Fidelity Rewards American Express Card Review

Cash back cards are very attractive, for obvious reasons.   With them, you are not invested in proprietary loyalty program that can be devalued at a whim.   To the contrary, your cash rewards can earn earn interest for you over time.     For the longest time, 1% was the standard cash back reward, with higher percentages for purchases with the card’s branded affiliate.

Then, things started to get a little complicated.   Some cards offered double cash back in certain spending categories, while others required you to reach spending floors before higher rates of back rewards kicked in.   I prefer to keep things simple, most of the time, and have a cash back card with a flat rate for all purchases.    The Schwab Visa has been the benchmark among flat rate rewards cards, delivering a phenomenal 2%.    It has recently come to my attention that another card, the Fidelity Rewards American Express offers Schwab some serious competition.   Let’s see how it stacks up.

Reward Formula

With this card, you accrue 2 points for every dollar spent.   When your total equals 5,000 points, you may have the points automatically converted into a $50 credit into any of your accounts with Fidelity Investments.

Eligible Accounts

These include brokerage accounts, IRAs, and 529 college savings accounts.

Fees

There is no annual fee.    The Standard Variable APR is 13.99%.   There is a 0% APR on balance transfers for the first six months, however, there is 3% fee on balance transfers in the introductory period, that goes to 4% afterwords.   The foreign transaction fee is specified in the Cardholder Agreement, which is not posted on their website.    Other American Express cards charge a 2.7% foreign transaction fee.    I must add that if you plan on carrying a balance, you probably should not be looking at a reward card.

Other Benefits

There are some travel rewards and merchandise gift certificates that are available for purchase with your points, however, it is difficult to imagine that they are of greater value than cash.

Some Drawbacks

The terms and conditions includes language that says that you will forfeit points if the card is closed by either yourself or themselves.    Since their reward system requires that you spend $2,500 before getting $50 cash back, you are risking up to $50 of rewards at any one time.     That is probably an acceptable risk for most people, unlike cards where the reward are distributed annually.

Verdict

Simply by the fact that the card is an American Express, it has a few disadvantages when compared to the Schwab Visa card.   For one, it is accepted at fewer locations than a Visa card.    Also, the 2.7% Foreign Transaction fee means that you are getting a “negative reward” of .7% whenever you use your card to make purchases in a foreign currency, and possibly with transactions in Dollars with a foreign company.    On the other hand, most people find American Express Card Member Services to be superior in areas such as merchant disputes and car rental insurance.

Getting beyond the Visa/Amex distinctions, this card is very similar to the Schwab Visa.    The rewards are so good, that it is possible that neither company is making much money on these offerings.    These cards exist to attract people to their respective brokerage services.

While some predict that the Credit Card Bill of Rights will mean the end of reward cards, it is my firm belief that affiliate cards like these will become more popular in the future.   It is a win-win for both the cardholder and Fidelity Investments.