The USAA (United Services Automobile Association) got its start back in 1922 as a mechanism for self-insurance by and for military officers.

Oddly enough the perception of military officers during this time was that they were a “high risk” group and were thus unable to secure auto insurance.

The USAA was initially created to solve this unique problem, but over time they outgrew their original mission.

They have evolved into a diverse set of companies all in the financial services sector with a range of products that includes property, casualty and life insurance, banking, investing and financial planning. They service over 12.4 million members and just shy of $130 billion in assets under management (AUM).

In our review below we will be focusing on the certificate of deposit rates offered by the banking division of USAA.

USAA CD Rates + Account Details

USAA CDs are federally insured by the FDIC up to $250,000 per depositor or $500,000 on joint accounts.

USAA offers sixteen, standard term certificates of deposit with terms ranging from 30 days to 7 years. Some of the term lengths are a bit unusual compared to other banks and credit unions, but USAA has regularly offered promotional CDs with these oddball terms in the past – sometimes with exceptional APYs.

USAA CD Rates

To put these offers in perspective, the current national average for a 12 month CD and a 60 month CD sit at 0.22% APY and 0.47% APY, respectively.

Along with their fixed rate deposits, USAA also offers “variable rate CDs” and “adjustable rate CDs.”

Their variable rate CDs consist of two terms – a 182 day term and a 1 year term. They feature the same APY as listed above for those respective terms. The main difference with these CDs is that the rate is variable and can change at any time without notice.

Their adjustable rate CDs are simply their 3 to 7 year CDs. These products allow for you to call in and receive a one-time interest rate hike if/when interest rates rise during the lifespan of your deposit. This one-time adjustment has a maximum increase of 2 percent from its original yield.

As you can see Jumbo CDs and standard CDs both come with the same annual percentage yield currently. They also have “Super Jumbo CDs” that come with an even higher minimum deposit requirement but the same yields as listed above.

Minimum Deposit Requirements

Interest on USAA CDs is compounded daily and credited monthly either back into the CD (for further compounding) or into another connected account. This is a nice feature for those using interest payments as income.

If you need any or all of your funds prior to your CD maturing you will have to pay an early withdrawal fee.

Early Withdrawal Fees

How to Open a USAA CD Account

You can open a CD account with USAA in one of the following 3 ways:

1. Online, through their website. This is the quickest way. Steps outlined below.
2. By downloading their app for either IOS or Android.
3. Stopping by one of their local branches. Locate them here.

If you choose to open the CD online. Here are the steps to open and fund your account:

1. Navigate to the USAA CD landing page here. Click “Open a CD.”
2. From here you’ll have an option on the left to login if you’re already a member. On the right, you can click the green “Join Online” button to become a member.
3. Fill out the required personal information. They may ask about employment and citizenship information. Have your drivers’ license or state issued ID handy.
4. Follow the next prompts to fund your account. For this you’ll need the bank account number you’re funding the CD with as well as the routing number for the bank.

Final Thoughts

While we appreciate the range of terms and products within USAA’s certificate of deposit suite, better yields can be found through online banks and nationally available credit unions.

Check back often though as USAA is known for offering promotional CDs with higher rates than their standard term products.

A bank CD (certificate of deposit) is a fixed-rate deposit account that comes with varying terms usually from a few months to 5 years. These accounts provide guaranteed interest and funds must be kept untouched in the account until maturity or they may be subject to an early withdrawal fee.

Bank CDs are federally insured by the FDIC (for banks) and the NCUA (for credit unions) to protect your funds in the event the institution fails while your deposit is active.

Brokered CDs are certificates of deposit that are sold through brokerage firms but are issued by banks or credit unions.

They also come with the FDIC or NCUA insurance and offer guaranteed interest on fixed rate terms.

Despite their obvious similarities, there are also several key differences that one should know when considering a brokered CD vs a standard CD at a bank or credit union.

Continue reading our overview below to understand the fundamental differences.

What is a Brokered CD and How to Obtain One

Most major brokerage firms offer brokered CDs. Fidelity, Charles Schwab and Edward Jones all offer these products and we’ve followed them closely and published their rates.

A brokered CD, unlike a traditional CD, can be bought and sold on a secondary market. Therefore the early withdrawal penalty does not exist for brokered CDs as one must simply sell their CD on the secondary market if funds from it are needed.

There are risks involved in selling brokered CDs on the secondary market though. The major one being the risk of losing value especially when rates as a whole are on the rise.

If interest rates are rising and you need to sell a brokered CD that you opened a while back when rates were lower, you’d be forced to sell it at a discount since current CDs would be much more attractive.

Conversely, if interest rates are falling and you need to sell your CD, you’d likely be able to sell it at a premium given that you purchased it with a better APY before rates fell.

Buying a Brokered CD

The brokerage firms that offer these products usually have online platforms for trading CDs on the secondary market and purchasing new issued ones.

If purchasing a new issue CD from your brokerage, you generally won’t encounter any up front fees. However, if you are purchasing a CD off of the secondary market, your brokerage firm may charge a fee to facilitate this. Depending on your brokerage the fees can be allocated in different ways. They may come in the form of a ‘ticket-charge’ which is essentially the fee the broker must pay to place your order. It may be a flat fee per transaction or it may be a fee placed on each increment of $1,000 you deposit. Be sure to get a thorough understanding of all potential fees you could face from your broker. Secondary markets, in general, can be tricky and may not have the volume required to buy or sell a CD at a favorable price.

You may also have the option to purchase “callable CDs” or non-callable CDs. A callable CD just means the institution can call it back if rates are dropping. If you want peace of mind knowing your funds will earn the fixed-rate for its duration, then a noncallable CD is the way to go. That said, callable CDs generally feature higher APYs since they can be called back at any time.

We should note that brokered CDs also have standard minimum deposit amounts that traditional CDs do. They also tend to be more restrictive on the exact amount you can invest and generally allow deposits in increments of $1,000. For example, you may buy a brokered CD with $2,000 or $3,000 but not $2,500.

Brokered CDs VS Traditional CDs: Side by Side Comparison

If you’re still on the fence as to whether or not a brokered CD or standard CD is a better option for you, we’ve put together a side by side table outlining the major differences and similarities of the two.

* Deposit insurance covers larger amounts with brokered CDs than standard CDs, as brokered CDs can leverage the FDIC or NCUA insurance of multiple banks and/or credit unions.

Another major difference in these two CD accounts that you may have spotted in the table above is the fact that brokered CDs do not provide compound interest.

Brokered CDs require interest to be distributed back to the account holder immediately. If you wish to compound your interest you will need to set up another account to reinvest your interest payments.

There is also no grace period with brokered CDs as these products do not auto-renew. Funds plus accrued interest are automatically placed back in your brokerage account upon maturity.

Who Should Open a Brokered CD

Generally there are three main reasons one would opt for a brokered CD rather than a traditional one at a bank or credit union. These are:

1. You need more than $250,000 in insurance coverage for your deposit. With brokered CDs you can hold deposits issued by multiple banks, effectively leveraging their FDIC insurance.
2. You want longer or shorter terms than those offered by traditional banks or credit unions. Terms of as little as one month are usually available with brokered CDs as are terms of 20 years.
3. You want the ability to cash out of your CD whenever you please. Unlike traditional CDs you won’t encounter any early withdrawal fees for doing this, you simply sell it on the open market. Keep in mind, however, that you must factor in potential broker fees in this scenario. You may find yourself better off currently going with an online savings account or money market account if you need liquidity.