One way this website makes money is through affiliate marketing. Some ads pay just to be seen, and others pay me only if you click on them. With affiliate marketing, you generally have to do something (like apply for an account) for me to get paid. I'm always wishing that the companies I use all the time and can highly recommend (like Vanguard, USAA, Bridgeway, Pentagon Federal, and Fidelity) would come out with an affiliate marketing program. Recently, my wish came true for one of these companies, so I decided to finally get around to writing a review about it.
The United Services Automobile Association (USAA) was founded in 1922 as a group of military officers who wanted to insure their cars. They gradually branched out into property insurance, life insurance, banking, and investing, originally just for military officers. In 1995, membership was extended to enlisted personnel. In 2009, membership was extended to all who have ever served in the military and their families. The truth is, however, that with the exception of auto and property insurance, all of USAA's services are available to anyone.
I currently use or have used USAA for auto insurance, rental insurance, homeowner's insurance, flood insurance, umbrella insurance, life insurance, checking, a credit card, a mortgage, and a home equity loan. I think they're top notch in most of these fields, and certainly among the best in all of them. I recommend them highly.
USAA Auto Insurance
USAA does this so well that I won't even consider going anywhere else. I think they're still either the cheapest out there, or close enough, but truthfully, I don't care. They've treated me so well through a half dozen claims that I'm willing to pay significantly more for that kind of service. On three separate claims they've made the claim “no-fault” so they didn't raise my rates. The first was a car I rented and then banged up with poorly fitting chains on a mountain pass. I pretty much trashed both front quarter panels. No fault? Hardly. But they covered it as one. The second I had a car totaled when an uninsured driver pulled out illegally in front of me. It was his fault, but he couldn't be found on this side of the border when it came time to pay the claim. The last was an incident where I was struck from behind and somehow, the investigating officer found that his buddy who hit me wasn't at fault. The judge later disagreed in court. In all three of these incidents USAA treated me properly. On another incident, when my wife was struck by a maniac whose insurance company initially refused to pay since the maniac said he didn't do it (despite eyewitness accounts that he did as well as a lengthy criminal record), USAA paid us right away, long before it ever got paid by the insurance company. Each time service was prompt, courteous, usually included a rental car, and often paid me quite generously for the totaled car. If you qualify for USAA auto insurance, I suggest you use it.
USAA Property Insurance
I've used USAA for property insurance for years, both renter's, homeowner's, and a “fire” policy on my rental property. I've only had one claim for a leaky air conditioner that ruined some carpet and walls. They paid for remediation (including mold) and replacement with no hassles at all. I think my rates went up slightly after that one for a year or two, but have since come back down. I also do my flood insurance and umbrella insurance through them, getting a discount for having auto, property, and umbrella with them.
Dividend Program offered by USAA
One of the really cool things about USAA is that, like Vanguard, it is member-owned. Part of your premiums are returned to you each year in the form of a dividend. Part of USAA's required capital holdings is held in Subscriber's Savings Accounts and a distribution is periodically made from it if approved by the board of directors. Since 1973 when the program started, they've made distributions in all but 2 years. I don't have my most recent statement, but at the end of 2010 they paid me $78.35 (6%) on my previous balance of $1305.83, then added $364.033 to the account. Considering I was spending something in the neighborhood of $2000 a year on auto and property insurance, that works out to something like a 4% discount on the insurance, which will increase every year (in addition to long-term policy holder discounts.)
Checking Accounts
I've written before about how I think USAA checking rocks. Not only are there no fees or minimums, but we get free checks and reimbursement of all our ATM fees (up to $15 a month.) The debit card on the account used to pay you 0.5% cash back, but they changed that last year when banking regulations changed. My favorite part of the account is the deposit options. I can scan checks into my computer and deposit them online. I can even do it when I'm out and about on my Iphone. There's even a cool USAA app. Here's a chart comparing USAA checking to its usual competitors.
USAA Credit Cards
I've had a USAA credit card for a long time. Several times they offered me a deal that was too good to pass up, like 0.9% or 1.9% indefinitely (not just a year) with no fees. So I wrote a check out to myself (after asking for a big credit line increase) and plopped it into a money market account paying 5%. I haven't gotten an offer like that for quite a while, but I also can't seem to find a money market account paying anything more than 1% either. The card is also good for a low, fixed rate. No gimmicks or rewards, but if I actually needed to carry a balance on a card for a long time, I'd choose this one. I think my rate is something like 7-8%, but confess I haven't actually checked since I don't plan to ever use it. They also have rewards cards, that pay you back up to 1.25% of what you spend on them, but there are better deals elsewhere, notably through Fidelity (2% on the AmEx and 1.5% on the Visa) and PenFed (5% back on gas, 1% on everything else.)
