Military Affected by the Government Shutdown-- USAA Loan

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.




Thanks for sharing your experience - a truly unfortunate and, quite frankly, bewildering series of poor decisions by USAA during this crisis. I, too, am active duty USCG and I've been with USAA for most all of my career. To hear that you were fed a line about pay verification for publically available information is ludacris. For a company that has built its reputation on member loyalty, customer service, and being there for military members in the most difficult of times, this is truly disturbing and a black mark in terms of credibility.


I received a note last week in the mail from USAA addressed from the CEO explaining that the meteoric growth the company has experienced in the last ten years has resulted in the need for on-going changes to security, technology, and management. Perhaps the company has also grown too big for the level of customer care that established their foundation for this success in the first place. USAA should reconsider its position here; this type of story could result in a lot of accounts shifting to Navy Fed, PenFed or other military-friendly credit unions. USAA is not the only game in town, and increasingly not the most competitive. Custome loyalty is their strongest asset, and that can evaporate much more quickly than it can be generated. 


I certainly hope the shutdown ends soon for us all, and that the potential financial hardships that could result from an extended closure are not realized.

@240MTRelevant, I like your use name— I'm sure there's a great story there.  


In my past life, I was a business guy. Basic rule: A happy customer will tell a friend; an angry customer tells ten.


If you read these posts on this thread, there are many that have decided to switch. I see your prediction was spot-on. USAA should sit up and take note. 


Thank you for taking time to write this long, worthy read. USAA has declined to assist me too, and I have direct deposits with them! I am a single income household with two children in college. I have banked with them for years. My direct deposits (fed civilian pay and va benefits) have been established for years and they still would not assist me. Said I needed to go through the traditional loan application process, which I’m sure the criteria is so stringent I wouldn’t qualify for it either. Although I am far from rich, I will be changing all of my direct deposits to a credit union once the shutdown ends. I’m appalled at the treatment from USAA, at a time when I needed them most.

I have been with USAA for 20 years myself and will be looking to transfer all my bussiness.  Smaller local credit unions are assisting members but not USAA. 

I have been with usaa since 1997 and am disgusted with how they are treating the members of the Coast Guard. I am retired from the Coast Guard and have noticed these last few years how USAA has gone down the tubes as far as customer service and pricing on insurance. I have already dropped them as my insurance and will be leaving them as far as banking as soon as the shut down is over and I can change my dirrect deposit over to navy federal. They have gotten to big and are no longer a military bank just a useless coporate bank that could care less about our Active Duty and Veterans.

@Been robbed, we're sorry to hear you are disappointed. We will pass your feedback along to the appropriate team. -Cynthia

I wonder how much of this negative feedback is going to be "passed along to the appropriate team" before something is done about it? It's unfortunate that I made the assumption that they would handle this situation the way they had previously. I just want it to be known that I will also most likely transferring my funds to NFCU when all of this concludes.

Zach, Bet the person/persons who are receiving those negative feedbacks are probably so overwhelmed they don't know what to do with them. They probably have a filter so they get put in file 13. I moved all my stuff to NFCU back in 2017 (member since the 1970s) after a series of non-impressive performances by USAA's banking/credit card and investment teams. I had conducted 75% of my financial business with USAA (since the mid 1980s) and about 25% with NFCU. NFCU added a few branches in the San Antonio in case I need to see them. I'm not going to write a book about it, but I'm happy with my decision. IRAs/investments are with Vanguard. The only reamining business I have with USAA is Home/Auto insurance. There are a lot of options out there. You just have to put your money where your mouth is--and just do it.



As I noted, I will be writing their Board of Directors to lodge an official complaint of the poor and frankly myopic decision making at USAA.  Of the stories posted in this thread alone, I think it is clear there is a genuine issue worth examining.  I intend to copy every news outlet I can think of for visibility.  Enough bad press will change USAA's ways.


Basic business rule:  A happy customer will tell a friend, an angry customer will tell ten.