When I was in the USAF, one of the best financial decisions I made was to join USAA. For those not familiar with USAA, it is probably the best all around financial institution on the planet. I have been a member for about 8 years now and I have no plans to leave for another bank or insurance company. Assuming you are eligible for USAA membership, I recommend joining.

USAA membership is limited. USAA membership is not available to everyone. It is limited to adult children of USAA members, Active Duty enlisted and commissioned military members, members of the Guard and Reserve, Officer Candidates (ROTC, OTS/OCS, and Academy), retired military members, and veterans who separated on or after 01/01/1996. You may also be eligible if you were once a member of USAA. If in doubt, ask! It’s worth it.

USAA is member owned. Each USAA member owns a subscriber savings account, which contains money that USAA holds in the member’s name. In years when USAA collects more in premiums than they pay out, USAA actually makes distributions to its members (similar to a dividend). How many insurance companies do you know that would pay you a refund?

Why you should consider joining USAA

The best customer service of any bank I have ever dealt with. I’ve been a member of several banks and credit unions, and USAA’s customer service is by far the best. Based on customer service alone, I would recommend them to people. Want more proof? Business week ranked USAA #1 in customer service two years in a row.

Full service bank with great features and rates. USAA has been an innovative bank for years, and offers many premium services as standard for all accounts. These include free checking and savings accounts with no minimum balance fees, free checks, free rewards debit card, free overdraft protection, free web bill pay, and more. In addition, you will find these great services:

  • No ATM Fees. One of my favorite benefits provided by USAA is no ATM fees. USAA doesn’t have local branches, so they don’t charge fees for members to use ATMs and they refund the fees other banks charge (for the first 10 ATM withdrawals and refunds up to $15 in other banks’ ATM usage fees each month).
  • Investment options. USAA offers CDs, IRAs, mutual funds, brokerage accounts, and salaried financial advisers (read: no commission based compensation) to help you understand your investment options.
  • Internet, telephone, and mail banking. USAA only has locations in San Antonio, TX, so you need to have access to the internet, a telephone, or the postal service. That said, their web banking has a stellar interface and is very intuitive. It’s by far my favorite out of all my financial institutions.
  • Deposit checks from home. All you need is a home computer and a scanner and you can send in a copy of your check for deposit. If that doesn’t work for you, you can mail your checks to USAA with postage paid envelopes USAA provides members free of charge.
  • Online tools. USAA members have access to online tools to help them understand their options and make financial decisions.

Industry leader for insurance. My wife and I use USAA for our auto insurance, homeowner’s insurance, and a rider to cover her wedding ring and our computers. USAA also offers renter’s insurance (highly recommended, especially in the military!), life insurance, and more.

Competitive loan rates. Mortgages, home equity loans, auto loans, etc. I always check USAA first. I got my new car loan from USAA. All I did was call them on the phone and it was approved quickly and at a better rate than the other place s I checked. They even sent me a dealer check overnight. We also have our home mortgage through USAA.

Top rated credit cards. In 2007, USAA ranked #1 in a Consumer Reports report for credit cards. I have a USAA credit card that gives 1% cash back on all purchases, but I recently stopped using it in favor of my Chase Freedom Card, which offers up to 3% cash cash back on purchases on things like gas, groceries, and more. For me, the Chase Freedom Card is a better deal.

USAA is not always the best option

While I am a big fan of USAA and I highly recommend them, they are not always the best option around. I gave the example of using my Chase Freedom Card for a better rewards program than USAA’s credit card, but there are other things to keep in mind:

No local branches. This is good and bad. USAA keeps their costs down by handling all business transactions from one location, resulting in lower overhead costs. This enables them to provide better deals to their members (remember, USAA is member owned). However, this can be a hassle if you are used to banking in person. You will need to do your banking over the internet, by telephone, or via the postal service. I haven’t had any issues with this.

Insurance rates. When I was stationed in the UK, I purchased auto insurance through USAA. They were still the best option when I returned to the US, at least until I bought a motorcycle. After shopping around, I saved several hundred dollars by switching to another major insurance company. After I sold my bike, I found better rates with USAA. As with everything else, it pays to shop around.

Interest rates. USAA’s current interest rates in their high yield savings accounts also leave something to be desired. The regular USAA savings account features rates as high as 1.01%, and their USAA Performance First Savings account has rates as high as 1.01%. However, the USAA Performance First Savings requires a minimum of $10,000 to open, and the highest rates don’t kick in until you have $50,000 in savings. (Rates updated April, 2009).

Current High Interest Savings Account Options Better than USAA

These accounts are available to anyone: HSBC savings account @ 1.65%, offers 1.76% interest, E*Trade offers 1.45%, and ING Direct returns 1.5% interest on any balance. You can also get a $25 bonus from ING Direct if you open an account with a minimum of $250. There are other banks that currently offer higher interest rates than 1.5%. Again, shop around. (Rates updated April, 2009). Here is a current list of high yield savings account rates.

I highly recommend USAA

With all of these great benefits, it’s no wonder USAA has won so many industry awards. The best part is, once you sign up, you’re a member for life.

I admit that I’m a fan of USAA. But, I’m not the only person who loves USAA. Check out what these bloggers think about USAA:

For more information about USAA, check out their website, or the wikipedia feature.

*disclosure: I was not compensated in any form for writing this article. This article is based on my personal experiences with USAA and I encourage you to investigate your options before making any major financial decisions.

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