Should you apply for the Fidelity credit card… or not?
Over the years we have seen quite a shake-up when it comes to brokerage credit card offers. During the Great Recession and the tough economy that followed, some were discontinued or had their rewards reduced. However, the Fidelity has consistently offered cards with solid rewards.
Even so, Fidelity made some changes to its program in early 2016. It dropped American Express and Bank of America as its issuing partners — and will now offer a Visa Signature card issued by U.S. Bank. The good news: The card still offers 2 percent cash back.
Update: If you are looking for non-brokerage cards that offer 2 percent cash back, go here.
Previously, there used to be two versions of this card: The Fidelity Rewards Visa Signature and the Fidelity Investment Rewards American Express.
Now, this is the rewards card Fidelity offers:
Fidelity Rewards Visa Signature (no annual fee)
The card comes with the following benefits:
- Unlimited 2 percent cash back (each dollar spent gets you 2 rewards points, worth 1 cent each)
- No expiration date on rewards
- The ability to deposit rewards into a Fidelity brokerage account, cash management account, 529 college savings plan or retirement account. You can divide rewards into a single account, or several.
- No annual fee
It’s worth noting that the foreign transaction fee is 1 percent, a bit lower than many cards with foreign transaction fees offer. However, don’t forget that plenty of cards waive this fee entirely.
*Warning: If the rewards are deposited into an IRA or 401k account, than that will count towards the annual contribution limits set forth by IRS, so keep that in mind.
The Fidelity cards offer 2 percent back on all spending, which is rare. The Citi Double Cash card is probably its closest competitor. However, the Double Cash card gives you 1 percent back on purchases and the second 1 percent back after you pay. With the Fidelity card, you get the full 2 percent in one step, with the purchase.
The biggest drawback with this card is that you must redeem into a Fidelity account. Other cash-back cards will allow you to deposit rewards into any bank account, or even redeem in other ways, including for statement credits and for online purchases. However, one of your redemption options is redemption into a cash management account. Cash management accounts essentially work like checking accounts, so you’ll have easy access to your reward money.
Whether this is the card for you depends on your goals. One person’s “lack of flexibility” could be another person’s “simplicity.” If you’re looking for a card that offers a consistent 2 percent back on everything and want to invest those rewards for the future (without the temptation of cashing them out for gift cards and Amazon purchases), the Fidelity Rewards Visa Signature card could be a good match.
Updated Jan. 6, 2016