The USAA Career Starter Loan is a loan program offered to midshipmen and cadets from the following United States military outfits: Air Force, Army, Marines Reserve Officer Training Corps (ROTC), Officer Candidate or Training School (OCS/OTS) and the Navy. The loan is intended to provide low-interest funds to help budding military personnel build up their credit history, pay personal debts, and buy what they need for their careers.
The loan amount varies between $25,000 and $36,000 depending on your position. If you’re in OCS or you’re part of the ROTC, you can access $25,000 with an interest rate of 2.99%. If you’re in the academy for the other parts of the U.S. military mentioned above, you can access a loan of $36,000 with a 0.75% interest rate. Either way, the interest rate is far lower than that offered for many credit cards and personal loans.
Your loan lasts for five years and requires regular checking for active duty to stay valid. The loan doesn’t have any penalties attached to early repayment. You also don’t have to offer any security on the loan. As such, the USAA Career Starter Loan is a good way to start building credit for those who have a low credit score. It’s also worth noting that your first repayment does not go out of your account until you’re six months into your active duty.
To get a loan from the USAA you need to first register for a membership with the USAA. The lender is USAA Federal Savings Bank, which is an FDIC-insured bank located in San Antonio Texas, but given its specialized lending its not really a competitor to traditional banks operating in the state such as Coleman County State Bank and First Central Credit Union. You’re allowed to become a member of USAA if you’re a pre-commissioned officer, military member, military veteran, or if you’re the spouse or child of somebody in the United States military.
Should You Apply for the USAA Career Starter Loan?
Assuming you meet the application criteria and have a plan for how you’ll use the money to enhance your military career, the USAA Career Starter Loan is an excellent option. It has a lower interest rate than many more traditional alternatives. Plus, you can use the loan to begin building your credit rating if you currently have a low score.
As with all loans, consider what you’ll spend the money on before applying. Do not take out a loan if you believe you can afford what you need for your career without it. Even with the low interest rate, using the USAA loan will result in you spending more on your career essentials than you would if you simply purchased the items outright.