Life Insurance
One of my life insurance policies is through USAA. The rate was okay, but the big draw to me at the time is it would pay me if I died as result of an act of war (many policies don't). Since I was regularly deploying to a war zone back then, it seemed a prudent choice. I usually include them when comparison shopping, but more recently went with MetLife for a policy as it was quite a bit cheaper and the war exclusion is much less important to me now.
Mortgage
When I got out of residency I obtained a mortgage with USAA after 20 minutes on the phone. No documentation required. Now granted, that was 2006 and most banks were handing out money like candy at a parade, but the fact that they knew my rank (and thus my salary) really cleared out a lot of obstacles to getting that mortgage lined up. The rate was pretty good too.
Home Equity Loan
I have a home equity loan on my rental property. The rate was okay, but the fees were very low and quite transparent. Since my original intent was to use it as a bridge loan, the low fees more important to me than a low rate. I'm now 2 years into that “bridge” and thus far it's been a hassle free experience.
Investing With USAA
USAA offers brokerage accounts, mutual funds and IRAs with fairly low fees. Their fees are lower than 90% of the investment firms out there, they offer index funds, and their precious metals fund has quite a good track record. However, even their low fees are still often 2 or 3 times as high as Vanguard's, so I generally recommend against using USAA for investing purposes. But you could do far worse. Most military docs, of course, have access to the TSP, which is even cheaper than Vanguard, so there is little reason to use USAA's investing services.
All in all, USAA is a great firm to do business with. If you can qualify to do so, I would use them for your auto and property insurance. You may also want to look into using their checking account, credit cards, and mortgages. If you think this review is all unicorns and rainbows, feel free to read the 199 bad reviews on USAA at PissedConsumer.com. (Bank of American has 626 bad reviews, so 199 isn't too bad I guess.)
Couldn’t be happier with USAA. Top notch service all around. That is why they have been at the top of the industry now for years.
I currently have homeowners, auto, umbrella, checking, savings, credit card, Roth and 529 through them.
I find their mortgage rates are very competitive. I however went with the builders mortgage company because they kicked in extra back and got be just a tad bit lower of a rate.
My future investing will likely be through my company 401K (vanguard) however USAA does make it easy to invest and no buy/sell fees if you stay with their funds.
The two areas I have found USAA to be lagging in are life insurance (I to bought a policy for the war rider) and auto loans. You can find much lower life insurance rates out there and I intend to move to Banner next month when I leave the military. When it comes to auto loans, USAA has solid but not spectacular rates. I was disappointed when I approached them with competitors and they were unwilling to match (1.5% lower), however they have been great with everything else.
I have to agree with just about everything in this post. I use USAA for just about everything I can due to the great customer service (checking, savings, auto loan, life insurance, car insurance, property insurance). Just this month, they were able to able to match a competitors auto loan rate at 1.99%. In the future, I will continue to shop elsewhere for various rates and fees, but the tie will always go to USAA for their fantastic track record.
While banner frequently is cheaper than usaa, it isnt always. At one time for me at whatever they call super preferred rates, usaa was cheaper. Banner doesnt have the same rating as usaa but id still go with banner for the cheaper term if i was no longer on active duty. When on active duty, bc of the war clause, u just cant beat usaa. Now that im off active duty, i keep a term policy with them even though i know i could do better just bc i like to believe i support the person who is still on active duty. Probably crazy of me but its such a small amount of money that im okay with it and i have other life insurance that isnt with usaa.
I’ve had Allstate for 10 years and due to recent events am in the process of getting quotes to switch home, auto, and umbrella insurance. Does USAA have competitive bundling discounts?
I believe they do.
Also have used USAA for many years for a wide variety of accounts (banking, credit cards, loans, and insurance) and have been very happy overall–although I ended up dropping the life insurance in favor of another company.
Another plus of USAA is the foreign transaction fees when traveling overseas. USAA charges a 1% transaction fee for both credit and ATM withdrawals. By comparison the other major bank’s credit card that I use regularly charges a 3% foreign transaction fee. Needless to say I only used USAA credit and debit cards on a recent trip to Europe.
I had a reader write in to point out that the SSA account with its dividends is only available to the military member, not their family members. There are actually several tiers to USAA membership, with officers, their spouses, and USAA employees in the top tier, which is the only one that gets the SSA dividends.
Great website! (I just found it about 2-3 weeks ago!)
quick question.
I called USAA recently and I can not use their services (except checking/saving accounts), as I have never been in the military. So, what other companies do you recommend for autoinsurance, life, rent/home, umbrella insurance?
I’ve heard good things about Geico, but don’t know that I know enough to make recommendations about other companies. I would suggest going to an independent agent that can sell you policies from any company.
