Should You Apply for a USAA Credit Card?

Advertiser Disclosure

Many people who are members of the military or armed forces are very familiar with the many banking services that are offered by USAA (United States Automobile Association). This company specializes in offering financial services to military members, as well as other groups.

They offer numerous special deals for credit cards that are intended to be useful for military families. Here are a few of the options that are offered, and a quick discussion of some of the advantages or disadvantages that you should be considering.

 

Are Cash Back Credit Cards a Good Option?

Cash back rewards credit cards are a popular option for nearly everyone who uses a credit card. USAA does have credit card offers that include cash back rewards. But, when compared with some of the other great cash back rewards cards, like Discover it® or the Capital One Quicksilver, the USAA options aren’t nearly as enticing. The cash back rewards are based on your yearly spending, and the rewards are not as robust as some other cards that offer a straight 1%, with 2% and even 5% bonus categories. For example, if you spend between $0-5000, you will receive a cash back reward of 0.45% for your yearly purchases, or up to $22.50. Not that great.

If you spend between $5,000-10,000, you will earn that same $22.50 plus 0.85% of all purchases once you exceed $5,000. This gets you up to a maximum of $65. With the same spending on a regular 1% cash back credit card, you would earn $100 on the same $10,000 of spending. While the percentage does begin to increase with higher spending ranges, you are still almost always going to be better off with one of the other major cash back credit cards. Even at the highest ranges, spending more than $17,000 per year, you will only earn $135 plus 1.25% of the purchases over $17,000.

All of the cash back cards offered by USAA operate under this same system, with spending tiers determining the cash back percentages that you can earn. While there are no annual fees, and they do offer 0% introductory APR until December 2014, in many cases you can do better elsewhere. Find a card that offers a straight percentage of at no less than 1%, and one with bonus categories is even better!

How About USAA Cards That Offer Rewards Points?

Most of the credit cards that are offered by USAA do offer rewards points. With no annual fee, these can be attractive to some. Choose between the USAA Rewards World MasterCard or the USAA Rewards American Express for the best options, which include earning one point for each dollar you spend, and the American Express version offers bonus double points when you spend money on gas or groceries.

The points that you earn can be redeemed for cash or merchandise, or even statement credit, and there is no cap involved, making the USAA rewards points cards a better option than the cash back variety. Until you earn more than 20,000 points, however, the redemption options are a bit slim because the point value is less than one cent per point. The value increases as the number of points you earn increases.

Redeeming points for gift cards or cash back is not as valuable as redeeming them for a cruise or other travel options, so choose carefully when you consider these cards. Unless you plan to do plenty of traveling, it might not be worth it to work toward the rewards when you can earn better options with many other cards. Unless you plan on earning tons of points, it will take a long time for you to get full value or a great deal from these points.

What Are the Perks to USAA Cards?

All this talk about the drawbacks should come with some mention of the perks that are offered. Because these cards are targeted toward military families, there are some benefits that may be extremely useful to those serving our country.

For example, if you are deployed and have a balance on your USAA credit card, you will qualify for a reduced APR for up to one full year. You will receive a rebate for the interest that you are charged during your deployment. And, there are no fees for any foreign transactions, making it possible to use the card worldwide without incurring any additional fees or charges. These perks make the cards attractive to those who face deployment, as the break on finance charges can be quite significant.

 

Special Offers From USAA

There are a few solid offers available from USAA, including the USAA Rate Advantage MasterCard, which offers an APR as low as 6.9%, with no annual fee. If your credit is poor, you may have to pay a higher APR, so read the fine print carefully before signing up. There are no cash back or points rewards offered with this card.

Link: USAA Rate Advantage MasterCard®

Another option, the USAA Secured Credit Card is a good option for those who do not have a credit score high enough to qualify for a regular card, but still wish to boost their credit score or recover from a period of bad credit. This card does have an annual fee of $35, which may be worth it if you need to bring your credit score up high enough to qualify for a traditional credit card.

 

Conclusion

Although the USAA credit cards may offer some specific benefits that are going to be attractive to active members of the military, with the lower interest during deployment or rebate of interest charged while deployed, there are definitely plenty of better options out there for most folks. Read the fine print, and, consider all of the options before choosing a card that does not hold up as well when it comes to cash back or points rewards.

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