It’s been a while since my last post about USAA, and they’ve churned out several new products. Individually they’re impressive enough, and collectively they’re making life easier for members.
Before I dig into that, the Federal Trade Commission wants me to disclose that I have a business relationship with USAA. My spouse and I have used their auto insurance since 1981 (and we recently filed a claim on a hit&run driver). Our daughter joined USAA a few years ago when she bought her first vehicle, and my father has some of his assets in their CDs. (Dad is a 1950s Army draftee, and I signed him up in 2012.) I’ve also been to USAA’s headquarters for three different conferences where they paid for our lodging & food. And last but definitely not least, USAA advertises on this blog. The advertising revenue raises the blog’s value so that I could sell it to the current owner for a very large donation to military-friendly charities.
Let me get right down to USAA’s long-term goals:
- The company wants more members (“All who served honorably, and their families”), and
- They want to keep their members after their military service.
It’s been nearly 20 years since they expanded their membership eligibility, and the data is conclusive: the newer members are buying more products and services while costing less to take care of. (Some of that is age-related, and technology has given a big boost to member service.) USAA is spending less of our premiums on direct marketing and gaining more paying members through partnerships like the NFL Salute To Service and Hiring Our Heroes. The company is stumbling badly in some areas (business checking) but racking up impressive numbers in others (claims processing, member financial readiness).
I noticed an interesting data point the other week. My spouse and I only carry liability insurance on our vehicles (no collision or comprehensive) and we’ve lived at the same address for 15 years. Unlike USAA’s active-duty members, our driving habits have been relatively constant since we’ve retired. During those 13 years (including a teen driver), our monthly premium has risen from $69.67 to… $70.28. It bounced around in the high $70s for a few months, but overall it’s been remarkably flat for more than a decade. Meanwhile inflation has risen by 33% over the last 13 years, or an average of 2.2% per year. USAA’s core business– insurance– has held the line on price hikes.
Of course I’ve paid enough premiums during those years to buy a good used car– yet the point of insurance is protecting yourself against catastrophic risks that could destroy your financial independence. I sure hope I waste several more decades of premiums.
But that’s just one data point for one member. If you’ve had the same policy and coverage for over a decade then I’d love to hear how your premiums have changed.
Let’s move on to USAA’s new products.
USAA is blatantly pandering to Millennials with a smartphone app that gamifies savings! As silly as it sounds, it works with geezer members too.
This app has been in their Innovation Center for a while, and I saw a beta last fall. They released Savings Coach a couple months ago and it’s free for any member with USAA savings and checking accounts.
In financial terms, it’s designed to monitor the changing balance in your checking account and then suggest places where you could save a little more money.
In gamer terms, the USAA eagle challenges you to cut your expenses and take your savings to the next level for valuable prizes, er, medals.
Last month I opened my first-ever USAA checking and savings accounts. It took about 10 minutes on their website and a few days later I was ready to go. I’d already downloaded the USAA Savings Coach app (it’s also in Android’s Google Play), and the first thing the eagle wanted me to do was the “Pay Yourself First” challenge. We decided that I could afford to transfer $10 every week from checking to savings, and the app set up the automated transfer.
Next up are the “Coffee Challenge” and the “Pizza Challenge”. You can also build your own challenge by deciding what treat you’re going to skip once in a while to put the savings in your… savings account. Complete your challenges and earn a medal. Your dashboard shows yesterday’s total spending and your average spending, and you can also check your medal count.
Change your daily habits by putting the Savings Coach icon in the space currently occupied by your favorite smartphone game. Play around with the challenges. Gamify your net worth by earning medals. Nobody else has to know what you’re doing– it’s just between you and the app.
You may feel a little goofy about working with an animated eagle, but meanwhile the app is helping you track your spending and figure out where you’re wasting money. In your spare time you’re gradually moving money from your checking account (that you’d be tempted to spend) to savings (earning higher interest) and then you can invest it for your financial independence.
How does raising your net worth compare to your latest favorite smartphone game?
Financial Readiness Score
Next up is the Financial Readiness Score. (Sorry, no more animated characters.) It’s a classic financial-planning tool with data boxes for you to fill in your numbers. Depending on how well you already know your financial picture, it takes about 15 minutes to complete the initial data entry.
It pre-fills the screens from your profile, and you can link non-USAA accounts for a consolidated view of your finances. (“Link” means that USAA can log on to your other financial accounts to query the balances, but they can’t touch anything.) The tool quickly populated its spreadsheet with my accounts from Navy Federal Credit Union, Pentagon Federal Credit Union, Fidelity, American Express, Bank of America, and Chase. (It already knew about my USAA accounts.) It can even link to your Thrift Savings Plan account.
