USAA Secured Card® American Express® Helps Build Credit While Earning Interest: Review
When you apply for a loan, one of the first things the bank looks at is your credit score. If your credit’s not up to snuff, odds are you won’t get the green light. The USAA Secured Card® American Express® is designed for people who want to take their credit from bad to good.
This card is good if you need a stepping stone to a better credit rating. For example, you could use it to build credit for the first time or get a fresh start after a bankruptcy. We analyzed the USAA Secured Card® American Express® to see if you should use it to help build your credit score.
Improve Your Credit While Earning Interest
Unlike a traditional credit card, the USAA Secured Card® American Express® is a secured credit card. For the most part, you use it like a regular credit card. However, you just need to put down some cash as collateral. This card stands out because that cash can actually grow while you use it to improve your credit.
How the card works for people with bad credit
With a USAA Secured Card® American Express® account, you have to put up a deposit that doubles as your credit line. You can get started with as little as $250 or raise it to as much as $5,000.
The money you use for a deposit is put into a USAA certificate of deposit (CD). Your deposit earns interest at a variable rate. As long as you don’t default on your payments, you’ll get the money back once the CD matures in two years.
Tip: If you want to put up a smaller deposit at the beginning but increase your credit line later, you can always add money to the CD.
Using the card to grow your credit
The USAA Secured Card® American Express® is a credit card, not a prepaid debit card. That means your account history is reported to the major credit bureaus. So how do you use the card to improve your credit score? It’s simple -- good credit habits.
Below is a quick rundown of the what makes up your FICO credit score, the credit score used by most U.S. lenders:
FICO Credit Score Factors and Their Percentages
|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 most important factor that affects your credit score is your payment history. Understandably, Paying on time helps your score. Paying late does just the opposite. Once you’ve got a USAA Secured Card® American Express® account, the best thing you can do for your credit is to always get your payment in by the due date. (Set up automatic payments so you never have to worry about it.)
The other way to boost your score is to put up a bigger cash deposit because another big factor is your credit utilization ratio. This is how much debt you’re carrying versus your total credit limit. Generally, the ideal ratio is 30% or less.
If you have a high credit limit with your USAA Secured Card® American Express® account keeping the balance low can lead to a higher score over time. Paying the balance in full each month is an even better way to have a positive impact on your score.
Once you’ve got these two techniques down, you can keep the ball rolling by doing the following:
- Keeping old accounts open. Shutting down older accounts can drag your score down so avoid it if you can.
- Using different types of credit. If you’re building credit with a secured card, you could try mixing things up with an installment loan to balance things out.
- Limiting how often you apply for new credit. Each new inquiry knocks a few points off your score so only apply for credit when it’s really necessary.
Is the USAA Secured Card® American Express® Rewards Card?
USAA has some great rewards card options but this card isn’t one of them. That means no points, cash back or miles on your purchases. This card’s sole purpose is helping you amp up your credit score.
Special Banking Benefits for Military Members
USAA caters to military members and their families. As part of your card agreement, you get access to the following benefits:
- Reduced APR for deployment or PCS - If you’re deployed or get Permanent Change of Station orders, USAA can cut your annual percentage rate down to just 4%. That can take some of the stress away from trying to pay down a balance.
- Reduced APR while on active duty - USAA also extends the reduced 4% APR to card members who carry a balance while on active duty.
- Rebated finance charges - Eligible members may be able to get finance charges that accrued while they were on campaign refunded.
- Rebated interest charges - You may also qualify for a rebate of interest charges if you earn a medal while on campaign. This benefit applies to card members who earn the Global War on Terrorism Expeditionary Medal, the Afghanistan Campaign Medal or the Inherent Resolve Campaign Medal.
USAA understands that deployment is tough. They have a team of specialists who can help you to manage your account before, during and after you’re deployed. Just remember that you have to call USAA to apply for any of these benefits.
Extra Benefits for Travel and Shopping
You get more than just a way to build credit with your USAA Secured Card® American Express® account. This card also gives you some built-in perks that can make shopping or a trip less stressful.
- No foreign transaction fees. You won’t pay any extra fees when you use your card to make purchases outside the U.S.
- Complimentary concierge service. Your card comes with its own 24/7 concierge service to help with things like planning a getaway or booking a hotel.
- 31-day worldwide rental car insurance. If your rental car is damaged or stolen, you’re protected by USAA’s rental car coverage.
- Travel assistance services. This card offers travel, roadside, and emergency medical assistance when you’re away from home.
- Worldwide travel accident, baggage delay and trip cancellation insurance. If the worst happens on your trip, USAA’s insurance protections can keep it from being a total bust financially.
- Price protection. USAA can refund up to $250 to you if you see something you bought with your card on sale for less within 120 days of purchase.
- Extended warranty. USAA doubles the store brand warranty or the manufacturer’s warranty for up to one year on purchases you make with your card.
Generally, many these perks are often found with other credit cards, but not secured credit cards. It's nice to see that this card still provides such benefits for people with poor or no credit.
Building Credit Can Be Costly, Temporarily
If you’re looking for a card with a 0% introductory APR on purchases or balance transfers, this one’s not it. The same regular variable APR applies to purchases, balance transfers, and cash advances you make with the card.
The APR range has a high and low end so if you’re starting completely from scratch with building credit, you can expect to get a higher rate.
There are a few basic fees to keep in mind, starting with a $35 annual fee. The returned payment fee and late payment fee also go up to $35. There’s a separate fee for balance transfers and cash advances. That fee is 3% of the transaction amount, up to a max of $200.
Military Affiliation Required
Not just anyone can open a USAA Secured Card® American Express® account. 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 you’re not eligible to join USAA, look at other secured card options that can also help you increase your credit score.
Compared to USAA’s Other Credit-Building Cards
USAA Classic Visa Platinum®
The USAA Classic Visa Platinum® isn’t a secured credit card, but it is geared towards people who need a little help with their credit. This card is good for someone who has average credit and wants a shot at getting one of USAA’s premium cards in the future.
Compared to the USAA Secured Card® American Express® option, this card actually has a higher APR range. That’s something to consider if you’re angling for the best rate possible.
USAA Classic American Express Card® Credit Card
The USAA Classic American Express Card® Credit Card is very similar to the USAA Classic Visa Platinum® in terms of the APR and annual fee. The main point where the cards diverge is acceptance. Visa tends to be more universally accepted.
Once again, this card is aimed at people with average credit. If you don’t want to put up a deposit to get a credit card, you might want to look at this one or the USAA Classic Visa Platinum®. Just be mindful of the APR if you’re going to carry a balance at all.
USAA Secured Card® Platinum Visa®
The USAA Secured Card® Platinum Visa® card shares a lot in common with the USAA Secured Card® American Express®. The annual fee and APR range are the same. The $250 to $5,000 deposit is also identical.
Really, the difference between the two boils down to where you shop the most. If you shop at places where American Express isn’t accepted, this one might be the better pick.
Final Verdict: Solid Choice for Military Members to Build Credit
A USAA Secured Card® American Express® account could be a great fit for military personnel who is new to credit or trying to rebuild it. This card might not work as well if you don’t have at least $250 to put up for the deposit. We’d suggest, if you get this card, that you shoot to pay your balance in full each month. That way, you’re not paying extra for the interest if you get stuck with a higher APR.