I wanted to share some information about my most recent, and likely last, transaction with USAA. First, a little about me and my relationship with USAA: 18+ year member (Checking, Savings, Brokerage, Home & Auto Insurance, Roth IRA, previous auto loans), relatively high net worth (approx. $80K on deposit with USAA alone), relatively high income (over $100K net deposits to USAA per year), and very high FICO credit scores (788 Experian, 813 Equifax, 832 Trans Union).
I recently applied for a new auto loan with USAA. I was immediately approved but not at the lowest interest rate which was advertised on the website (1.75% with Car Buying service). Somewhat confused, I called USAA to investigate why I was offered a 2.65% loan for 60 months. The customer service representative apologized but stated that the lowest advertised rate was only available for the most highly qualified applicants. I asked if she could elaborate and possibly explain what made USAA perceive me as anything other than the lowest possible credit risk. She was unable to provide any additional information so I asked if I could escalate the issue for reconsideration. After being put on hold for some time she came back and explained that the “back of the house” had made the determination based on a number of factors and it was simply “a business decision”. I asked her if she could outline those factors and she was only able to elaborate that the “business decision” was made because my Experian credit score was “only” 788 and that my wife and I had applied for two credit cards within the last 6 months. I explained that we had applied for two credit cards in order to receive the very generous travel perks those cards provided, and that our credit balances were nearly zero and any usage was paid in full each month. I also explained to her that these two credit cards and overall credit utilization were also reflected in my FICO scores. She said she understood, but it was “just a business decision.” I told her that if I didn’t qualify for USAA’s most competitive rates then there was something significantly flawed in their algorithm. I thanked her for her time and explained that this would shape my future business decisions and dealings with USAA.
Later that same day I joined a local credit union. After having been a member of this credit union for less than one day I was offered an auto loan with a rate significantly lower than what USAA had offered. And because I will now have a loan payment to another institution I have decided to cut out the middle man – USAA. But please don’t be offended, it’s just a business decision. And because I will be moving my main checking account to another institution, I thought I might as well search out other savings account options as well. It turns out that the rate of return is 4 X higher with an American Express Bank savings account! I will be moving my savings account in early January. Please don’t be offended, it’s just a business decision. And because I will be moving my checking and savings accounts I figured I might as well explore other options for my brokerage and Roth IRA accounts as well. Guess what? It seems Vanguard offers me significant savings and more personalized attention. I will be liquidating both accounts and rolling to Vanguard in early January. Please don’t be offended, it’s just a business decision.
I am somewhat sad to say this, but being a loyal USAA member/customer no longer plays a role in the business decisions of the organization. In all, it appears that not being a highly qualified auto loan applicant is going to save me considerable money in the long run! Not only will I get more personalized customer service and a lower rate with my brand new credit union, but I will also enjoy 4 times the interest rate on my savings account and cheaper brokerage and IRA fees.
I know I am just a small fish in the big USAA pond, but I sincerely hope that someone high enough in the USAA bureaucracy looks at this situation and realizes that the organization is losing its way. I recently received an e-mail announcing my USAA Subscriber’s Account distribution for the year. That e-mail also thanked me for my loyalty. Somewhat ironic that I now realize that the decades of loyalty have been one way; and have likely been detrimental to my overall financial wellbeing. Perhaps this ‘business decision’ by USAA was just the wakeup call that I needed.
Resolution? No. But USAA did close the loop.
BLUF: No straight answer. Moving $80K in current deposits to other banks and changing my direct deposit moving forward. Sad.
More detailed response:
I received a call an individual from "The CEO's office". She said that my original loan application was forwarded to Senior Underwriters and then provided me with a list of different reasons for why I was not offered the lowest advertised APR. This time, she said the reason was that my wife and I (joint application) had 4 revolving credit accounts with a balance. Since I had just applied before the holidays this did not surprise me in the least; we 'hide' gift purchases from each other so as not to spoil the surprise. The accounts are all paid in full each month.
I asked if she could tell me what those outstanding balances where, because I could certainly tell her. She could not tell me the dollar balances, only that there were four accounts with balances. I explained that they were all likely very minor and each were paid in full every month. She said that it did not matter, only that there were four accounts with balances. Interestingly, using USAA's logic, it would be better to have one credit card with a $10,000 balance than to have four with $1000 balances.....and our balances are not anywhere near that high!
I then asked her if she understood that credit utilization is already included in the credit score provided by the rating agencies. That means my 800+ FICO scores already include any open balances on revolving accounts. She said she did understand but there was nothing that could be done and the decision was final.
I politely thanked her for her time and repeated that I was in the process of moving my current deposits and the majority of my future direct deposits to other institutions that value members and provide transparency in their credit decisions.
The offer of the higher APR is now nowhere near as concerning as the lack of consistency and transparency USAA has used in reaching its decision. On two separate calls I received completely different answers as to why USAA determined me to be less than a highly qualified applicant for an auto loan.
We truly thank you for providing an update here in the community and I apologize it was not a more satisfactory experience. We wish you the best of luck and hope that someday you may consider USAA for your financial needs again. Thank you.