USAA CD Rates Review

Sep 01, 2017 | Be First to Comment!

USAA is a trusted bank that serves military members and their families. If you’re eligible to open accounts at USAA, you might want to consider opening a certificate of deposit (CD) for the sake of keeping all your accounts with one bank.

However, it may not be the best option if your goal is to grow your savings in the fastest way.

Learn more about the CDs offered by USAA and see if they fit your goals:

High Interest Rates Found Elsewhere

A CD is a type of bank account that gives you the opportunity to earn interest on your savings. They function much like a savings account, but with two big differences. The first is that they tend to offer more interest than a savings account. The second is that there are restrictions on depositing or withdrawing from a CD.

To make changes to your CD you either must wait for the CD’s term to expire or pay an early withdrawal fee. If you want to withdraw from your CD, you’ll need to withdraw the full balance.

Tip: Get an idea of how much interest your CD will earn with a CD calculator.
USAA offers three types of CDs:
  • Variable Rate CD
  • Adjustable Rate CD
  • Fixed Rate CD.

Variable Rate CD

When opening a Variable Rate CD, you can choose from one of two terms, 182 days or 1 year. The minimum deposit to open a variable rate CD is only $250, so it’s a good choice for people who are starting to save.

The interest you earn depends on which maturity you select. Longer maturities tend to come with higher interest rates, but sometimes the rates can be equal. Because the CD has a variable interest rate, how much you’re earning can change at any time. This can be good if rates go up, but bad if they go down.

The Variable Rate CD is unique in that it lets you deposit more money into it without a penalty. This feature is very unusual among CDs and is another factor that makes it a great choice for new savers.

Adjustable Rate CD

The Adjustable Rate CD also allows the interest rate to change during the CDs term. The perk is that this time, the power is in your hands. If interest rates go up during the CD’s term, you can request a one-time rate increase of up to 2%. You can also make a one-time additional deposit when you request a rate increase.

The Adjustable Rate CD offers three terms: 3, 4, or 5 years. The longer the CD term, the higher the interest rate.

Fixed Rate CD

The Fixed Rate CD pays the same interest over the life of the CD no matter what happens. This is good if you open a CD during a time when rates are high. On the flip-side, locking money up with low return can hurt if interest rates increase.

There’s a huge variety of terms available, ranging from 30 days to 7 years.

Both the Adjustable Rate and Fixed Rate CDs offer Standard, Jumbo, and Super Jumbo varieties. You qualify for the Jumbo CD by depositing at least $95,000. The Super Jumbo CD requires $175,000 or more. If you qualify for one of the higher balance CD tiers, you’ll earn more interest

One draw of USAA’s CDs is the option to have the interest paid out to a checking account rather than reinvested into the CD. That makes them a good way to create a safe income stream from a lump sum of cash. This can be especially valuable for retirees or people who are nearing retirement age.

All told, USAA’s CD rates are very low, even on the long term CDs. Most online banks offer savings accounts with better rates no deposit or withdrawal restrictions. The main reason to open a CD at USAA isn’t the interest, it’s the customer service and ability to keep your accounts in one place.

Early Withdrawal Penalties

When you deposit money at a bank, you’re effectively making a loan to the bank. You give the bank your money and in exchange, the bank pays you interest. The bank makes money by lending your money to other customers and charging them interest.

With a savings or checking account, you could come ask for your money anytime. That makes it difficult for the bank to use your money for longer, but more lucrative loans. When you open a CD, you’re committing to leaving your money in the bank for a certain period of time. That makes it easier for the bank to make long term loans. If you break your agreement and ask for the money back sooner, it could cause the bank trouble.

For that reason, CDs charge an early withdrawal penalty. If you need your money back before the CD’s term ends, you’ll be charged an amount based on the original term of the CD.

USAA’s early withdrawal penalties are as follows:

USAA Bank CD Early Withdrawal Penalties

CD Term Early Withdrawal Penalty
30 days or less 30 days of interest
31 days to 1 year 90 days of interest
More than 1 year to 5 years 180 days of interest
More than 5 years 365 days of interest

CDs are insured by the Federal Deposit Insurance Corporation so you cannot lose money if the bank goes out of business. FDIC insurance insures a maximum of $250,000 per person, per account type. The only way to lose money on a CD is by incurring an early withdrawal penalty that is greater than the amount of interest you’ve earned.

Minimum Deposit Requirement

The minimum deposit that is required is different for USAA’s different types of CDs. The Variable Rate CD has the lower minimum at $250. The Adjustable Rate CD and the Fixed Rate CD share a $1,000 minimum deposit requirement.

If you’re opening an IRA CD, the minimum is $250, even if you get an Adjustable Rate CD.


USAA does offer IRA CDs, letting you get the tax benefits of an IRA with the safe returns of a CD. USAA’s IRA CDs offer the same terms as its non-IRA CDs, with one exception: a lower minimum deposit of $250.

What Happens When the CD Matures?

When a CD’s term ends it is said to have matured. When a CD matures, you have the opportunity to make changes, such as withdrawing some or all of the money or making an additional deposit.

USAA offers a 10-day grace period during which you may make changes. If you fail to make changes to your CD within 10 days of it maturing, your CD will automatically renew for the same term at whatever the market interest rate is. If that happens, you’ll need to wait until the new CD matures before you can make a penalty-free withdrawal.

How Does It Compare?

USAA isn’t the only bank offering CDs. If you’re looking for the best interest rates available, consider these competitors.

Synchrony Bank

Synchrony Bank’s CDs’ interest rates vary by the amount you’ve deposited. Like USAA, there are three balance tiers that affect your rate, but the rates are overall much higher. That makes Synchrony Bank a good choice for people looking to earn a good return on a high balance CD.

You can open a CD with a term ranging from 3 to 60 months with a minimum deposit of $2,000.

Goldman Sachs Bank USA

Goldman Sachs Bank USA offers CDs with terms ranging from 6 months to 6 years. Its rates are market leading, especially for longer term CDs.

The main draw of Goldman Sachs Bank USA is its low minimum deposit requirement: just $500. You also get a 10-day rate guarantee. If rates go up in the first 10 days after you open your CD, your CD’s rate will automatically be increased to match.

Ally Bank

Ally Bank is a popular online bank that offers a full suite of financial services to its customers. You can open three different types of CDs at Ally.

The first is the High Yield CD. This is a no-frills CD with terms ranging from 3 months to 5 years. You deposit your money and wait for it to accrue interest as it matures. Ally’s rates are far higher than USAA’s making it a tempting choice.

The second is the Raise Your Rate CD. You can choose a 2 year or a 4-year term. With a 2-year CD, you can choose to increase your CD’s interest rate to the market rate once during the CD’s life. With a 4-year CD, you can opt to increase the rate twice. That makes it a good choice for people who think rates are due to go up.

The third option is the no penalty CD. As its name implies, you won’t pay an early withdrawal penalty if you need to take money out of this CD. The only term you can choose is 11 months. Your interest rate is determined by which of the three balance tiers your CD falls in.


USAA’s CDs offer lackluster interest rates but come from a financial institution with one of the best reputations out there. If you already have accounts at USAA you might consider a USAA CD, but if you want the best deal when it comes to the numbers, look for a CD elsewhere.

If you already have accounts at USAA you might consider a USAA CD, but if you want the best deal when it comes to interest rates, look for a CD elsewhere.

More: Best Certificates of Deposit of the Year
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