A Secured Card With Some Unusual Perks
A secured card is a path to creditworthiness for individuals with low credit scores. With a secured card, you give the bank a certain amount of money that acts as security. The bank issues you “credit,” but only up to the amount you’ve deposited.
With the USAA Secured Card® Platinum Visa®, you get to pick your own credit limit from a range of $250 to $5,000. You’ll take that money and use it to open a two-year certificate of deposit (CD). Your CD is your credit limit and the security on your card.
Many secured cards ask that you take your cash and put it in a bank account, where it generally won’t earn any interest (not even the tiny amount that the money in your checking and savings accounts earns). The USAA Secured Card® Platinum Visa® does a little better where interest is concerned, offering cardholders variable interest on the balance of their CD. Currently, USAA lists a 0.54% Annual Percentage Yield (APY) on CDs associated with the card.
The bad news for those with low credit scores and tight budgets is that the USAA Secured Card® Platinum Visa® comes with annual fee of $35. If you’re a USAA member and you want the military-related benefits of a USAA card, the USAA Secured Card® Platinum Visa® could be a good option. But if you’re a member who doesn’t need special perks and just wants a secured card to build up credit, you might prefer a secured card that doesn’t charge an annual fee.
Set your own credit limit – One of the nice features of the USAA Secured Card® Platinum Visa® is that cardholders can set their own credit limits. The maximum credit limit for the card, $5,000 is also higher than some other secured cards. With the USAA Secured Card® Platinum Visa® you can start off with a credit limit as high as $5,000. Some other secured cards require you to make a certain number of on-time payments before they will raise your credit limit to the maximum allowable on the card.
Smart Tip: Don’t be tempted to go for the $5,000 credit limit if that’s more money than you could pay off in a month. It’s best to take a cautious approach to credit, especially when the point of the secured card is to help you build up your credit by making consistent on-time payments.
No foreign transaction fee – Traveling outside of the U.S. with your USAA Secured Card® Platinum Visa® Card? You won’t owe any foreign transaction fees.
Your deposit earns interest – With many secured cards, the money you give the bank as security just sits there until you’re ready to graduate from a secured card to a regular card. But with the USAA Secured Card® Platinum Visa®, your deposit earns interest in a two-year CD. As long as you keep the account for two years you’ll walk away with a little more money than you put in.
Special military benefits – Like other USAA cards, the USAA Secured Card® Platinum Visa® comes with special benefits for military cardholders. In case of deployment or Permanent Change of Station (PCS), your APR on your balance goes down to 4%. The same is true if you enter active duty, per the Servicemembers Civil Relief Act. However, it’s worth noting that we don’t recommend carrying a balance on a secured card because the money you’re “borrowing” comes out of your own deposit.
Who Its For
You can’t benefit from the USAA Secured Card® Platinum Visa® unless you’re a USAA member. If you’re a USAA member with poor credit, the USAA Secured Card® Platinum Visa® could be a good gateway to a regular credit card.
The USAA Secured Card® Platinum Visa® requires a minimum deposit of $250, though, so if that’s currently out of your price range you can look for a secured card that only requires a double-digit deposit and work from there, gradually increasing your credit limit.
If, on the other hand, your cash flow is good but your credit is poor you might appreciate the $5,000 maximum on the USAA Secured Card® Platinum Visa®. It’s higher than the maximum on some other secured cards, and gives you more room to keep your credit utilization ratio low. Your credit utilization ratio is the ratio of the money you spend to your credit limit. The lower it is, the more favorably the credit bureaus view you.
A high limit, assuming you can resist the temptation to spend up to the maximum, lets you keep to the sub-30% credit utilization ratio that the credit bureaus like to see.
How It Works
When you open a USAA Secured Card® Platinum Visa® you’ll decide on a credit limit between $250 and $5,000. Whatever limit you choose, you must have the cash on hand to buy a two-year CD equal to that amount.
Once your CD is purchased it will begin earning interest according to a variable Annual Percentage Yield (APY). As you make payments (on-time payments, we hope), your payment history will be reported to the credit bureaus and your credit score should rise.
Though the term of the CD is two years, you don’t necessarily have to keep the USAA Secured Card® Platinum Visa® for two years. You may be able to get a normal credit card after a year or 18 months with the card. When you close your account you’ll get back the money you put in the CD to secure the card. This process may take several days.
Unlike some secured cards, the USAA Secured Card® Platinum Visa® doesn’t automatically graduate to a regular credit card when you’ve made a certain number of on-time payments. If you want to make the jump to a true credit card, you’ll have to apply for a credit card separately.
What’s the Catch
The USAA Secured Card® Platinum Visa® doesn’t have a catch, per se. In fact, the APR range, 10.90% - 20.90% Variable is fairly low (though, again, paying interest on a secured card is not the smartest move). The catch with the USAA Secured Card® Platinum Visa®, to the extent that there is one, lies with the $35 annual fee and the $250 minimum deposit.
If you’re a USAA member with a poor credit score and limited access to funds, you might be better off applying for a secured card with no annual fee and a lower minimum deposit. You can always ask for a credit limit increase as you get more comfortable making payments.
Just the Math Please
The USAA Secured Card® Platinum Visa® doesn’t offer rewards such as cash back or points.
If you transfer a balance to the USAA Secured Card® Platinum Visa®, you will pay a 3% balance transfer fee, up to a maximum of $200 per balance. The same goes for cash advances.
Rates and Fees
Annual Percentage Rate (APR) for Purchases
10.90% - 20.90% Variable depending on your credit score. This APR is variable so can fluctuate according to movement in the Prime Rate.
APR for Balance Transfers
Your APR on any transferred balances will be the same as your regular APR. It will be between 10.90% - 20.90% Variable, depending on your credit score.
APR for Cash Advances
The APR range for cash advances is the same as the regular, APR range 10.90% - 20.90% Variable. Your APR will depend on your credit score.
Penalty APR and When it Applies
There is no penalty APR with the USAA Secured Card® Platinum Visa®. There is a late payment fee of $25 for your first time paying late within a six-month billing period. Otherwise, the late payment fee is $35.
How to Avoid Paying Interest on Purchases
Your due date is at least 25 days after the close of each billing period. If you pay your entire balance by each month’s due date you will not accrue interest charges.
Balance Transfer 3% of the amount of each transfer, up to a maximum of $200 per balance.
Cash Advance 3% of each cash advance, up to a maximum fee of $200 for each convenience check. The fee is waived when you’re transferring funds electronically to a USAA deposit account.
Foreign Purchase Transaction None
Late Payment Up to $35
Returned Payment Up to $35
How It Stacks Up
USAA offers secured cards, one with Visa and one with American Express. If you’re a USAA member and you want to stick with a USAA secured card, you’ll have to choose whether a Visa or American Express card will be more useful to you. Visa is accepted more widely than American Express.
As we’ve mentioned, the USAA Secured Card® Platinum Visa® has an annual fee of $35. Some competitor secured cards, including the Discover it® Secured Card – No Annual Fee, let you build up your credit score without paying an annual fee.
The USAA Secured Card® Platinum Visa® requires a minimum deposit of $250. Does that sound a little steep for you? If so, you might prefer a card like the Capital One® Secured MasterCard®, which can be had with a minimum deposit as low as $49.
USAA members who need to repair their credit could do worse than the USAA Secured Card® Platinum Visa®. If you can afford a $35 annual fee and a deposit of at least $250, you’ll have a card that reports to the credit bureaus and earns you a modest amount of interest on your deposit. Plus, you’ll have the benefits of a USAA card, including reduced APRs in the event of deployment, PCS or active duty.