Note: In July 2019, USAA announced the sale of its brokerage business to Charles Schwab. The deal is expected to be completed later in 2020. You can read our review of Schwab here.
USAA made its name offering low-cost financial services to active and retired military families. Unlike its top-ranked insurance offering, USAA brokerage accounts are open to the general public. But the cost to trade is pricier than many competitors.
USAA is best for:
- Active or retirement military and family members.
- Selection of no-transaction fee mutual funds.
- Non-active stock traders.
USAA at a glance
|Account minimum|| $500
|Stock trading costs||$8.95|
|Options trades||$8.95 + 75 cents per contract
|Account fees (annual, transfer, closing, inactivity)||No annual; up to $70 account closing or transfer fees; $35 to close IRA
|Commission-free ETFs||24 commission-free ETFs
|Mutual funds||3,500 no-transaction-fee mutual funds|
|Tradable securities||• Stocks.
• Mutual funds.
|Trading platform||Limited features|
|Mobile app||Can trade, but average features|
|Research and data||Average quality but free|
|Customer service options (including website transparency)||• Monday-Friday, 7:30 a.m.-8 p.m. Central time.
• Saturday 8 a.m. - 5 p.m. Central time.
Where USAA shines
No-transaction fee mutual funds: USAA investors have about 3,500 no-transaction fee mutual funds available, a strong selection compared with its competitors. Transaction fees for other mutual funds are $45.
Research and data: USAA has a good selection of educational offerings, including a Morningstar education series that gives basic and intermediate guidance on issues such as 401(k) management, portfolio withdrawal mistakes, strategies in a low-return environment and how much foreign stock and bond exposure you might want in your portfolio. There are data tools to sift through available stock and fund prices and performance, as well as training tools that allow you to put together hypothetical portfolios.
Account minimum: Last year, USAA dropped its initial investment to $500 from $3,000. That’s a move in the right direction. USAA also has about a dozen of its own mutual funds that allow an initial investment of $50 plus $50 per month.
Where USAA falls short
High trade commissions: USAA charges customers $8.95 per stock or ETF trade, a higher rate than most competitors. This will be a turn-off for frequent traders.
Is USAA right for you?
For active or retired service members and their families who already do their banking or have insurance through the company, a USAA brokerage account means they could keep all their finances under one roof. For other investors, USAA’s high trade commissions may have you looking for more affordable alternatives.