Credit Cards

USAA Rewards American Express Card Review

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 5 minute read

Credit cards are among the most often used of the several financial services offered by USAA to military personnel and their families. When you use your USAA American Express Rewards Card for everyday expenditures like petrol and groceries, you can take advantage of the card’s rewards program and pay very little interest on your balance. 

Assuming you meet the requirements, you should give the USAA Rewards American Express Card some serious study.

Key Characteristics

  • Sign-up Bonus. First-time buyers get a bonus of 2,500 points—enough for $25 in airfare—when they make their first purchase.
  • Fees. A yearly subscription is free of charge. The maximum cost for transferring a balance is $200, and it is 3% of the amount transferred. The fee for making a foreign exchange is 1%.
  • APR. Your creditworthiness and fluctuations in the prime rate will determine the specific APR for purchases and balance transfers, which can be anywhere from 9.90% to 25.90%.
  • The Reward System. Buying groceries or gas will net you 2 points for every $1 spent. You can earn as many points as you like, and they will never expire. Cash, merchandise, gift cards, and airfare booked through USAA.com or by phone can all be purchased with accumulated points. When used for airfare, your points are worth one cent apiece; when redeemed for a cruise with Explore Cruise Travel, they’re worth a little more. However, the value of a point decreases when converted to currency, goods, or gift certificates. You can get a $25 bill credit for every 3,000 points you have, or you can exchange 3,500 points for a $25 gift card or gift certificate at major businesses like Macy’s, Marriott, or Staples. However, the value of each point grows when redeemed for a bigger sum of cash. For instance, if you have 20,000 points, you can get a $200 statement credit. In addition to using your points for yourself, you may give them to charities like Habitat for Humanity; 6,000 points is equivalent to a $50 donation.
  • Eligibility. You must be a member of USAA to receive the USAA Rewards American Express. You must be a current member of the U.S. armed forces, a veteran who was discharged with honor, or a member of the enlisted ranks. If you are an adult child, spouse, or widow/widower of a USAA member, or if you are currently enrolled in a commissioning program (such as the Academy, ROTC, or Officer Candidate School/School), you may also be eligible for membership.
  • Benefits for those in the military. If a service member has credit card debt before entering active duty, the SCRA caps their interest rate at 6%. (this applies to reservists and national guards, as well). For members who already have a credit card or loan debt with USAA, the company will reduce the interest rate to 4%. Active-duty members who are deployed, deploying, or who suffer a permanent change of station are eligible for a 4% discount on USAA credit cards. All interest paid on a USAA credit card by a member who has received a qualifying campaign medal will be refunded to the card at the end of the campaign. The Global War on Terrorism Expeditionary Medal, the Iraq Campaign Medal, and the Afghanistan Campaign Medal all meet the requirements.

Pros

  1. A lack of interest. If you’re looking for a low-interest rate, a rewards credit card isn’t your best bet, especially for everyday expenditures. If you carry a balance from month to month but pay at least the minimum amount due each time, the interest you pay on your USAA Rewards card might be nearly half of what it would be with another rewards card.
  2. Points Have No Limits or Time Limits. The USAA Rewards credit card has no annual fee, no limit on the number of points you can earn (even in the bonus categories of gas and groceries), and no expiration date on the points you have already earned. Most reward systems have a cap on the total number of points that can be earned in bonus categories; once that cap is reached, any further purchases in that category receive the other rate of 1 point per dollar spent.
  3. Disabled Category Rotation. As opposed to our program, many others require cardholders to join new quarterly categories in order to earn additional points. If you forget to sign up or don’t buy anything in those categories, you’ll only get one point for every dollar you spend. Gas and grocery purchases made with your USAA Rewards American Express card always earn double points.
  4. Help for those in the military. Additional perks provided by USAA include a lower annual percentage rate (APR) of 4% for active duty members than is required by the SCRA and the option to have any interest incurred during a campaign in which you receive a qualifying campaign medal rebated to your USAA card.

Cons

  1. Weak New Player Incentive. The smallest sign-up bonus you can get for a rewards card is 2,500 points, which is about $25 in travel expenses. To get to the point where you may redeem gift cards, you need an additional 2,500 points. There is no annual charge, but there are alternative cards with larger sign-up bonuses and better rewards for things like gas and groceries. For instance, there are two credit cards that provide sign-up bonuses of $100 each; Chase Freedom and the BankAmericard Cash Rewards.
  2. In other words, there is no introductory annual percentage rate. Typically, a rewards card’s introductory APR promotion covers both purchases and balance transfers for 9–15 months. A promotional 0% for 15 months is available from Discover it, Chase Freedom, and American Express Blue Cash every day. Everyday purchases can earn rewards on any of the three cards, and there is no annual charge.
  3. Score low in terms of value. Each point is worth less than one penny unless you redeem them for airfare, a cruise, or cash (which requires 20,000 points). Rewards on other cards, like Chase Freedom and Discover, are worth at least one penny per point and can be redeemed for a statement credit, check, or direct deposit.
  4. International Finance Charge. If you use your card for purchases outside of the United States, the one percent (or more) foreign transaction fee may nullify any rewards you might otherwise receive from using your card. If you anticipate making a lot of purchases in a foreign country, a credit card that doesn’t charge you a percentage of the total like Discover it or Capital One Quicksilver Cash could be more convenient.

Bottom Line

When it comes to credit cards, the USAA American Express Rewards Card is the clear winner, offering military members cheap interest rates and generous rebates. However, there are a lot of alternative cash back cards that provide larger rates and bigger sign-up bonuses, especially for regular expenses like gas and grocery.

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