A Money Market Fund is more enticing than a traditional bank account and is the safest way to enter the stock market. In this context, it is used to pool investors’ money and buy low-risk, highly liquid securities. Thanks to the latter, investors can easily enter and exit the fund.
The USAA Money Market Fund is a service offered by the United Services Automobile Association (USAA) in conjunction with Victory Capital. It provides low expenses and a low initial deposit for investors of $1,000. On the downside, this type of fund is notorious for offering low returns, just like a bank savings account. However, it is safely backed by the Federal Deposit Insurance Corporation (FDIC).
Does USAA offer a money market account?
Yes, USAA, in conjunction with Victory Capital, offers a money market account for its customers. This is a type of savings account that carries higher interest rates than traditional savings accounts. Some of these accounts have higher minimum balance requirements and may require that a certain amount of money be maintained to avoid monthly maintenance fees.
The upside of these types of accounts is that they are backed by the Federal Deposit Insurance Corporation (FDIC). In other words, your money is protected for up to $250,000. Some of the advantages and disadvantages of the USAA account are as follows:
- It is available for all 50 states that make up the country
- It has a high-interest yield
- No mobile check deposits
- Accessible in physical locations in all states
- No sign-up bonus
- No debit card available
- Has monthly service fees
What interest rate does USAA offer?
USAA money market accounts are insured by the Federal Deposit Insurance Corporation (FDIC). This independent government agency backs the reports against losses on your deposits in the event the bank or savings association fails.
The USAA money market offers an Annual Percentage Yield (APY) ranging from 0.26% to 1.54%, where rates vary. In this case, maintenance fees are $10, although you can avoid paying this fee if you keep $1,000 in the account. Also, note that the company will charge you an additional $5 if you exceed the maximum number of monthly transactions.
The account fees are distributed as follows:
- Monthly price: up to $10
- Paper account fee: N/ A
- Excess transaction fees: $5
- APY: from 0.26% to 1.54%
Features of a USAA Money Market Account
If you don’t already have a USAA money market account and are looking for benchmarks to see if it’s the definitive option for your goals, here are some features that will determine that decision:
The USAA Money Market Fund requires a primary investment of $1,000. This requirement is obsolete for those who accept monthly automatic deposits of $50 or more. It has an estimated annual expense ratio of 0.62%, and the objectives of this fund are based on generating interest income in the short term, i.e., less than one year.
This fund comprises USAA members, active and retired military members of the Armed Forces, and their family members, along with any registered civilian Victory Capital clients.
From inception in 1981 through 2020, the fund’s average return per year was 4.20%.
Protection against uncertainty
Although money market funds typically pay less interest when interest rates fall, they can still protect against uncertainty. When the funds began in the 1970s and 1980s, interest rates rose.
After the 2008 financial crisis, interest rates fell and led to questions about the value of certain money market funds. But, realizing that these interest rates may rise again, market funds became eligible because of their liquidity and safety.