A Banking Alternative: USAA?
I’ve always been under the impression that USAA was an insurance company, even though I’ve been bombarded with literature that says otherwise. I hold my car insurance, primary residence insurance, and now even my rental property insurance is held with USAA, as they’ve been the low-cost provider for all of those.
Yesterday though, I noticed a coworker paid his lunch bill with a USAA branded credit card, and further discussion revealed that he does all of his banking with USAA as well.
Naturally, one would question how you deposit a check to a bank with no physical presence. And why would you want to incur ATM fees while being forced to use a competitors ATM? And how do they stack up to my existing bank, Bank of America?
Scan your deposits in… from home.
I’ve noticed over the past several years that the only reason I go to Bank of America is to deposit checks, and make the occasional cash withdrawal. Honestly, I can’t remember the last time I set foot in the bank itself. So naturally, I had to wonder how one would go about making a deposit to a purely online bank that is more convenient than driving down the street. The answer lies in my desktop scanner.
With USAA’s Deposit@Home system, you simply log in to your account and scan in the check to be deposited using your own scanner. The deposit is immediately credited to your account, and you simply void the check after completing the deposit.
Pretty cool if you ask me.
ATM fees are reimbursed.
Assuming a USAA banking customer would have to absorb the ATM fees of a local bank, since USAA doesn’t have a system of their own ATM’s would only be partially correct. Yes, you’ll incur some ATM fees, but those fees are actually reimbursed by USAA for the first 10 ATM withdrawals per month, up to a total of $15. So you can use the most convenient ATM without worrying about the $2.00 transaction fee you’re slapped with.
Some other perks?
USAA offers free checks, interest for checking accounts, credit and debit card rewards programs (with no annual fee), free online bill pay, and no monthly service fees. They also offer a host of savings options, certificate of deposit (CD) options, and some cool banking options for kids (like a prepaid cash card with parental control).
So where’s the drawback?
At this point the only drawback I’ve found is that they don’t have a physical presence, which should be obvious. But this one drawback does mean that you won’t have access to a safety deposit box with USAA banking.
Currently, we receive a free safety deposit box at Bank of America since we have a number of accounts with them. Switching to USAA exclusively would eliminate that option, and we’d need to pay for a safety deposit box.
Beyond that, the issue of convenience has been solved.
I’ll investigate further, but I like what I see.
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It should be emphasized that USAA has membership requirements which have to be satisfied. Not just anyone can join. Check website. I’ve been a member since 1969 and membership has eased quite a bit since then. I also maintain a small , local bank account for ease of money transfer, ATM, etc.
I received your blog as part of receiveing Google Alerts on anything “USAA” and then read your “About TCOB” after my 1st post above. You don’t offer in your history any comments about your military background but from your statement of your knowledge about USAA insurance and mail receipt of offers I assume you are already a member and know the restrictions. Sorry to butt in so to speak, but I’m a big fan of USAA and it has served me well. Good luck in your endeavors.
You are absolutely right, Tom, and thanks for bringing that very important point up. I had assumed that I’d written about the USAA eligibility requirements in the past, however a quick search reveals that I haven’t.
For those who are curious, the eligibility requirements are as follows, based on the website information:
The restrictions apply to the insurance, mostly. You can still bank through them.
I don’t know if it’s accurate, or not, but I think they can’t be so restrictive with the banking piece, because of the FDIC insurance.
I had a rep say something to that effect, several years ago.
I’m switching from a netbank back to USAA. I’ll miss the good interest rates… but the USAA service is second to none.
Aaron: Thanks, I wasn’t aware of the difference between the insurance and the banking. Use both but never asked. I have two sons who have been members since they got their first drivers licenses and cars but never joined the military.
I am currently (required MRWD) drawing on my IRA from USAA nad balances remaining are drawing a gauranteed 4.o%. USAA currently offering 3.25% on 2 YR CD’s and $100.00 for “new” checking accounts. Not bad in these times with no bank worries.
@Tom & Aaron,
I asked the USAA rep about the possibility of a non-USAA member taking advantage of USAA banking. Essentially, the rep verified Aaron’s claims.
While it’s not explicitly obvious, a non-USAA eligible member can become a client of USAA banking, they just can’t take advantage of the insurance side of the business.
Pandora’s box was opened when I called to ask USAA about a $24 charge on my auto insurance bill. Eventually, a CS rep told me it was for the jewelry rider on my homeowner’s insurance on our house in Alaska.