USAA Personal Loan for Military Affected by the Government Shutdown

Occasional Contributor

This is an important, albeit long, read regarding the somewhat disingenuous practices at USAA in support of their military customers. 


The following is the experience I had with USAA this afternoon.  


For context, I am a 20-year active duty military officer who has banked with USAA my entire career.  I carry an average monthly balance at USAA between $10,000 and $20,000. We have bought three houses and four cars through USAA and have had our car and housing insurance through them since I was a non-rate. Over the years, I have flowed several hundreds of thousands of dollars through USAA.


Due to the shutdown, I am not being paid, despite still working well over 40 hours a week. Currently, there are thousands of other men and women in similar roles working without pay to serve their country.  In an ostensibly philanthropic decision, USAA recently followed Navy Federal Credit Union's lead of an interest free loan to those affected by the shutdown by offering their own 0.01% private unsecured loan under the following stipulations. One must be: 

— A member of the Coast Guard or NOAA,

— U.S. Resident,

— U.S. Citizen,

— At least two paychecks from the U.S. government in a direct deposit,

— Active Duty.


Having met all criteria, I was surprised when I was told I cannot be granted a loan because although I have 20 years with USAA, all while in an active duty capacity with the U.S. Military, my checks are not directly deposited to USAA. Therefore, the USAA loan cannot be offered to me. We made the business decision over ten years ago to use another bank account for my direct deposits and USAA for discretionary spending accounts (insurance, Christmas, emergency funding, major expenses, etc.).   My credit is near perfect and we have almost no debt aside from our mortgage. My pay is well above what would be required to pay back any loan.  This loan was merely to secure a contingency if the government shutdown extended beyond four or five months. 


However, now my family is faced with considering how we will pay for food and mortgage on no income should the shutdown continue and I continue to have to work without pay.  I find it particularly distasteful that USAA uses an opportunity like this to masquerade as a pro-military institution, while not only capitalizing financially on the regrettable position of others, but then also denying from their customers the loans they proffer. 


When pressed on why they needed my paychecks deposited to USAA vice another institution, I was told, "To provide evidence of your pay." Anyone who has worked with USAA and is military knows that USAA is well aware of your rank and your pay scale. Military pay scale is easily accessible information. Further, I provide leave and earnings statements to USAA to secure a home loan without having to have my checks deposited. Pressed further on the issue, they had no reply.  I was simply told they have no answer and that at some point, USAA may re-evaluate their position. But no time soon. 


The research of two Pew Charitable Trusts reports found that 55 percent of households did not have enough savings on-hand to replenish a month’s worth of lost income. These findings are reconfirmed by a joint-study from Princeton, George Washington University, and Oxford, which found nearly half of families are “financially fragile.” The study found of these families, 19 percent wouldn’t be able to pay for a $2,000 emergency within 30 days without selling their possessions for money, the other quarter wouldn’t be able to come up with the money at all.


What is most important here is that there are thousands of men and women that serve their country and bank with USAA as a trusted pro-military institution who are not mid-grade or senior officers.  Rather, they are non-rates, junior petty officers, and junior officers who may have young families, new mortgages, and lower pay scales.  They may not have significant savings, but rather, may have significant debt. Coupled with low wages of entry level military personnel, they will need these loans. In their case, it won't be for a safety net— rather, it will be a lifeline. These families will need the loan to pay next month's bills. And they will find out that USAA isn't there when they expected them to be. The decision of the USAA Board of Directors to establish a narrow and somewhat capricious criterion is wholly disheartening.  


These internal policies should be immediately reconsidered and revised. 


As for me, the assets I have with USAA will be immediately shifted to another banking institution, as I can no longer place my money in the care of an institution I cannot be assured has my best interest at heart. Tomorrow I will craft a letter to the Board of Directors.



Poor form from an institution initally designed to serve the service member community.
You have an average of 10.000 to 20.000 in USAA account.Why would you need 2.000 dollar loan for that cause you all that headache.

Thank you for your reply and sorry it took so long to reply. I've been working without pay.  


I intended to take a personal loan larger than $2,000, so that is first.  We have several thousands saved because having three to six months worth of savings is as an emergency is financially wise— personal finance 101.  However, in the current stalemate of this Administration, eventually our money will run dry as this will last well longer than 1 month. As the primary income earner in a house of seven, it would be very irresponsible and shortsighted of me to wait until the money runs dry before I apply, don't you think?

It goes like this... "Thank you for reaching out. We are sorry to hear you are disappointed. We will pass your feedback along to the appropriate team."

I want to take a minute to update this post.  After several conversations with USAA, they overturned this policy, broadening it to include a much wider group of members.  I applaud USAA for its efforts to holistically examine thier position.  

USAA will continue to earn my business. Thank you for being a trustworthy advocate for military personnel, USAA. BZ.


@Cmichae, thank you for your follow up post and thank you for being a member. We look forward to serving you for years to come. - Rhonda