Why Are USAA Savings Rates So Low?
USAA has built a reputation as a trusted financial institution for military members, veterans, and their families. However, many account holders have noticed that USAA’s savings rates are significantly lower than competitors—especially high-yield savings accounts offered by online banks.
So, why does USAA offer such low interest rates on savings accounts? And what are the best alternatives for members seeking better returns?
🔑 Key Takeaways: Why USAA Savings Rates Are Low
✔️ Does USAA offer competitive savings rates? ❌ No, its rates are far below national averages.
✔️ What is USAA’s current savings APY? 0.01% APY for standard savings, up to 0.93% APY (for balances of $500,000+).
✔️ Why are the rates so low? USAA prioritizes insurance and convenience over high-yield savings.
✔️ Does USAA need to attract deposits? ❌ No, it already has a strong, loyal membership base.
✔️ Are there better alternatives? ✅ Yes—banks like Ally, Marcus, and SoFi offer 4%+ APYs.
✔️ Should I move my savings? If you want to maximize earnings, parking savings elsewhere is highly recommended.
🏦 Why Doesn’t USAA Offer Higher Savings Rates?
USAA’s savings rates lag behind competitors because of structural, financial, and strategic decisions. Unlike online banks that aggressively compete for deposits, USAA prioritizes customer service, military benefits, and low insurance premiums over offering top-tier interest rates.
📊 USAA Savings Rates vs. Competitors (2025 Data)
| Bank | Standard Savings APY 📈 | High-Yield APY (No Min. Balance) 💰 |
|---|---|---|
| USAA | 0.01% | 0.93% (Only for $500,000+) |
| Ally Bank | 0.40% | 4.2% APY |
| Marcus by Goldman Sachs | 0.50% | 4.5% APY |
| SoFi | 0.25% | 4.6% APY |
| Capital One 360 | 0.30% | 4.35% APY |
💡 Pro Tip: Even a small shift in APY makes a huge difference over time. For example, $50,000 at 4.2% APY earns $2,100 per year, while the same amount at USAA’s 0.01% APY earns just $5 annually.
📉 USAA’s Business Model: Insurance First, Banking Second
Unlike pure banking institutions, USAA’s core focus is insurance rather than maximizing deposit growth. This business model prioritization explains why savings accounts are not a competitive priority.
📊 USAA’s Business Focus Breakdown
| USAA Financial Priorities | Importance Rank 🔢 | Impact on Savings Rates 📉 |
|---|---|---|
| Auto & Home Insurance | 🏆 #1 Priority | Keeps premiums low but limits banking perks. |
| Customer Service & Military Support | 🏅 #2 Priority | Offers excellent service but lacks high-yield incentives. |
| Banking & Savings Accounts | ⚠️ #3 Priority | Savings accounts are functional but not competitive. |
| Competitive Interest Rates | ❌ Low Priority | No need to attract deposits through high rates. |
💡 Pro Tip: USAA members benefit from superior insurance options but are better off moving savings to a high-yield bank.
🏗️ Operational Costs & Hybrid Banking Model
USAA is not a purely online bank—it operates a hybrid system that includes:
- Limited physical branches (Colorado, Maryland, New York, Texas).
- Full-service call centers for military families.
- High operational costs tied to insurance, customer service, and financial support.
📊 How USAA’s Costs Compare to Online Banks
| Bank Type | Physical Branches 🏢 | Overhead Costs 💸 | Ability to Offer High APY 📈 |
|---|---|---|---|
| USAA (Hybrid Model) | ✅ Yes (Few Locations) | ⚠️ Moderate | ❌ Limited Incentive for High APYs |
| Ally, Marcus, SoFi (Online-Only) | ❌ No | ✅ Low | ✅ Can Offer 4%+ APY |
💡 Pro Tip: Online banks pass savings from low overhead directly to customers in the form of higher interest rates.
💰 Does USAA Need to Attract Deposits? No.
One key reason banks offer high APYs is to attract more deposits—but USAA doesn’t need to.
✔️ USAA has over $110 billion in assets and 13 million loyal members who primarily use USAA for insurance and checking accounts.
✔️ Unlike commercial banks, USAA doesn’t rely heavily on consumer deposits to fund lending operations.
