Perhaps the most noteworthy benefits come with the USAA Active Military MasterCard. If you are deployed you get to enjoy three major perks (a) special interest rate for up to 12 months, (b) new finance charges during deployment will be rebated, and (c) no foreign transaction fees on purchases made outside of the country.

Verdict? If rewards are what you’re after, these cards aren’t the best deal out there. There are credit cards with higher travel rewards on the market. However, if you want the other USAA credit card benefits then one of theirs might still make sense.

Part 3: Low rates and credit building

The USAA Rate Advantage MasterCard – Offers a low rate with qualifying credit as low as 6.9 percent and no annual fee. Those considered less creditworthy may still be stuck with a rate as high as the 20s though, according to the fine print on the application. This card offers no rewards.

USAA Secured Credit Card – This is for folks who can’t qualify for a regular credit card, but still want a card to build their credit with. The USAA secured card charges a $35 annual fee which is definitely reasonable. You can learn more about how secured credit cards work here.

Verdict? Neither of these cards come with rewards, but that’s okay, because if you carry a balance or are trying to rebuild credit, rewards should be the last thing on your mind. If you have great credit and can get the lowest tier APR on the USAA Rate Advantage card, then it’s a deal. The secured credit card from USAA is also a good value for what it offers.

This review was written or last updated April 3, 2014

13 comments... read them below or add your own

  1. bill dowling February 25, 2014 at 5:39PM

    usaa is the worst credit card I’ve ever had I pad my bill in full every month my wife passed away on nov 23 14 imoved to Nevada usaa cut off my credit card I asked why no one has given me an answer I tried to pay off my remaining balance 1759.83 on my statement thew only give me the first four numbers and last four numbers they will not give me my complete number I cut up my credit card when they cut me off I also canceled my insurance with them

  2. KT December 21, 2013 at 1:25PM

    I have both the USAA World MC and USAA AMEX, if you’re trying to maximize your rewards benefits there are better cards (I have just signed up for the BCP after receiving meager cash back for gas and groceries with my USAA AMEX).

    However, there’s a few benefits such as concierge services, flight insurance, accident insurance on rentals, free roadside assistance, and extended purchase insurance that USAA offers on these cards that may sway judgment. I don’t make use of any of these items in the years I have had the cards, but it does make for a good safety net.

    The really poor job USAA did was that the reward systems are tiered, an example is if you spend $12,000 you’re actually touching 3 different tiers and the cash back is different for reach one – which is confusing and actually misleading. (for the MC between 0 and 5000 you only get .45%!!!!)

    One positive is that you can have all your services under one account – so I can pay my credit card balances and see what I have in my account at the same time, give me an idea of my net balances. But I don’t think it’s worth the 200+ dollars I lose in cash rebates.

    • KT December 21, 2013 at 1:26PM

      I should add that the AMEX card for gas/groceries gives your 1% additional to the tiered system. So if you spend 5000 on gas/groceries you will get 1.45% instead of the .45%.

  3. Kristine December 17, 2013 at 9:42AM

    Usaa has the worse point system ever. You pretty much need to put your entire life on credit card to see any rewards from it. I have friends with other cards that earn air mile tickets every year… With usaa it takes a few years. If you are looking for a credit card that offers rewards DO NOT use USAA!!

  4. del shobe July 8, 2013 at 12:39PM

    I have talked to at least 6 different “customer representatives” and spent hours trying to establish a method for on line payment. hours of holding for transfers. passed from one rep to another. when I asked for a supervisor, I was put on hold for about 15 minutes before being cut off completely. now I am waiting for an invoice so I will know where to mail my cut up card– along with my suggestion of where they can put it!!!!!

  5. Charlie June 19, 2013 at 10:43AM

    It takes USAA at least a week to process any credit card payments. I submitted a payment 10 days ago that has still not been processed. Everything else about the company is nice, except for the fact that I have to wait a week to use my money.

  6. Greg March 7, 2013 at 3:06PM

    Do NOT trust USAA if you travel! They talk about service but don’t deliver. Never believe what they say. Despite the fact that we notified the credit card department that we were traveling to specific countries in Europe and having its assurance we would be able to charge and obtain cash advances in those countries, when the time came to use the credit card in those countries the charge was denied. That caused us a great hassle. Fortunately, the merchant allowed us to call USAA and the initial operator confirmed that we recored our travel but “Security” denied any charges and transferred us to Security, which said there was no record of our travel. Thus Security called their fellow employees liars. Security subsequently realized their error and activated the card and apologized. But they caused us a great deal of time and anxiety. As usual the bank looks out for itself rather than the customer. So don’t believe this crap they say about how they know what it is to serve. All they want is to serve themselves. When we we needed them to come through they didn’t. We really dislike this organization is its hypocrisy.

  7. Steph nj February 17, 2013 at 1:46PM

    The USAA credit cards is a honor to have. No annual fee . Reps are willing and educated to aid you. Many credit card companies need to get couching from USAA.

  8. Ryan Bates January 25, 2013 at 12:33PM

    Careful. Their ‘cash rewards’ are misleading. I have four credit cards. I just signed up for the USAA card this past year due to the lower APR and ‘cash rewards’. The ‘cash rewards’ are not cash at all, they are a credit posted to your account. With my three other cards, I get REAL cash back, not a credit. I get a check in the mail made payable to me to do with as I please. A credit on my bill is money already spent. I’m looking for another card now I’m so pissed.

  9. Samantha Bennet December 16, 2012 at 6:55AM

    I actually love the USAA card. It’s great for traveling abroad as the foreign transaction fees are waived when traveling outside of the US. Those fees can add up pretty quickly and this card has saved me money in that area.

    • Dave February 16, 2013 at 3:39PM

      Samantha,

      what card are you using that waives the foreign transaction fees. Only USAA card I know of that does that is the Active Duty one if you are DEPLOYED overseas. I don’t know of another they offer which does this…

  10. Natalie October 1, 2012 at 2:31PM

    You actually get 2x the points when you use your card on gasoline or groceries. We use that in most of our expenses anyways.

  11. Jeremy L. December 30, 2011 at 7:50AM

    One thing that you neglected to mention as a benefit to USAA members is the member mall (http://mall.usaa.com). It is possible to shop through the member mall and get 2 or more points on purchases for every dollar spent. I just booked travel to Vegas for next year and got 2 points per dollar, so my ~$1000 trip got me 2000 points.

    I compared the points-based AMEX that I have through USAA with their cash rewards card and found that while I do prefer cash as a reward, the points card would end up earning me a lot more back.

    Also, don’t forget that if you’re carrying a balance, these meager percentages back are worthless when you’re paying 9.9% or higher! Pay your bill in full! :)

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