I agree with your post, but I think that you are a little gentle on the criticism re: USAA investing. USAA has great customer service and I use them for most of my routine banking and all of my insurance. I initially started my investing with USAA throught a ROTH IRA because of their service and convenience. However, the more I am learning, I am seeing that the service is VERY expensive for investments. For example, the USAA world growth fund (USAWX) has an EF of 1.25% compared to Vanguard’s Total Intl Stock Index (VTIAX) EF of only 0.14% for broad international exposure. I would not advise anymore to use USAA for investing, the expense ratios are just too high, and that is money out of your pocket every year. Like you said, you could do worse than USAA, but you could do a lot better.
just talked to usaa about opening a retirement account they advised roth ira with a mutual fund and I talked about only putting in 50.00 on the 1st of every month for the beginning im only 20 do u have any advice
Yes, the more you save, the more you will have later. $600 a year isn’t going to go very far toward retirement. About $100K assuming 45 years of contribution and 5% after-inflation returns. Figure out a way to contribute 10-20% of your gross income every month and you will be very wealthy some day.
USAA is a superb property and casualty insurance company. I wouldnt do business with anyone else. But dont assume everything else they offer is top quality. I am a physician who recently moved to an area with expensive real estate costs. My bank where I was moving from only did mortgages in a three state area, and I hesitated to use the local lender my real estate agent offered. I went with USAA because I trusted them. It was farmed out to Military Family Home Loans — which was actually a Wells Fargo offshoot.
It was a nightmare of incompetence and we only made closing by the skin of our teeth, and only because I raised holy hell with USAA itself for a month and went three steps up the management chain. I had the down payment in ready cash sitting in the bank and an income that prequalified me for a loan twice the size of the one we ended up requesting. I had assets that nearly equalled the total value of the property being purchased, and our credit rating was impeccable.
USAA, or rather this subsidiary, was way over its head in dealing with a million dollar home and modestly complex business concepts. As an example, they kept asking for W2’s. I had received corporate distributions from my previous surgical practice for 13 years, which are reported in K 1s.
Frankly, as a physician needing to put together a multimillion dollar retirement portfolio, I wouldnt dream of using USAA after that experience, simply because I learned that they wouldnt admit that they knew little or nothing about handling loans of that size. My car insurance? Absolutely. Forever.
Anything financial outside the standard guy who draws an average paycheck? (Which is most of us doctors) — Wouldnt dream of it after my mortgage experience.
USAA has changed. While there service has always been good, it used to be top notch. I agree you have to break it down by division:
Banking – A+ No fee international Visa? Thank you. Free checking/savings and great online banking.
Insurance – Home, life, umbrella, renters in the past and auto. I regularly check and it doesn’t get terribly cheaper. Service is phenomenal on several small claims and one totaled car over 15 year history. Kids are driving now so we shall see. Home insurance I miss as they don’t do my part of Florida, but my new policy with Security First is cheaper on a more valuable home.
Mortgages – Not the cheapest, but certainly the simplest. Have used them for 1 of 4 loans.
Investing – Products are reasonable with reasonable rates. Buy and sell process is simple and intuitive (to include options). Research is okay, but usually use yahoo finance or google finance. Had access to a bloomberg terminal for awhile (very sad that is gone).
NOW for the biggie—————————————————————————————————————————————–
Advice – This where I’ve noticed the biggest change. 15 years ago the had a service where you paid a flat $1000 and got honest, reasonably independent advice. My wife and I have lived by that advice for the last decade and we are financially sound with a retirement ready portfolio. We saved hard, invested aggressively in equities, bonds,direct real estate and bought a term insurance policy based on very specific goals. We used mainly USAA products and have been very fortunate. Over the years we would go back and pay another $1000 every 3-5 years to make sure we were on track. This last time (1yr ago) that service was gone and we were referred to the ‘Wealth Management Team’. I tried 2 different teams (San Antonio and Jax) before giving up. Their ‘free’ advice was not only bad it was horrible …….. Variable Uniform Life and an Annuity were top priorities. I know those products aren’t from the devil, but they are close for me. I’m 44 and work part time, live very comfortably on around $100k per year with a retirement ready net portfolio. We travel, have no debt (except on some income property) and spend time with our 3 kids (529s cooking). What the hell do I want with a ‘death benefit’ or tax deferred growth at 1-4%? Did we even get to talk about the rest of our insurance? NO Did they offer specific investing insight? NO, only by asset class and very broad. Apparently, if you want real advice you now need to pay and pay annually based on your holdings. I know this is common in the rest of the investing world, but USAA had the best of the best with a simple flat fee.
However, I digress, the advice on the investing side has become $$$ driven and not in my best interest. I’m told that they will be happy to manage all my assets for a simple annual holdings based fee, but that comes out to $2500+ per year, no thanks. I’ve done reasonably well with just some time and patience. I moved my brokerage and 529 accounts 8 years ago to Vanguard due to fees and greater options. I was so displeased this last go round that I was inclined to move all of my kit (insurance, banking, IRAs) out of USAA. I had to remind myself that it is just another large company with strengths and weaknesses like all the rest. It is a shame though, because I really credit that initial advice years ago with getting me and the family where we are today.
My trusted friend has died and been reincarnated as a salesman, like the rest.