USAA Classic American Express® Credit Card for Improving Fair Credit: Review

Oct 13, 2016 | Be First to Comment!

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Your credit score tells lenders a lot about how responsible you are with money. If your score’s just average, you can get approved for credit but you may not get the best interest rates. The USAA Classic American Express® Credit Card gives you a chance to change that.

This card is meant for people who have fair credit and want to see their score improve over time. If you use your card wisely, you could begin to notice a significant difference in your credit in as little as 6 months.

Besides that, it also comes with some added benefits that make it ideal for military members. We take a closer look at the card's features to see if it can help you improve your credit.

Build Better Credit Without a Security Deposit

Raising your credit score doesn’t require magic tricks. It all comes down to how you use your credit accounts. The USAA Classic American Express® Credit Card is made for purchases only. You can’t use it to take a cash advance or transfer a balance. These two transactions tend to come with fees and possibly higher APRs.

Because you cannot use these transactions to rack up more debt, it can work in your favor. You'll focus on growing your credit score.

What goes into your FICO score

FICO credit score factors Percentage weight on credit score: What it means:
Payment history 35% Your track record when it comes to making (at least) the minimum payment by the due date.
Amounts owed 30% How much of your borrowing potential is actually being used. Determined by dividing total debt by total credit limits.
Length of credit history 15% The average age of your active credit lines. Longer histories tend to show responsibility with credit.
Credit mix 10% The different types of active credit lines that you handle (e.g., mortgage, credit cards, students loans, etc.)
New credit 10% The new lines of credit that you've requested. New credit applications tend to hurt you score temporarily.

The FICO credit score is the standard metric used by the U.S. lending industry. The biggest part of your FICO credit score is based on your payment history. Another 30% is based on how much debt you have versus your total credit limit. In credit-speak, that’s called your credit utilization ratio.

So how can you get better credit with the USAA Classic American Express® Credit Card? It’s simple. Aim to use less than 30% of your credit line and you always pay on time, no matter what.

Even better, pay your balance in full each month. That way, you build a positive payment history and avoid interest charges.

USAA will periodically review your account to see how you’re doing with the card. If you have a steady track ready of responsible use, they may upgrade you to a premium card. That could mean a lower annual percentage rate (APR) and a shot at earning rewards on purchases.

Tip: Want to know what else you can do to achieve better credit? There are various ways you can improve your credit score significantly.
Another popular option for rebuilding credit is a secured credit card. It requires a security deposit as collateral. So, you would need to put down cash upfront to build credit. Generally, it is easier for people with bad credit to qualify for a secured card. Compared to a secured credit card, the USAA Classic American Express® Credit Card is almost as easy to qualify for people who don't have good credit.

Can You Earn Rewards With the Card?

Earning cash back, points or travel miles is a great reason to get a credit card but this one may disappoint you. The USAA Classic American Express® Credit Card doesn’t have a rewards program. You may not mind that much, however, if you’re able to get some positive results with your credit score.

What Military Members Will Like About the Card

USAA credit cards are geared towards military members and their families. Part of being a USAA member means you get some added protections.

Here’s how this card can benefit you:

  • APR reduction for deployment/PCS - USAA can lower your APR to 4% for up to one year if you’re deployed or get PCS orders. That can make it easier to pay down your balance while you're away.
  • APR discount for active duty service - The Servicemembers Civil Relief Act (SCRA) gives military members a 6% APR on credit card and other loan debt they incur prior to active duty. USAA goes one better and drops the APR to 4%.
  • Finance charge rebates - If you’re serving on campaign, you may be able to get the finances charges that accrued on your account refunded.
  • Interest charge rebates - USAA may also refund your interest charges if you earn a medal while on campaign. Specifically, you have to earn the Global War on Terrorism Expeditionary Medal, the Afghanistan Campaign Medal or the Inherent Resolve Campaign Medal.

USAA has a team of specialists who can help you to manage your account before, during and after a deployment. If you want to take advantage of any of these benefits, you just have to give USAA a call to see if you’re eligible.

