USAA Preferred Cash Rewards Credit Card review: Reliable cash back for military members and families

The USAA® Cashback Rewards Plus American Express® Card* is primarily a good option if you’re active duty on a military base. It offers 5 percent cash back on your first $3,000 spent on military base purchases and gas station purchases each year and 2 percent back on your first $3,000 spent on grocery purchases. After that, rewards drop to 1 percent.

One key difference is that the USAA Cash Rewards Plus card offers an intro APR on qualifying balance transfers (then a regular APR will apply). If you need to make a balance transfer, this is a big perk. It’s possible the balance transfer to the USAA Cashback Rewards Plus card will save you more money in interest charges than you stand to gain from rewards earnings on either card.

Despite the name, Navy Federal caters to all military branches and veterans. With the Navy Federal Credit Union Visa Signature® Flagship Rewards credit card*, cardholders can earn 3X points on travel and 2X points on all other purchases.

The Navy Federal Flagship Rewards card comes with a statement credit of up to $100 for Global Entry or TSA application fees and collision damage waiver coverage for car rentals. It’s also a Visa Signature card like the USAA Preferred Cash Rewards card and shares those same benefits.

Plus, you get Amazon Prime free for one year and the opportunity to earn 40,000 bonus points when you spend $3,500 with your card in the first 90 days of opening your account.

Even though it’s not a no-annual-fee card like the USAA card, the Navy Federal card’s $49 annual fee can be quickly offset by the welcome offer and rewards potential.

With its high rewards earnings on military base purchases, gas and groceries, the USAA Cashback Rewards Plus card is a great complement to the USAA Preferred Cash Rewards card. You can swipe the card on those 5 percent on-base and gas purchases (up to $3,000 combined spending annually) and 2 percent grocery purchases (again, on up to $3,000 spent annually) while holding on to Preferred Cash Rewards to get that 1.5 percent on everything else.

If you’re open to a card outside the USAA ecosystem, a card like the Blue Cash Everyday® Card from American Express offers 3 percent cash back on U.S. gas station, U.S. supermarket and U.S. online retail purchases (up to $6,000 spent annually in each category) and a better welcome bonus opportunity.

The USAA Eagle Navigator™ Visa Signature^® Credit Card* is a decent travel card option that offers 3X points on travel and transit including air, hotel, car and vacation rentals, rideshare, tolls and more. It also gets you 2X points on other purchases. The card charges a $95 annual fee, so make sure you can offset that fee with the rewards and perks it offers.

A general travel card like the Chase Sapphire Preferred® Card might get top value for your $95 annual fee. Cardholders can earn an impressive welcome bonus as well as 5X points on Chase Travel^SM purchases; 3X points on dining, select streaming services and online grocery purchases; 2X points on other travel purchases; 1X on other purchases. Plus, this card allows you to transfer rewards to a variety of hotel and airline loyalty programs. Sapphire Preferred has a $95 annual fee.

The primary criteria for a rewards or cash back card’s rating is its rewards value. This includes the card’s average rewards rate, estimated annual rewards earnings, sign-up bonus value and reward redemption value.

To estimate a card’s average annual rewards earnings, we first calculate its average rewards rate based on how much it earns in different bonus categories and how closely its categories align with the average person’s spending habits, according to the Bureau of Labor Statistics (BLS).

The most recent BLS data estimates average total spending in 2022 was $72,967 per consumer. We then narrow our focus to which purchases are likely to be put on a credit card and earn rewards, subtracting expenditures like housing, vehicle purchases and education. This gives us a total “chargeable” annual spend of around $22,500.

Some of the major spending categories that contribute towards the annual spend include:

• Groceries: $5,700

• Dining out: $3,600

• Entertainment: $2,400

• Gas: $3,100

• Apparel and services: $1,900

Using this data, we assign a weighting to each of a card’s bonus categories. For example, a card’s grocery rewards rate receives a 22 percent weighting based on how much of the average person’s budget is spent on groceries. We also estimate the redemption value of points or miles from various issuer, airline and hotel rewards programs.

This weighting and rewards valuation allows us to estimate a card’s average annual rewards earnings — how many points or miles you’d earn with a given card if your spending was about average and you used the card for all of your purchases, as well as what those points are worth. We also use point valuations to determine a card’s sign-up bonus value.

With these calculations complete, we assign each card a score based on how its average rewards earnings, sign-up bonus value, rewards rate and redemption value stack up against other rewards cards.

We also rate cards based on how much it costs to keep them in your wallet or carry a balance. 

To start, each rewards or cash back card is scored based on whether it offers an intro APR and how its ongoing APR compares to the rates available on other rewards or cash back cards. 

We also score each card based on how its annual fee influences its overall value. 

We consider a card’s annual fee in two ways — how it ranks relative to the fees you’ll find on other cards in the category and how it impacts a card’s overall rewards value. Cards with an annual fee will always be at a slight disadvantage in our scoring system since annual fees inherently cut into your rewards value, but if a card offers terrific value via its ongoing rewards and perks, it can earn a high score even if it carries a high annual fee. 

With this in mind, we rate a card based primarily on how its ongoing rewards value and ongoing perk value (such as annual credits or bonuses) stack up against other cards in the category when you subtract its annual fee.

We rate each card’s flexibility based on the restrictions it imposes on earning and redeeming rewards and factor this rating into a card’s overall score. 

Flexibility factors include whether a card only allows you to earn a high rewards rate on a small amount of spending or requires you to meet a certain earning threshold before you can redeem rewards. We also examine whether your points are worth less when you redeem for some options versus others and whether a card gives you the flexibility to transfer rewards to airline and hotel partners. 

We also score each card’s set of features – its perks and benefits — against five tiers of features to provide a rating. 

We break down these tiers as follows:

• Tier 1 has less than standard card features (an ultra-streamlined card that offers basic utility and next to nothing in the way of ancillary benefits. 

• Tier 2 includes the benefits you’d expect on standard Visa or Mastercard credit cards, such as free access to your credit score, car rental insurance and $0 liability for fraudulent charges. 

• Tier 3 includes “prime card” or better-than-average card features like cellphone insurance, lost luggage insurance, concierge services and purchase protection. 

• Tier 4 includes luxury features such as airport lounge access, elite status with an airline or hotel and credits for expedited security screening membership programs. 

• Tier 5 includes the sort of exemplary benefits you’ll find on top-tier luxury cards, such as high-value travel credits, cardholder memberships and other unique and valuable perks.