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Copyright 2013 by John T. Reed
Last spring, I wrote an article telling readers how my USAA “subscriber account” had accumulated to $6,700 over 45 years of being a USAA member. USAA is an insurance company for current and former military and their families. They created a “subscriber account” for what they claim are regulatory and legal reasons. They are a mutual company—that is—owned by policy holders. Whatever.
As one who writes about How to Protect your Life Savings from Hyperinflation & Depression, I was horrified to see that I had $6,700 in USD-denominated assets in that account. I wrote an article about that and what I did about it: http://www.johntreed.com/example-of-a-protective-transfer-of-money-abroad.html
That article ended saying I was awaiting the check which I would use to pay down my HELOC when it arrived. It arrived on 11/12/13 in the amount of $6,786.67 and I promptly sent it to my HELOC lender with instructions to apply it to reduce our balance.
Normally, I would not be anxious to pay down debt that I could comfortably carry when hyperinflation is a threat. Debt is good in hyperinflation, but only fixed-rate debt. The HELOC is fixed for a couple of years but then it floats with an 18% lifetime cap. So we are killing it off to manage the risk of that 18% possible rate.
USAA has 9.4 million members. I am not sure they all have subscriber accounts, but certainly my West Point classmates and other long-term members do. I urge them to follow my example and clean out that subscriber account and get it into hard assets or well-selected foreign currencies. That “subscriber account” is not FDIC insured. It pays no interest. They do send you a little bit of it annually but that is not interest.
If there were financial difficulty at USAA, you would merely be an unsecured creditor or maybe even less than that—an owner to be paid only after all creditors were paid. Furthermore, you can kill the account and get all the money, then go back to doing whatever you previously did at USAA. And is I said in the prior article linked to above, it does not apply to USAA Federal Savings Bank or USAA Life Insurance Company relationships with USAA; only to their property and casualty insurance company.
I was a little concerned that the check might not arrive—that USAA might find some excuse not to send it. I have had trouble with them in recent years and am leery of them as a result. See my article on that trouble at http://www.johntreed.com/USAA.html.
I appreciate informed, well-thought-out constructive criticism and suggestions.
John T. Reed