bank rates

Should I Stay With USAA?

USAA logoLast month, USAA Federal Savings Bank said in a letter to customers it would offer its products “only to veterans, those currently serving in the military and their eligible family members.”

Previously, the San Antonio-based bank offered nationally available checking, savings and CD accounts.

USAA’s move comes as no surprise.

Many banks and credit unions are trying to improve loan-to-deposit ratios by discouraging or limiting new accounts and keeping yields low.

Plus, according to the letter, the new USAA customer restrictions are consistent with its historical “mission … to serve our service members and their families.”

The letter advises current depositors who don’t otherwise qualify that they can continue to open new accounts as “long as one (existing) account remains open and active.”

I don’t meet USAA’s military affiliation test, but I do have an account – a jumbo CD that matures Nov. 30.

Should I keep it open when it matures – in some amount and for some term – to be in a position to take advantage of future USAA deposit deals?

The bank’s current posted rates argue against doing this.

Here are some of USAA’s far-from-competitive APYs for “regular” (i.e., less than $95,000 balance) CDs:

  • 1 year – 0.71%
  • 2 years – 0.81%
  • 3 years – 0.91%
  • 5 years – 1.06%

On the other hand, who knows what future promotions the bank may serve up that I’d be missing out on if I were to close my CD account?

After all, although its current rates border on pathetic, USAA has offered decent rates in the past (like the 2.03% APY borne by my current CD, opened in 2010).

And maybe USAA will feel compelled to compete in the future with credit unions focusing on military-related customers, such as PenFed and Andrews Federal Credit Union, which occasionally offer outstanding CD rates.

Preserving my USAA “grandfather” status would apparently involve relatively little financial sacrifice.

The bank’s customer service people have indicated to me that I could remain a customer in good standing by, say, reducing the balance of my CD at maturity to $1,000 (the minimum deposit) and changing the term to one year.

My rate would be only 0.71%, but – what the heck – maybe it would be worth it if in a year USAA were back at its old practice of offering competitive yields!

At least I have a few more weeks to ponder the matter.

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