📊 Why Do Banks Raise Savings Rates?
| Bank’s Financial Need | Raises APY? ✅❌ | How USAA Compares 🏦 |
|---|---|---|
| Needs more deposits to fund loans | ✅ Yes | ❌ USAA doesn’t need to attract deposits. |
| Competing for new customers | ✅ Yes | ❌ USAA already has a stable, loyal base. |
| Low-cost operations allow high APY | ✅ Yes | ❌ USAA has higher expenses due to hybrid banking. |
💡 Pro Tip: If a bank doesn’t need your deposit, it won’t offer high interest to attract it. That’s why online banks, which rely on deposits, offer 4%+ APY while USAA stays at 0.01%.
🚀 What’s the Best Move for USAA Members?
If you have a USAA savings account, the smartest financial move is to split your finances:
✔️ Keep USAA for checking, insurance, and military benefits.
✔️ Move savings to a high-yield account (Ally, Marcus, SoFi, etc.) to earn more interest.
📊 How Much More Can You Earn By Switching?
| Savings Balance | USAA at 0.01% APY 🏦 | Online Bank at 4.5% APY 💰 | Difference Over 1 Year 📈 |
|---|---|---|---|
| $10,000 | $1 | $450 | $449 lost |
| $50,000 | $5 | $2,250 | $2,245 lost |
| $100,000 | $10 | $4,500 | $4,490 lost |
💡 Pro Tip: Don’t leave money on the table. A simple bank switch could make you thousands per year in passive earnings.
🔎 Final Thoughts: Why Are USAA Savings Rates So Low?
✔️ USAA prioritizes insurance & military services over high savings rates.
✔️ Their business model doesn’t depend on deposit attraction, so APYs stay low.
✔️ Hybrid banking structure limits flexibility compared to online banks.
✔️ Loyal customers may not demand better rates, allowing USAA to keep them low.
✔️ The best move? Use USAA for checking & insurance, but store savings elsewhere.
If you’re still using a USAA savings account, consider transferring your money to a high-yield bank. It’s a risk-free way to earn significantly more interest over time. 🚀
💬 FAQs: Expert Answers
Q: Why does USAA keep savings rates so low while other banks offer 4%+ APY?
USAA’s low savings rates stem from its core business focus, operational costs, and lack of competitive pressure to attract new deposits. Unlike online banks that need high-yield accounts to bring in customers, USAA relies on its insurance and banking convenience to retain members.
📊 USAA vs. Online Banks: Why Savings Rates Stay Low
| Factor | USAA Strategy 🏦 | Online Banks Strategy 💰 |
|---|---|---|
| Main Business Focus | Insurance, military benefits, and full-service banking. | Maximizing deposit growth and online banking efficiency. |
| Deposit Attraction Strategy | No need to attract new deposits—members stay for other services. | Uses high APYs to bring in customers and build capital. |
| Operational Costs | Hybrid model (call centers, limited branches) increases costs. | Lower costs due to digital-only operations. |
| Competitive Response | Slow to react to Fed rate hikes. | Adjusts APYs quickly to match market demand. |
💡 Pro Tip: USAA has no urgency to raise rates because members use it for convenience, not investment growth.
Q: Does USAA offer different savings rates for higher balances?
Yes, USAA has a tiered savings system, but even its best rates are far below market averages. The Performance First Savings Account provides slightly better returns, but only for balances of $500,000 or more.
📊 USAA Performance First Savings Rates (2025 Data)
| Balance Tier | Interest Rate (APY) 📉 | How It Compares to Market 📊 |
|---|---|---|
| $1,000 – $9,999 | 0.01% APY | Far below national average (0.41% APY). |
| $10,000 – $49,999 | 0.20% APY | Online banks offer 4%+ APY with no minimums. |
| $50,000 – $99,999 | 0.38% APY | Still nearly 10x lower than high-yield accounts. |
| $500,000+ | 0.93% APY | Still half of what online banks offer. |
💡 Pro Tip: Unless you’re depositing half a million dollars, you’ll earn far more by switching to an online bank.
Q: How much money am I losing by keeping my savings at USAA?
