S&P downgrades USAA

The ripple effect of Standard & Poor’s downgrade of the United States continues. As reported in today’s Wall Street Journal in an article entitled “S&P Cut Ripples Across Businesses”, five insurers are losing their triple-A status including United Services Automobile Association (USAA). This company is an insurer for many active and retired military members as well as their family members.

Apparently S&P claims the fundamental credit characteristics of companies such as USAA has not changed. The problem, from the perspective of S&P, is USAA’s business and assets are highly concentrated in the United States.

Because of this downgrade, what are the consequences for USAA members like me? I would believe the obvious: lower rates on savings accounts, checking accounts & CDs, higher rates for credit cards & loans, and a reduction in some services.

As I stated yesterday, with friends like S&P, who needs enemies!

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