All Hands,

As you are all probably aware, the Feds have lowered the lending rates to an all time low of around .25%, which in turn should lower your revolving credit rates.

Well, I just got off the phone with my credit card company, USAA, to inquire if it effected my rate. Keep in mind, that I have been with USAA for over 13 years, and have all my financial stuff with them, and have had the same credit card account for over 10 years, and it is currently the platinum card, which most of you probably have.

Here is what I found out; USAA told me that my current rate is 6.9%, in their weird math, it is the prime rate + 2.9%, not sure how they get 6.9% out of that, but that is not why I am writing this. USAA also told me that they are "restructuring" all their credit card accounts to reflect a new "house base rate" of 6.0%. Doesn't sound bad yet, after further clarification, our new rate will look like this: "house base rate" (6.0%) + 2.9% = 8.9%. I don't know about you guys, but that does not make any sense, the feds lower the rates, and USAA raises our rates, USAA exists because of us military people, they are suppose to be there for us. Maybe if we unite, we can stop this, please contact USAA about your account.

Surfman,

A couple of points...

The 6.9% rate is a reflection of a "prime rate" of 4% plus USAA's inhouse add on of 2.9%. The .25% rate that you cite is the federal lending rate, which is the bank-to-bank lending rate. In theory, a lowering of the federal lending rate "should" lower consumer credit rates, but it's not a given.

Can't speak for USAA but from your comments, it sounds like they're saying they'll use a base rate of 6% and add on the 2.9%. They may be seeing a lot of defaults on credit cards and are covering their losses. Just thinking out load so don't quote me on that! At the end of the day, 8.9% is still nothing to shake a stick at. And if you pay the balance off each month, the interest rate becomes a non-issue.

Also, USAA is a company. While they consistently treat military personnel well in my opinion, they still have a fiduciary responsibility to the company. In the current economic times, they might be taking a couple of turns on their monetary lines.

quote:

Originally posted by Brian_Jordan:
Surfman,

A couple of points...

The 6.9% rate is a reflection of a "prime rate" of 4% plus USAA's inhouse add on of 2.9%. The .25% rate that you cite is the federal lending rate, which is the bank-to-bank lending rate. In theory, a lowering of the federal lending rate "should" lower consumer credit rates, but it's not a given.

Can't speak for USAA but from your comments, it sounds like they're saying they'll use a base rate of 6% and add on the 2.9%. They may be seeing a lot of defaults on credit cards and are covering their losses. Just thinking out load so don't quote me on that! At the end of the day, 8.9% is still nothing to shake a stick at. And if you pay the balance off each month, the interest rate becomes a non-issue.

Also, USAA is a company. While they consistently treat military personnel well in my opinion, they still have a fiduciary responsibility to the company. In the current economic times, they might be taking a couple of turns on their monetary lines.

Good info, I do realize that the fed rate is what it is, but I just felt that we are getting short changed, and that is not an easy pill to to swallow from USAA. They have treated me, my family and my friends in the service well over the years, and this doesn't seem typical of them, but I guess these aren't typical times. And your right, not having an ongoing balance is the key, then the rate issue becomes a non issue. I was just surprised to hear this info on the phone today, especially from such an organization as USAA. Ironically, the official notice of the rates changing just came in the mail today. I just sucks that people like you and me, have to pay for others that made poor decisions with regards to bad loans, and personnel finances, which caused the current state of the economy. Thanks for your time. Merry Christmas!

I just got the letter and I did not agree to the terms and closed my account on principle. I understand that times are tuff but If they can not stick to their agreement or make an agreement that they can not live with in the first place then i do not want to do buisness with them. I will continue with my other banking and insurance products with them but I can not let them pass their hardships on to me. Luckily i do not use credit much anyways.

The only borrowing I ever do from USAA is auto loans. They are good with those and make it totally painless by mailing you a check to take to the dealership. I have a credit card with them but pay any balance the same month. I was never impressed by USAA's interest rates on credit. As far as mortgage, they are very safe in the amounts they will approve you for. With todays home prices, I could never get a home with what USAA is willing to give.

just a little tip with USAA that i have used in the past. with regards to their credit card, when you PCS you can have your APR reduced to 4.0% for your first year at your new residence. when i transfered in the summer of 07 we called USAA and they reduced our APR to 4.0% for 12 months. they will only do the 4.0% with a PCS. i transfer this coming summer and plan on using it again.

Now the above info is the kinda info your commands should be spreading around in 'financial responsibilities' training sessions.

I just spoke with USAA this morning about membership, such as parents of military members.

They said that they just expanded USAA membership to all general public as of recently. However, the general public will only be able to use their banking products only such as checking and savings. So basically everyone can join USAA now.

quote:

Originally posted by Badge3157:
Now the above info is the kinda info your commands should be spreading around in 'financial responsibilities' training sessions.

Even better would be not use credit cards at all! I've been credit card debt free for 5 years now! I have an American Express that I use for bills and instead of cash and pay it off at the end of the month. The points have been great. GPS, I-Pod, Hotel stay for free as I'm just using the card on things that I'd be paying for cash and the $35 annual fee.