If you park your savings at USAA, you’re missing out on thousands of dollars per year in interest. The difference between 0.01% APY and 4.5% APY is staggering.
📊 Potential Interest Earnings: USAA vs. High-Yield Accounts
| Savings Balance | Interest at USAA (0.01% APY) 🏦 | Interest at Online Bank (4.5% APY) 💰 | Annual Loss 📉 |
|---|---|---|---|
| $10,000 | $1 | $450 | -$449 |
| $50,000 | $5 | $2,250 | -$2,245 |
| $100,000 | $10 | $4,500 | -$4,490 |
| $500,000 | $50 | $22,500 | -$22,450 |
💡 Pro Tip: Even with $10,000 in savings, you’re missing out on nearly $450 per year—free money you could be earning elsewhere.
Q: Why don’t USAA members demand better savings rates?
Many USAA members prioritize convenience, insurance benefits, and trust in the institution over maximizing savings interest. The loyalty factor is strong, and some members don’t actively compare rates.
📊 Why USAA Members Stick with Low Rates
| Reason for Staying | Explanation 🔎 | Impact on Savings 📉 |
|---|---|---|
| Trust in USAA’s brand & military service | Members have been with USAA for decades, trusting its financial stability. | Low awareness of how much interest they’re losing. |
| Convenience over returns | USAA offers seamless banking & insurance integration. | Customers avoid switching, even if rates are lower. |
| Lack of urgency to move funds | Some members don’t track APY differences closely. | They miss out on higher earnings elsewhere. |
| USAA doesn’t advertise savings rates | The bank focuses on insurance & checking perks. | Keeps members from realizing how uncompetitive the rates are. |
💡 Pro Tip: Check your monthly interest earnings—you may be shocked at how little you’re making.
Q: Is USAA ever going to raise savings rates?
USAA has been slow to respond to market trends in the past, and its rate adjustments tend to lag behind competitors. Even when the Federal Reserve raises interest rates, USAA has historically kept its APYs low.
📊 USAA’s Track Record on Raising APYs
| Year | Federal Reserve Interest Rate 📈 | Average USAA APY 📉 | Competitor APYs (Ally, Marcus, etc.) |
|---|---|---|---|
| 2020 | 0.25% | 0.01% | 0.50% – 1.00% |
| 2022 | 4.50% | 0.05% – 0.38% | 4.00% – 4.50% |
| 2025 (Current) | 5.25% | 0.01% – 0.93% | 4.2% – 5.0% |
💡 Pro Tip: If you’re waiting for USAA to match market rates, you’ll be waiting a long time.
Q: What’s the best way to maximize savings while keeping USAA for other services?
Many members use USAA for checking and insurance but transfer their savings to high-yield accounts elsewhere. This way, they keep the benefits of USAA without sacrificing interest earnings.
📊 Best Strategy for Managing Your Finances with USAA
| Financial Service | Best Option 🏦 | Why It’s the Best Move 💡 |
|---|---|---|
| Checking Account | USAA | No fees, strong military benefits, excellent customer service. |
| Auto/Home Insurance | USAA | Highly rated military-friendly insurance coverage. |
| Credit Cards | USAA or Chase Military Cards | Good rates, military-specific benefits. |
| Savings Account | Ally, Marcus, SoFi, Capital One | Earn 4-5% APY instead of 0.01% APY at USAA. |
💡 Pro Tip: You don’t have to close your USAA accounts—just move savings to a high-yield bank for better returns.
Q: What is the best alternative to USAA for high-yield savings?
If you want to keep your USAA account but earn more on savings, these banks offer some of the highest APYs with no hidden fees.
📊 Top High-Yield Savings Accounts (2025)
| Bank | APY 💰 | Minimum Balance 🏦 | Monthly Fees ❌ |
|---|---|---|---|
| Ally Bank | 4.2% APY | $0 minimum | No fees |
| Marcus by Goldman Sachs | 4.5% APY | $0 minimum | No fees |
| SoFi Bank | 4.6% APY | $0 minimum | No fees |
| Capital One 360 | 4.35% APY | $0 minimum | No fees |
💡 Pro Tip: Ally, Marcus, and SoFi are all FDIC-insured, meaning your money is just as safe as at USAA—but earning significantly more interest.
