USAA has established a reputation for competitive service and perks for members of the military and their family. There are a few different options that military families have, but USAA is one of the most popular. One of the many aspects of banks and credit unions that people search for is the interest on savings accounts. While savings accounts aren’t the best way to grow your money, it’s nice to know that your money will grow even if you don’t touch it. So, how good is USAA savings account interest? It depends on your situation, and here’s how:

Savings Account Options

USAA offers two main options when it comes to savings accounts. There is the regular USAA Savings Account, and the USAA “Performance First” Savings Account. There are two main differences between the two accounts:

  • The minimum deposit required to start the account
  • Interest rate scaling

As of today (07/18/2020), the minimum deposit for the traditional USAA savings account is only $25. In stark contrast, the minimum deposit for the “Performance First” account is $10,000. With the vanilla account, you get the same 0.05% APY on the money in your account regardless of how much you hold. On the other hand, the “Performance First” account offers interest rate scaling that rises at different landmark account balances.

Performance First Rate Scaling

The way that the PF savings account scales is as follows:

  • $0 to $24,999 gets an APY of 0.05% (Equal to the regular account)
  • $25,000 to $49,999 gets an APY of 0.1%
  • $50,000 to $99,999 gets an APY of 0.15%
  • $100,000 to $249,999 gets an APY of 0.2%
  • $250,000 to $499,999 gets an APY of 0.25%
  • $500,000 to $999,999 gets an APY of 0.55%
  • $1 million or more gets an APY of 0.58%

As you can see, interest rates gets more aggressive as you store more money. This makes sense, as the more money you give them, the more they can invest and build on themselves. While this seems like a good reason to store a bunch of money in your USAA savings account, there may be another way to look at it.

Should I Save With USAA?

My answer is: No. While banks like USAA offer extremely competitive perks to military families, I don’t think USAA savings account interest is one of those. You can easily find widely available accounts that will give you a better return on your savings. For example, Ally Financial offers a high-yield online savings account that currently offers 1% APY on all balance tiers. This means that, no matter how much you hold with Ally, you will make 1% APY on your money. That is higher than every single tier with USAA.

With that said, I honestly don’t think you should use savings accounts as your primary method of saving at all. While a small emergency fund is great, you should use the articles below to better utilize the money you hold.

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