Rebuild Credit With a USAA Secured Credit Card
Just in case you’re not familiar with USAA, it’s a large financial services provider that’s been around since 1922. I’ve been looking at their credit cards and the USAA Secured Credit Cards really caught my eye.
Did you notice that the card name is plural? It’s because you get to decide if you want a USAA Secured Credit Card with a logo from MasterCard or from American Express. With Amex, you get better benefits and perks, such as a concierge service. But with MasterCard, you get wider acceptance. I think it’s kind of cool that you get to choose.
It’s a bank, but it also offers insurance, brokerage services, and more. It really targets the military and their family members, but many of USAA’s financial products, including credit cards, are available to anyone who joins. And that’s good news because USAA has some unsecured credit cards with APRs starting as low as 9.9 percent.
Alas, the secured credit cards are only available to those in the military and their families. But if you’re eligible and you’re trying to rebuild credit, you should take a look at this card. Your security deposit is used to open a 2-year Certificate of Deposit (CD), so it’s an interest-earning deposit account (the earnings will be low, but it’s still nice to get something back). Note that it’s a 2-year term so you have to be willing to commit your money for that period of time.
Okay, there are no rewards, so we’ll get right to the costs and fees.
Rates and Fees
The rates are really quite good. The purchase APR is low and there is no penalty APR. Don’t take advantage of that, though. The whole reason to get a secured card is to pay your bills responsibly and improve your credit. But it’s a nice safety net in case you have a financial emergency.
APR: You get a variable rate of 9.9 percent. Nice!
Balance Transfers: There isn’t a zero percent intro offer. Unless you’re offered a promotional rate, the balance transfer APR is a variable 9.9 percent. There’s a 3 percent transfer fee.
APR for Cash Advances: You still get a variable 9.9 percent, which is amazing for a cash advance. The transaction fee is 3 percent. But I still want you to remember that interest on a cash advance starts ticking right away, so be careful with this.
Annual Fee: You pay $35 per year. Slightly on the high side.
Foreign Transaction Fees: It’s 1 percent, which is below average, so that’s good.
Security Deposit: Your deposit, which goes into a CD, ranges from a minimum of $250 to a maximum of $5,000.
Credit Limit: The amount you invest in a CD becomes your credit limit.
The Bottom Line
If you’re eligible, this credit card is just a notch below the secured credit card from Navy Federal. A downside to this card is that two years is a long time to tie up your money, but at least it’s tied up in an investment.
I always like to read the comments section when I review cards. One of the biggest complaints was that you can’t “graduate” from this secured card to one of their unsecured cards. Now, your credit score might improve enough for you to qualify for one of their unsecured cards, but you’d have to apply for a new credit card. The issue is that USAA doesn’t offer a smooth transition to an unsecured credit card. At the end of the day, that’s an inconvenience, but it doesn’t change the fact that this is a really good secured card.