For those planning to move their money out of the bank, here are some general things to do so you don’t run into issues:
Checking Account
- Open your new account outside of USAA (obviously). I am personally going with Fidelity Cash Management because of its 2.6% APY and unlimited ATM reimbursements, but you do you. I’m generally fond of Fidelity, but there are plenty of other good options out there.
- Look through your transaction history on your USAA debit card/checking account for the last couple months to identify any automatic withdrawals (rent, mortgage, credit card payments, electric, water, etc.) and note those down ALONG WITH THE TRANSACTION DATES.
- Go into OneSource and update your direct deposit to point to your new checking account and have the “balance” selection go to your new account.
- Go back to your list of automatic debits from step two, go into those respective accounts and update the direct debit location from USAA to your new bank. For me this would include updating my automatic mortgage payment, adding my new checking account as a payment account for my credit card, and updating my utilities accounts.
- Make sure you have enough in the new account to cover these direct debits before cutting over. This is where knowing the transaction dates is important.
- This is where you need to be tactical. You are going to have all of your paychecks going into the new account going forward and have updated your direct debits. But you may also have automatic drafts against your USAA checking account in the meantime that you didn’t catch. You will need to determine how much cash to keep in your USAA account until you can switch everything over to the new account. I will probably keep $1,000 in the USAA account for a period of time until I’m sure the dust has settled and that I won’t get hit with an overdraft.
Savings Accounts
- I haven’t used USAA’s atrocious savings accounts for years. I have all of my emergency savings in online high-yield savings accounts. I have personally used Marcus by Goldman Sachs and currently use M1 Finance with an M1 Plus membership. M1’s new HYSA pays 5% APY. This means that with my emergency fund I will earn $1,000 per year in interest vs $2 at USAA. That’s not an exaggeration, USAA’s rates are just that bad.
- Ally and Marcus are both highly regarded HYSAs with no fees. Capital One also has a high yield savings account, so you could have a “one stop shop” for your banking needs if you wanted to go with them and open a checking account, savings account, and credit card. The personal finance subreddit has a good list to choose from and you can find that with a quick Google search.
Credit Cards
- Don’t close your credit cards because that can negatively impact your credit score.
- Periodically make a charge to any open cards so they don’t get closed for inactivity. This could be as simple as paying for one of your streaming services on that card and nothing else.
- Research cards that are good for your lifestyle. There are tons of cards out there with no annual fees that earn cash back, but most people who are into credit cards will tell you that points/miles are the way to go. These often have annual fees, but are usually easy to get value from them to offset those fees. There are way too many cards to list, but just Google “best cards for x” and look for results from NerdWallet, Reddit, or The Points Guy.
That is my approach for switching bank products.
As far as insurance, I’m currently shopping around for insurance and have already gotten a quote that will save me at least $300 per 6-month period on auto. The homeowners insurance quotes I’ve gotten so far have been more or less the same, but I’m sure I can find lower quotes with more research.
Here’s something to consider about insurance, though: insurance policies are contracts that are often times identical from insurer to insurer. This means that, technically, all else being equal, USAA is obligated to pay exactly the same as Geico or Progressive or Allstate.
The difference that I have personally seen with USAA is that, generally speaking, USAA would go out of its way to look for any possible way to cover you in the event of an accident or loss. The same can’t be said of other insurers. Companies like Allstate will look for any loophole or exception within the policy to deny coverage or lowball the settlement amount. This is just one area where, at least in the past, USAA could demonstrate its exceptional service. With the changes that have happened in the last few years, I don’t know if they still do this.
With my experience with USAA claims, credit where credit is due, USAA felt like they would do everything in their power to make members whole, at least historically. My point in saying this is that look at the whole picture when deciding who will cover your vehicle/home. Insurance companies are not all created equal. Amica and Chubb are two companies that I frequently heard managers mention as insurers that could go toe to toe with us service wise. So do with that information what you will.
Service is important, but also consider the fact that most people aren’t dealing with insurance adjusters often, so there’s no need paying way more to speak to a friendly adjuster once every 5 years or however long you go between claims.
To summarize a bit: USAA’s banking products are mostly horrible. There’s really not a single compelling reason to use USAA‘s bank products that I can see. The only redeeming factor that I can think of is that USAA is sitting on a metric ton of cash, so the likelihood of them going insolvent is about as close to zero as it gets.
Insurance is a bit more tricky because historically USAA truly has been able to set themselves apart in terms of service because of how financially strong we are/were. I think it’s unclear if that’s still the case. So while you can likely find insurance that is cheaper elsewhere, make sure that you are truly getting the same coverage at the new insurer and that they are financially strong. This is where it could be beneficial to talk to an independent insurance broker. There are so many moving parts and different coverages with insurance, so at least know what you’re getting yourself into.
Good luck! Please share any best practices or considerations that you want!