Military Community Shows Financial Resilience, Growing Savings by 19% and Cutting Credit Card Balances by 23% Over Last Five Years, New USAA Bank Data Shows

USAA’s Military Financial Wellbeing Index highlights the impact of pandemic-era trends and inflation on service member finances

Military service members were stronger financially at the end of 2023 than they were pre-pandemic even as inflationary pressures impacted household finances, according to the first-ever Military Financial Wellbeing Index released by USAA Federal Savings Bank, the leading financial services provider for the military community and their families.

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The index reveals insights into the financial health of America’s service members as measured from aggregated USAA Bank account and product data from over 900,000 USAA members that were designated as currently serving, inclusive of active duty, reservists and National Guard, between 2019 and 2023. It showcases military members’ financial resilience and highlights select generational and regional trends.

More Money In The Bank

Despite the challenges of inflation, service members grew their savings and kept more in their checking accounts over the last five years.

• Between 2019 and 2023, service members saw an average 19% increase in their savings balances and a 23% increase in checking balances.
• In 2023, the typical checking and savings balances saw year-over-year declines of 12% and 10% respectively compared to 2022, a potential sign of inflationary pressures.

Being Resourceful with Credit Cards

Mounting credit card debt weighed on the average consumer in 2023, with credit card balances reaching record highs in Q3 per NY Fed data¹. In contrast, service members carried lower balances and managed debt better at the end of 2023 compared to pre-pandemic.

• The average daily credit card balance for military members was 23% lower at the end of 2023 than 2019.
• 50% of military members paid their credit card bills on time and in full in 2023 versus 40% five years prior.
• In 2023, 37% of military members carried a revolving balance; in 2019, this figure was 45%.

A Boost for Gen Z and Millennials

Gen Z and millennials had differing fortunes when it came to savings and credit cards. While Gen Z service members saw bigger jumps in savings balances, they were also the group with the greatest reversion to pre-pandemic credit card trends. In contrast, millennials saw a smaller bump in their savings, yet managed their credit more modestly.

• Between 2019 and 2023, Gen Z service members saw an 18% increase in savings account balances, compared to just 6% for millennials. Gen Z checking balances also increased by 18%.
• In 2023, millennial credit card balances remained 23% lower than their pre-pandemic average, compared to 11% for Gen Z.
• Millennial service members in this group also charged less on restaurants, entertainment and shopping than other generations.

While the exact reasons for the difference are unclear, housing costs may play a factor. Per data from the National Association of Realtors, millennials are anywhere from five to seven times more likely to be a homebuyer in 2024 than a Gen Zer². Likewise, younger service members are more likely to live on base earlier in their military career.

Looking at average account balances, younger service members fared somewhat better than their civilian counterparts. In 2023, Gen Z service members had a 21% higher average checking account balance and 8% higher savings account balance than the typical Gen Z civilian. This was also the case for millennial service members, who had 10% and 10% more on average in their checking and savings accounts, respectively, compared to millennial civilians.

Among the reasons behind the improvement in broader military financial wellbeing: stable employment rates among the military population throughout the pandemic and beyond, a growing emphasis on financial readiness within the military, and pay and benefit increases. Younger service members, especially officers, may also be earning more than civilian peers who are early in their careers.

The Index also outlines areas to watch as inflationary pressures continue mounting for the military community and civilians alike. Rising credit card spending and lower savings rates may stress finances.

• Spending Hikes: For active-duty service members, credit card spending increased between 2023 and 2019 across some major essentials: grocery/pharmacy (32%), fuel (36%) and utilities (13%).
• Regional Imbalances in Savings…In 2023, service members living in regions known for a lower cost of living had savings account balances below the national average – and well below peers in some higher-cost regions. For example, the average balances for active-duty members in Fayetteville/Coastal Carolina and Norfolk/Newport News were 16% and 26%, respectively, below the national average. In contrast, military members in Seattle had an average account balance that was 32% higher.
• …and Credit Management: Service members in Fayetteville/Coastal Carolina (41%) and Norfolk/Newport News (39%) were more likely to carry a revolving credit card balance than the average active-duty member nationally (37%). Conversely, revolving rates for members in Seattle (31%) and San Diego (33%) were below the national average.

That said, service members in lower-cost regions had higher average checking balances in 2023 than the typical civilian in the same area. Active-duty members in the Norfolk/Newport News region had 63% more in their checking accounts compared to non-serving USAA members in the same area; in Fayetteville/Coastal Carolina and San Antonio, these figures were 56% and 31% respectively.

"The USAA Military Financial Wellbeing Index points to a military population that has taken meaningful steps to improve their financial health, even amid some tough economic circumstances," says Michael Moran, President (Interim), USAA Federal Savings Bank. “This Index goes beyond sentiment to put a real number behind the optimism and the challenges that our military members share with us on a daily basis. While it’s great to see service members in a better place than they were pre-pandemic, we can’t ignore the reversal in trends. With inflation continuing to pressure military households, we encourage service members to be vigilant with their personal finances and preserve some of these hard-earned gains.”

Financial Readiness Guidance

• If you're carrying a credit card balance, consider consolidating high-interest debt and exploring balance transfer options to lower-rate cards or loans. Utilize rewards programs strategically to maximize your spending on essential purchases.
• Continue to prioritize saving, even small amounts, to build a financial buffer against future economic uncertainties. Revisit your spending habits and identify where you can cut back on non-essential spending.
• USAA members can take control of their financial lives with a personalized Financial Readiness Dashboard that outlines suggested actions and tools for improving your financial health, updated regularly to help you navigate any situational changes or challenges you may face.

Methodology

The Military Financial Wellbeing Index was derived from aggregated and anonymized USAA Bank member account and transaction data from over 900,000 service members who were designated as currently serving, inclusive of active duty, reservists and National Guard, who held one or more USAA Bank products between 2019 and 2023. Where comparisons were drawn to civilians, civilian data was derived from the account and transaction data of approximately 3.4 million non-serving USAA members who held one or more USAA Bank products between 2019 and 2023. The Index does not include any financial account or product data that members may have held at other financial institutions.

Within this Index, ‘Gen Z’ refers to individuals aged 18-29. ‘Millennials’ refers to individuals aged 30-39.

About USAA

Founded in 1922 by a group of military officers, USAA is among the leading providers of insurance, banking and retirement solutions and serves more than 13.5 million members of the U.S. military, veterans who have honorably served and their spouses and children. Headquartered in San Antonio, USAA has offices in eight U.S. cities and three overseas locations and employs more than 37,000 people worldwide. Each year, the company contributes to national and local nonprofits in support of military families and communities where employees live and work. For more information about USAA, follow us on Facebook or X (@usaa), or visit usaa.com.

“USAA Bank” means USAA Federal Savings Bank. Bank products offered by USAA Federal Savings Bank, Member FDIC. Credit card, mortgage and other lending products not FDIC-insured.

¹ Federal Reserve Bank of New York – Center for Microeconomic Data (Feb 2024). Quarterly Report on Household Debt and Credit – Q4 2023. https://www.newyorkfed.org/medialibrary/Interactives/householdcredit/data/pdf/HHDC_2023Q4.pdf?sc_lang=en

² National Association of Realtors. (2024, April 3). 2024 Home Buyers and Sellers Generational Trends Report. https://www.nar.realtor/sites/default/files/documents/2024-home-buyers-and-sellers-generational-trends-04-03-2024.pdf

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