Q: Why doesn’t USAA raise its savings rates to match competitors?
USAA’s savings rates remain low due to its financial structure, operational priorities, and customer base behavior. Unlike online banks that adjust APYs frequently to attract new deposits, USAA relies on existing members who prioritize convenience, military benefits, and full-service banking over competitive interest rates.
📊 Why USAA Doesn’t Offer Higher APYs
| Factor | Explanation 🔎 | Impact on APY 📉 |
|---|---|---|
| Core Business Model | Focuses on insurance & full-service banking, not deposit growth. | Low incentive to raise savings rates. |
| Customer Loyalty & Inertia | Members rarely switch for better APYs, keeping deposits stable. | No pressure to increase interest. |
| Limited Need for Additional Deposits | USAA has a strong capital base and doesn’t rely on high-yield savings to attract funds. | Lower motivation to offer better rates. |
| Operational Costs | Call centers, legacy systems, and insurance infrastructure take priority. | Less budget allocated to high-yield savings incentives. |
| Slow Response to Market Changes | APY increases lag behind Federal Reserve rate hikes. | Customers lose potential earnings. |
💡 Pro Tip: USAA members who value savings growth should consider moving funds to a high-yield bank while keeping checking & insurance at USAA.
Q: How does USAA’s savings APY compare to the national average?
USAA’s 0.01% – 0.93% APY is well below the national average, which currently sits at 0.41% APY. Online banks, in contrast, offer 4.0% – 5.0% APYs, making them far more lucrative for savers.
📊 USAA Savings APY vs. Market Rates (2025)
| Bank | Standard Savings APY 📉 | High-Yield Savings APY 💰 |
|---|---|---|
| USAA Basic Savings | 0.01% | ❌ No high-yield option under $500,000. |
| USAA Performance First | 0.01% – 0.93% | Requires $500,000+ for top rate. |
| National Average (2025) | 0.41% | Standard banks adjusting to Fed hikes. |
| Ally Bank | 4.2% | No minimum balance required. |
| Marcus by Goldman Sachs | 4.5% | No fees or restrictions. |
| SoFi Bank | 4.6% | High APY for direct deposit users. |
💡 Pro Tip: Even traditional banks offer better rates than USAA, making it a poor choice for long-term savings growth.
Q: What does USAA offer instead of high savings rates?
While USAA’s savings APY is uncompetitive, it does provide other perks that may justify membership for those who value military-specific benefits, low fees, and strong customer service.
📊 USAA Benefits Beyond Savings Rates
| Feature | Benefit ✅ | Limitation ❌ |
|---|---|---|
| Military-Focused Services | Specialized financial planning for active-duty members. | Not useful for civilians or non-military families. |
| No Monthly Fees | Free checking & savings accounts with no minimums. | Low savings rates mean you earn less over time. |
| ATM Fee Reimbursements | Up to $10 per month in ATM refunds. | Doesn’t offset the lack of interest earnings. |
| Insurance Discounts | Competitive auto & home insurance rates. | Better savings APYs available elsewhere. |
| Strong Customer Service | 24/7 support for military families. | Not a reason to accept poor savings growth. |
💡 Pro Tip: If you use USAA for insurance, keep it—but for savings, moving funds elsewhere is a smart financial move.
Q: Can I move my savings to a high-yield bank and still use USAA for checking & insurance?
Absolutely! Many USAA members keep checking & insurance with USAA but transfer their savings to a higher-yield bank to maximize returns.
📊 Best Way to Manage Finances with USAA
| Account Type | Best Institution 🏦 | Why It’s the Best Move 💡 |
|---|---|---|
| Checking Account | USAA | Free checking, military benefits, strong security. |
| Savings Account | Ally, Marcus, SoFi, Capital One | 4-5% APY for higher interest earnings. |
| Auto/Home Insurance | USAA | Excellent customer service & military-specific discounts. |
| Credit Cards | USAA or Chase Military Cards | Military perks and competitive rates. |
💡 Pro Tip: By keeping your checking account at USAA but saving elsewhere, you get the best of both worlds—military-friendly banking plus high-yield savings.
Q: If I move my savings to another bank, is my money still safe?