Get Even More Card Perks for Travel and Shopping

If you’re planning a vacation or just a trip to the mall, you’ll want to take this card along. It comes with a full list of features to increase your peace of mind everywhere you go.

Travel benefits and protections

  • No foreign transaction fees. Paying a 3% fee on foreign purchases can add up fast. Fortunately, USAA doesn’t add on a fee when you use your card outside the U.S.
  • Complimentary concierge service. Card members have access to their own personal concierge on a 24/7 basis. That's good when you need help planning a trip or booking dinner reservations.
  • 31-day worldwide rental car insurance. Getting in an accident with a rental car can be a nightmare. With this card, you’re covered against accidental damage and theft.
  • Travel assistance services. When you’re traveling more than 100 miles away from, you can rely on USAA’s travel services if you get in a bind. That includes help with medical emergencies or car trouble.
  • Worldwide travel accident, baggage delay, and trip cancellation insurance. If something goes wrong while you’re away, USAA has got you covered with built-in insurance.

Shopping protections

  • Price protection. If you buy something and see it on sale for less within 120 days, USAA may refund up to $250 of the price difference refunded.
  • Extended warranty. USAA doubles the store brand warranty or the manufacturer’s warranty on things you buy for up to one year.

Annual Fee is a Minor Setback

The USAA Classic American Express® Credit Card doesn’t have a 0% introductory period for purchases. A variable APR applies to anything you charge and your rate is based on your creditworthiness.

The rate range is on the high side but that’s typical of cards for people who have average credit. Someone who’s got excellent credit would be able to land a card with the best rates. Excellent credit usually means a score of 750 or higher.

This card has a $35 annual fee. You'll have to decide whether the potential to raise your credit score is worth it. The returned payment fee and late payment fee also go up to $35.

The annual fee shouldn't be a surprise because the card is designed for people who have poor to average credit.

Who Can Apply for the USAA Classic American Express Card?

The USAA Classic American Express® Credit Card is available to USAA members. To join USAA, you have to be one of the following:

  • An active, retired or honorably separated officer or enlisted personnel of the U.S. military
  • An officer candidate in a commissioning program (Academy, ROTC, OCS/OTS)
  • A spouse, widow, adult child or stepchild of a USAA member

If none of those apply, you won’t be able to get a USAA credit card. Luckily, there are plenty of other credit card options for people with fair credit.

How It Measures Up Against Other USAA Credit Cards

USAA Classic Visa Platinum®

The USAA Classic Visa Platinum® is almost identical to the USAA Classic American Express® Credit Card. You get all the same military benefits and many of the same travel and shopping protections. The biggest difference between the two cards is acceptance.

In general, Visa is accepted in more locations than American Express. If you shop at retailers that don’t take American Express, you may want to pick this card instead.

USAA Secured Card® American Express®

The USAA Secured Card® American Express® is another way to build, rebuild or just improve your credit score. With this card, you put up a $250 cash deposit to open your account. That money is parked in a USAA interest-bearing CD.

You can deposit up to $5,000 if you like and whatever you deposit serves as your credit line. You won’t get any rewards with this one but it can prove valuable for increasing your credit score.

USAA Secured Card® Platinum Visa®

If you prefer a secured Visa, the USAA Secured Card® Platinum Visa® hits the mark. It also requires a deposit of at least $250, with a max deposit of $5,000. The $35 annual fee and the APR range are the same as the USAA Secured Card® American Express®.

Bottom line? The biggest difference is acceptance so you have to decide if you like Visa or American Express better.

Final Verdict: For Cash-Strapped People to Rebuild Credit

The USAA Classic American Express® Credit Card is good for someone who wants better credit and pays their bill in full each month. We wouldn’t necessarily recommend it if you carry a balance because of how high the APR is.

Ultimately, whether you should get the card comes down to how you feel about paying an annual fee to get better credit. Also, don't forget that the strict membership requirement means that only people with military affiliation will be able to get this card.

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