CDs, or certificates of deposit, are a great long term savings strategy, offering higher interest rates than a normal bank account in exchange for a commit to leave the money in the account for a set time period. Many people are attracted to the reasonable interest rates and flexibility of USAA CDs in particular.
Are USAA CDs for Armed Services Members Only?
You may wonder if you even qualify to buy a USAA CD, considering that USAA usually caters to members of the armed forces. The good news is that any American citizen can purchase a USAA CD. Despite offering many services exclusively to servicemen and their relatives, USAA actually has no restrictions on CDs and banking.
Types of USAA CD Account
There are three different kinds of USAA CD account with three kinds of interest rates: fixed, adjustable, and variable. These are not complicated to understand. Fixed rate CDs have the same interest rate throughout the duration of the CD. Adjustable rate CDs can be adjusted once during their duration, while variable rates mean that the rates change with the normal flux in national interest rates. Additional deposits can be made to CDs. allowing people to slowly increase their investments and assets.
As with all CDs, the rates offered by the USAA change routinely. This company generally offers rates that are comparable to those offered by other banks. It’s important for people to do their research and be aware of what the going rates are.
Lengths of USAA CDs
The fixed and adjustable rate CDs at USAA have a minimum opening deposit of $1000, which is similar to that of other banks. Fixed rate CDs have term lengths of one month to seven years, while adjustable rate CDs are available from three to seven years. Variable rate CDs require only a $250 opening deposit, although they also have lower APY rates. These can be purchased for term lengths of either 182 days or one year. There is a great deal of variety and flexibility in these CDs, so USAA is usually highly rated.
Advantages of USAA CDs
The advantages of the USAA are mainly related to its role as a major provider of services to members of the armed forces. All services can be handled online or by telephone. These are available 24 hours a day and seven days a week. A variety of products are offered and it is easy to change from one service to another. For example, the USAA makes it easy to “ladder” CDs online. In this practice, people ensure that they have money available to them if needed by staggering the end dates of their CDs, while also getting the favorable interest rates of CDs.
Another advantage of USAA CDs is that there are no hidden fees such as maintenance fees. All charges are made clear with no unpleasant surprises. People who have had surprise fees that ate into (or even exceeded) their interest rates will appreciate this.
Disadvantages of USAA CDs
There are a few disadvantages to USAA CDs as well. The CD rates, while competitive, are not the best that can be found on the market. In addition, there are no physical locations. People who would like to discuss their CD options in person may want a different type of CD. In addition, many new investors don’t like that the USAA doesn’t offer an agent dedicated to them.
USAA CDs, like all financial products, have both advantages and disadvantages. It is important for potential investors to thoroughly investigate all CDs and the companies that provide them, and to make the decision that is best for their situation.