In the next few steps you add information about your household budget and spending. It’s not as detailed as their retirement planner but it looks at how much of your spending is discretionary or debt payments. It also checks your retirement savings by tapping into your USAA retirement planner (if you’ve filled one out) and your other linked accounts.
Another step asks Yes/No questions about your insurance policies, your financial plan, your will, and your healthcare directive.
Then you click on the results button.
Your total score is broken down among those four areas. The heaviest weighting (43%) is having enough insurance (after all, USAA is an insurance company). I only got 28/43 in this section because my spouse and I don’t carry life insurance (a subject for another post) and we have minimal car insurance. I had 24/24 points for savings & retirement. (Whew!) I also scored 13/13 on our financial plan and our legal documents. I squeaked by on the household finances (16/20) because I need to update our budget in the retirement planner.
Best of all, this is not just a feel-good checkup. At the end of the process you have an action list. You can add the FRS tile to your default “Account View” login page and see it every time you use the site.
In a future post, I’ll do a deeper dive on the FRS and report my progress.
“My Credit Score”
Finally! A credit score without having to jump through hoops!
USAA has rolled out their credit-scoring service over the last few months, so if you’re a member then you may already have seen that tile pop up on your accounts summary page. If you don’t see the tile then go to their “Credit and Identity Monitoring Tools” and sign up for Experian’s free CreditCheck service. (Don’t get suckered into the paid services– “free” is good enough.) It’ll ask you a few questions to confirm your identity (including your Social Security number) and then the tile should pop up in your accounts window.
You need to be a USAA member to sign up for this service, but you don’t need a USAA credit card.
Experian’s CreditCheck VantageScore is different than the FICO score, but it’s the same scale and your credit scores would be within a few points of each other.
The real value of the credit-scoring service is pointing out where you may be helping or hurting your own credit. My score is apparently a few points lower than it could be due to:
- “Lack of sufficient credit history on bankcard or revolving accounts”
- “Open real estate account balances are too high compared to their original loan amounts”
- Very few loans
- Too many inquiries
In other words I tend to close credit-card accounts that I’m not using (especially when their terms change or I encounter bad customer service) and I’m making the minimum payments on my mortgages. I apparently need to have more credit cards (three is “very few”?!?) but I don’t know who’s making the “too many” inquiries.
The algorithm says that my credit score dropped a few points for each issue.
You’ll see what’s affecting your credit score, and you’ll learn how to improve it. This not only affects the amount of money you can borrow and the lender’s interest rate, but it will also affect your insurance premiums and your ability to rent an apartment or a home. Even better, Experian’s system predicts how much you’d be able to improve your score. A few points might be enough to move you from one borrowing category to another and save you a lot of money on interest rates.
My score is what I expected to see: it’s in Experian’s top “Super prime” category, and a lot higher than the Hawaii state average of 689. (Not that I’m hyper-competitive about it.) I could raise my score by opening a few more credit cards (earning tens of thousands of free frequent flyer miles) but I feel that my financial life is already complicated enough. However I’m going to keep an eye on mortgage rates, because knocking another half-percent off our current interest rates would free up quite a bit more cash.
Experian’s free service also offers a free annual credit report, so that’s one less time you’ll have to visit AnnualCreditReport.com.
A traditional product: member service
Speaking of USAA member services, a couple months ago our 10-year-old car was rear-ended by a hit&run driver. (Nobody was injured and we’re fine.) We reported the other vehicle’s license plate number to the police to confirm that we’re not at fault for anyone else’s damage.
It cost us $500 of hardware to get the car back on the road. (The cosmetic dents could easily cost another $2000 to hammer out, but we’re not fixing those.) We haven’t carried collision insurance in over 30 years, so we’ve saved more than enough money to pay for a busted hatch latch and a bumper mount. I was very impressed by the USAA mobile app– I was able to notify them of the accident in less than 10 minutes, including iPad photos and a collision diagram. I strongly recommend downloading their mobile app on your smartphone or tablet. I hope you never need to use the claims feature, but if you’re stuck on the side of the road then you’ll probably be able to submit your claim before the tow truck shows up.
I’m returning to USAA next month for DigitalMilEx. If you have questions about the products and services described in this post, I can get the answers directly from the program managers. If you have questions about anything else at USAA, I can research those answers too.
Savings Coach (Apple Store) (Google Play)
USAA’s Retirement Planner And Financial Goal-Planning Tools
Hiring Our Heroes: Teaching Employers To Hire Military Veterans And Spouses
DigitalMilEx schedule, topics, and speakers