You need a credit card to make any progress on improving your credit, but that low credit score prevents card issuers from approving you.
A low credit score often puts you in a catch-22 type of situation. The credit cards you can actually get will come with few benefits, excessive fees and high interest. The USAA Secured Card is an excellent choice to avoid those issues. It’s an American Express card, which means it’s accepted in most areas throughout the United States and the rest of the world. It has the usual great rewards USAA offers along with the company’s low-interest rates. Learn more about it here to see if it fits what you’re looking for.
Everything You Should Know About the USAA Secured Credit Card from American Express
Here’s the basic info on this USAA benefits card:
- The annual fee is $35
- It has variable annual percentage rates (APR) of 10.9 to 20.9 percent with no penalty APR
- Balance transfers and cash advances have fees of 3 percent of the transaction amount, with a maximum of $200
- The fee for both late payments and returned payments is $25 for the first incident within the last six billing periods and $35 for subsequent incidents
- It’s a secured credit card and the credit limit can be anywhere from $250 to $5,000
You’ll find that the annual fee is very competitive compared to other credit cards intended for repairing a bad credit score or establishing credit. This USAA benefits card has low-interest rates and the lack of a penalty APR means that you don’t need to worry about getting hit with hefty interest charges if you slip up. One of the unique aspects of this American Express card is how the refundable security deposit works. With your typical secured credit card, you pay your security deposit upfront, and this amount of money becomes your credit limit. Once you either close the card or switch to an unsecured card, you get your security deposit back, as long as you’ve paid off what you owed.
Although you go through the same process when you get this USAA Secured Card, you’re actually opening a 2-year certificate of deposit (CD) with USAA Federal Savings Bank. Unlike with other card issuers who will simply keep your security deposit, USAA ensures that your security deposit grows. The CD will have a variable interest rate, and although the value won’t go up an enormous amount, you’ll still have more money than what you started with. Since it’s a variable rate CD, you’re also free to put more money into it whenever you want up to that $5,000 limit. If you do deposit more money, you’ll have a higher credit limit. Besides the growth of your security deposit, there are several other great rewards USAA provides to cardholders, including:
- No foreign transaction fees
- A waiver covering damage and theft of a rental car when you pay with your USAA card
- Assistance resolving identity theft
- Automatic extended warranties on products you purchase with your USAA card
Applying for the Card
To apply for this card, you need to go through the USAA website, and the process is easy enough. You’ll set up an account with USAA when you do so if you don’t already have one, and the application will require some standard information, including:
- Your full name
- Your home address
- Your phone number
- Your Social Security number
- Your date of birth
- Your employment and income
Once you submit your application, USAA will process the information to determine whether you’re approved and, if so, the exact terms it will offer you. You should be able to get the card even if you have a bad credit score, as it’s intended to help people in that situation.
Establishing or Repairing Your Credit
There is a large market of credit cards aimed at those who need to either start building their credit or fixing damaged credit due to previous financial issues. Thanks to its low annual fee, excellent interest rates, reasonable term and great benefits, this USAA card is definitely one of the top options you have available.
Since USAA reports your activity to the credit reporting bureaus, this card can be instrumental in boosting your credit score. Just remember that you need to have the right financial habits for this to work. If you don’t pay your bill on time or you have high credit utilization, you could end up bringing your credit score down and ending up worse off than when you started. USAA has free monthly credit monitoring available, and while you use this card, you’ll also be able to stay up to date on how your score is progressing.