Yes! All reputable high-yield banks are FDIC-insured, meaning your deposits are just as secure as they are at USAA—up to $250,000 per account holder.
📊 FDIC Insurance Protection
| Bank Type | FDIC Insured? ✅❌ | Coverage Limit 💰 |
|---|---|---|
| USAA Bank | ✅ Yes | Up to $250,000 per account. |
| Ally Bank | ✅ Yes | Same $250,000 FDIC protection. |
| Marcus by Goldman Sachs | ✅ Yes | Deposits fully covered. |
| Capital One 360 | ✅ Yes | Offers strong digital banking security. |
💡 Pro Tip: Your savings are just as safe (if not safer) in an online high-yield bank than they are at USAA.
Q: What is the smartest move for USAA members looking for better returns?
If you’re a USAA member who wants to keep using its services but also earn more interest on savings, follow these steps:
📊 Optimized USAA Financial Strategy
| Step | Action Plan 🚀 | Why It’s Beneficial 💡 |
|---|---|---|
| Step 1 | Keep checking & insurance at USAA. | No fees, military-friendly perks, seamless access. |
| Step 2 | Transfer savings to a high-yield bank. | Earn 40x+ more interest on your savings. |
| Step 3 | Use an online bank with no fees & high APY. | Maximizes growth without restrictions. |
| Step 4 | Monitor Fed rate changes & adjust accordingly. | Stay ahead of market shifts & APY fluctuations. |
💡 Pro Tip: This strategy ensures you don’t leave money on the table while still benefiting from USAA’s strengths.
Q: What’s the best alternative bank for high-yield savings?
If you want a high-yield account with no fees, these are the top alternatives to USAA savings accounts:
📊 Top High-Yield Savings Banks (2025)
| Bank | APY 💰 | Minimum Balance 🏦 | Monthly Fees ❌ |
|---|---|---|---|
| Ally Bank | 4.2% | $0 minimum | No fees |
| Marcus by Goldman Sachs | 4.5% | $0 minimum | No fees |
| SoFi Bank | 4.6% | $0 minimum | No fees |
| Capital One 360 | 4.35% | $0 minimum | No fees |
💡 Pro Tip: SoFi and Marcus often have the best rates, but Ally is great for overall banking convenience.
Q: Is USAA planning to increase its savings rates anytime soon?
USAA has historically been slow to adjust savings rates, even when the Federal Reserve raises interest rates. While many banks responded to the Fed’s rate hikes by offering 4-5% APYs, USAA has kept its rates stubbornly low—often lagging behind industry trends by several months or longer.
📊 USAA vs. Federal Reserve Rate Hikes
| Year | Federal Reserve Rate 📈 | USAA Savings APY 📉 | High-Yield Banks APY 💰 |
|---|---|---|---|
| 2020 | 0.25% | 0.01% | 0.50% – 1.00% |
| 2022 | 4.50% | 0.05% – 0.38% | 4.00% – 4.50% |
| 2025 (Current) | 5.25% | 0.01% – 0.93% | 4.2% – 5.0% |
💡 Pro Tip: If you’re waiting for USAA to catch up with high-yield savings accounts, you’ll likely be waiting a long time. Instead, transfer funds to an online bank now and start earning higher returns immediately.
Q: How much more money could I earn by switching from USAA to a high-yield savings account?
If you keep your money in USAA’s standard savings account (0.01% APY), you are missing out on thousands of dollars in lost interest compared to high-yield savings accounts that offer 4%+ APYs.
📊 Annual Interest Earnings: USAA vs. High-Yield Savings
| Savings Balance | Interest at USAA (0.01% APY) 🏦 | Interest at Online Bank (4.5% APY) 💰 | Annual Loss 📉 |
|---|---|---|---|
| $10,000 | $1 | $450 | -$449 |
| $50,000 | $5 | $2,250 | -$2,245 |
| $100,000 | $10 | $4,500 | -$4,490 |
| $500,000 | $50 | $22,500 | -$22,450 |
💡 Pro Tip: Even with just $10,000, moving to a high-yield account can earn you hundreds of dollars more per year—without any extra effort.
Q: Does USAA intentionally keep savings rates low because members don’t leave?
