Regardless of our attempt to put all of our spending towards signup bonuses, there will always be extra spend in-between new credit cards that we can’t fit into a 5% bonus category. I recently went into great detail on how we distributed our spend across credit cards last year to earn an average 14% back, but part of that total included over $12,000 of regular un-bonused spend! While some of this excess spend is unavoidable (such as going a little over the minimum spend in case we need to return anything), there is still a decent amount of opportunity to be had on all of the spend that happens between signup bonuses.
Late last year, USAA decided to step up their credit card game and released a new card that earns 2.5% cash back on everything. It started with a limited release in just a few states, but has since been rolled out to several more. I didn’t hesitate once it was available in Washington and applied even though it didn’t even come with a signup bonus. That’s a first since discovering the game of churning a couple years ago!
I’ll break down why we applied and how we plan to use it going forward.
Product Details and Who’s Eligible
USAA Limitless Cashback Rewards Visa
- Earns 2.5% cash back on everything if you direct deposit at least $1,000 per month into a linked USAA checking account
- Earning drops to 1.5% on everything if the direct deposit requirement isn’t met
- No Annual Fee
- No Foreign Transaction Fee
- Must be a USAA member to apply
Cash back can be redeemed in increments of $1 towards the credit card or into a USAA checking account.
The USAA membership part is what makes a lot of people ineligible for this card, as it requires either military service or having membership passed down to you through parents that were eligible (who possibly had the membership passed down to them). Somewhere down the line, one of your parents, grandparents, or beyond had to serve in the military, open an eligible USAA insurance policy (home and auto mostly), then share that information with any children who wanted their own USAA membership, and so on all the way down to you.
Other than the USAA membership requirement, this particular credit card is only available in certain states and hasn’t been rolled out nationwide yet. Here’s the current list according to Doctor of Credit, but I suspect they will roll this out nationwide some time in the future:
- AL, AR, AZ, CO, CT, FL, GA, HI, ID, IL, IN, KS, LA, MD, MI, MN, MT, ND, NM, NV, NY, OR, PA, RI, SC, TN, TX, and WA
If you’re eligible, this link should take you a place you can apply for the card:
Who Should Get This Card
If you are an eligible USAA member and live in one of the eligible states, this would be very high on my list of credit cards to recommend that you open. When most people hear about churning and some of the craziness involved to maximize signup bonuses and redemptions across numerous cards and programs, it’s no surprise they are a little intimidated by the process. Add in the huge amount of misleading and simply wrong information on credit scores out there and it’s no surprise that most people don’t even want to bother.
My go-to recommendation for people that highly value simplicity (often at the cost of extra reward potential) is for them to pick up a 2% cash back card with no annual fee.
For opening a single credit card (that won’t have to be cancelled or downgraded in the future) that can be used for almost everything*, they will be getting a decent return on their everyday spending without having to put any effort in. Cash is king, especially if you don’t want to deal with potentially complicated redemption schemes that come with most points and miles programs.
The reason I said “almost everything” is that the most popular 2% back card (the Citi Doublecash) comes with a foreign transaction fee that makes the card very expensive to use anywhere outside of the US.
Luckily, the USAA Limitless card solves the above problem by eliminating foreign transaction fees AND the return on spend is even higher by half a percent. That makes this the best card to get for anyone who values simplicity and/or cash when it comes to credit card rewards.
Even for someone who doesn’t mind a little complexity, it’s hard to beat 2.5% back on any spend that doesn’t fit into a bonus category. While it’s certainly possible to get more than that much in value out of a single SPG point or 1.5 Ultimate Reward points (if you have the Freedom Unlimited), it’s not easy to do so on any given trip that you plan on taking. I would much rather just take the cash and then choose to use it for travel, invest it, or something else entirely which simply isn’t possible with most points and miles.
* If you’re not eligible for this card and plan to travel abroad, I would recommend getting a 2% cash back card (like the Citi Doublecash) and another no annual fee card that doesn’t have a foreign transaction fee (possibly the Capital One Quicksilver). If in the US, use the 2% card, otherwise use the card with no foreign transaction fees. If even that is beyond your ideal level of simplicity, then just getting a single card like the Quicksilver and using it for absolutely everything would probably be my choice.
Why We Applied for the USAA Limitless Card
First, we are fortunate to be USAA members already because my grandfather served in the military, passed USAA membership onto my parents, who then were able to pass it along to me. Plus, we already had a direct deposit going into a USAA checking account because that just happens to be the joint account we set up to pay rent (and now the mortgage) back when Becky and I first moved in together. For that reason, we didn’t even have to change anything around to take full advantage of the new card, which made it that much more appealing.
While our actions may not reflect it (as we frequently sign up for new credit cards), we do highly value simplicity when it comes to our finances and points balances. For every transaction we make, there’s a quick decision that has to go through our heads on which credit card to use. Before we got this new card, it looked something like this:
- If we have a card that we haven’t met the minimum spend on (and the business accepts that type of card), use it
- If the particular business falls into one of our bonus categories, use it
- Discover It rotating categories first because the cash back is doubled for now (10% back effectively)
- Amex Blue Cash Preferred for groceries (~6% back)
- Chase Freedom rotating categories next (5%+ back)
- Chase Ink for office supply stores (5%+ back)
- Chase Reserve for travel and dining (3%+ back)
- Otherwise, use one of the following depending on what trip(s) we plan to take soon
- Amex SPG card if we anticipate needing SPG points for hotels or airline programs
- Any Chase UR card if we anticipate needing more UR points
- Citi Doublecash for a simple 2% back
That 3rd step is where it was needlessly complicated, as my perception of what we should be accumulating changed frequently depending on what upcoming trip was on my mind. Even under ideal redemptions of the un-bonused SPG and UR earnings, it was rare to get above 2.5% worth of value from each point.
In order to simplify our un-bonused spend decision making AND start getting a little bit better return on it across the board, we decided to apply for the USAA Limitless card and I don’t anticipate it leaving our wallets any time soon. Our new decision flowchart can be simplified to this:
- Use any card with an outstanding minimum spend -> Use a card with a bonus category -> Use the USAA Limitless card
From now on, any time we don’t have a new credit card with a minimum spend and don’t happen to be shopping at a place with a bonus category (or can’t remember the bonus categories at the time!), we just pay with the Limitless card. No hassle and we’ll be earning a solid 2.5% back on whatever the purchase is in the best rewards program around, cash money.
While in a perfect world, we would work to reduce the amount of un-bonused spend we have to a very small amount and put everything towards signup bonuses and bonus categories, we’ve found it quite difficult to do consistently in practice. Particularly as banks add restrictions on applications make getting new cards more difficult.
Even a Couple Percent Back Adds Up Over Time
Unless USAA changes the terms on the card, we should always be able to get at least 2.5% back on everything going forward. That amounts to at least $1,375 per year based on our annual spending which is no drop in the bucket!
For example, if we did nothing but invest the cash back earned from credit cards ($1,375) in a Roth IRA every year from now until we turn 65, it would grow to over $250,000 tax free!
If you happen to be someone who spends most of their money via debit cards or cash, this one credit card could potentially earn you a quarter of a million dollars over time for an extremely small amount of effort! This of course assumes you use it responsibly and pay it off in full every month.
If you want to find out how much extra you could have at retirement thanks to cash back on your spending, multiply your annual spending by 2.5%, then plug that into any compound interest calculator:
*The 7% I chose comes from the historical after-inflation return of the overall stock market, which you can invest in via low cost index funds such as VTSAX.