USAA has no direct incentive to raise rates because its business model relies on customer loyalty and bundled services. Since most USAA members join for insurance, banking convenience, and military-focused financial services, there is less urgency to offer competitive APYs.
📊 Why USAA Doesn’t Compete on Savings Rates
| Factor | Why USAA Doesn’t Raise Rates 🏦 | How It Affects You 📉 |
|---|---|---|
| Loyal Customer Base | Many members stay for convenience, not for rates. | USAA doesn’t feel pressure to offer higher APYs. |
| Main Business Focus | Insurance & loans, not high-yield savings. | Banking customers are not their primary target. |
| No Need for More Deposits | Already has a strong asset base. | Doesn’t need to attract funds with better interest rates. |
| Slow Response to Market Trends | Lags behind Fed rate increases. | Customers lose potential interest earnings over time. |
💡 Pro Tip: USAA’s strategy depends on members not actively shopping for better rates. Stay informed and move your savings elsewhere for better financial growth.
Q: What are the best alternatives to USAA’s savings accounts?
If you want higher interest rates with no hidden fees, consider moving your savings to a high-yield bank.
📊 Best High-Yield Savings Accounts (2025)
| Bank | APY 💰 | Minimum Balance 🏦 | Monthly Fees ❌ |
|---|---|---|---|
| Ally Bank | 4.2% | $0 minimum | No fees |
| Marcus by Goldman Sachs | 4.5% | $0 minimum | No fees |
| SoFi Bank | 4.6% | $0 minimum | No fees |
| Capital One 360 | 4.35% | $0 minimum | No fees |
💡 Pro Tip: Ally and Marcus are great for high-yield savings, while SoFi is excellent for combined checking & savings accounts.
Q: Can I still keep my USAA checking and insurance while moving savings elsewhere?
Yes! Many USAA members use USAA for checking and insurance but move their savings to a high-yield bank to earn better interest.
📊 Best Strategy for Managing USAA & High-Yield Savings Together
| Financial Product | Best Institution 🏦 | Why It’s the Best Move 💡 |
|---|---|---|
| Checking Account | USAA | No fees, military benefits, strong customer service. |
| Savings Account | Ally, Marcus, SoFi, Capital One | Earn 4-5% APY instead of 0.01% APY at USAA. |
| Auto/Home Insurance | USAA | Highly rated military-friendly insurance coverage. |
| Credit Cards | USAA or Chase Military Cards | Military perks and competitive rates. |
💡 Pro Tip: Keeping checking and insurance at USAA while using a high-yield bank for savings ensures you get the best of both worlds—military perks and higher interest earnings.
Q: How do I transfer my savings to a high-yield bank?
Transferring your savings to a high-yield bank is a simple and quick process that can be done online in minutes.
📊 Steps to Move Your Savings from USAA to a High-Yield Account
| Step | Action Plan 🚀 | Time Required ⏳ |
|---|---|---|
| Step 1 | Choose a high-yield savings account (Ally, Marcus, SoFi, etc.). | 5-10 minutes |
| Step 2 | Open an account online—no fees or minimum balance needed. | 10 minutes |
| Step 3 | Link your USAA checking account for easy transfers. | 1-2 days |
| Step 4 | Transfer savings and start earning higher interest immediately. | Same day to 3 days |
💡 Pro Tip: Online high-yield banks make it extremely easy to set up and transfer funds—most accounts are opened within minutes.
Q: How safe is my money in a high-yield savings account?
Your money is just as safe in a high-yield savings account as it is at USAA because all major online banks are FDIC-insured up to $250,000 per depositor.
📊 FDIC Insurance Protection at High-Yield Banks
| Bank Type | FDIC Insured? ✅❌ | Coverage Limit 💰 |
|---|---|---|
| USAA Bank | ✅ Yes | Up to $250,000 per account. |
| Ally Bank | ✅ Yes | Same $250,000 FDIC protection. |
| Marcus by Goldman Sachs | ✅ Yes | Deposits fully covered. |
| Capital One 360 | ✅ Yes | Offers strong digital banking security. |
💡 Pro Tip: A high-yield savings account is just as secure as USAA—so there’s no reason to settle for low interest rates.
