In recent years, cash back rewards credit cards have not been as lucrative as in the recent past. Very few cash back credit cards offer a rewards rate above 1% for most purchases. The Fidelity Rewards Visa Signature credit card defies that trend by offering 2% cash back on all purchases that can be credited to any Fidelity brokerage, college savings, or checking account. This can be an excellent option for Fidelity investors that want a solid cash back rewards rate.
In 2016, Fidelity partnered with Elan Financial Services (part of U.S. Bank) and switched credit card issuers (Visa instead of American Express). This should be a plus for existing Fidelity cardholders due to several negative comments regarding Fidelity AmEx’s customer service. In addition to the fact that Visa is more widely accepted than American Express across the globe.
While 2% cash back might not be the most exciting reward in the land of credit card rewards, it still isn’t anything to scoff at. For a flat-rate cash back credit, only the Citi Double Cash can rival the Fidelity Visa for a 2% everyday rate. Most flat-rate cards have a rewards rate of 1.5% or less. Other cash back cards will offer a higher payout in a revolving category (example: 5% on gas purchases in the summer then 5% on home improvement purchases in the fall) and pay a 1% rate on all other categories. With the Fidelity credit card, you know you will be getting an industry leading flat-rate reward for every purchase without the hassle of trying to time when a category will offer an increased reward rate.
No Sign-Up Bonus?
One downside of the Fidelity Rewards Visa Signature is the lack of a sign-up bonus. Chances are any credit card offer you receive by e-mail or snail mail has a sign-up bonus when you meet a spending minimum within the first couple months of opening the account. While a sign-up bonus might be considered a “cherry on top” for some applicants who are loyal to a specific airline or hotel brand and would sign-up for the card regardless, some might view it differently with a cash-back credit card.
Fidelity offers a higher reward rate and allows cardholders to put the savings directly into a savings or investment account, but other cash back cards will offer a small welcome bonus. If the Fidelity credit card is going to be a secondary credit card, it might make more long-term financial sense to choose a cash back card, like the Chase Freedom Unlimited, with a lower everyday payout but offers the welcome bonus. How much more would you have to spend with Fidelity at 2% with no sign-up bonus to offset the credit card with a 1.5% cash back rate and a $150 sign-up bonus? Just some food for thought.
2% Cash Back Rewards
Although the Fidelity Rewards Visa Signature is lumped into the flat-rate cash back rewards category, cardholders accumulate reward points instead of receiving a monthly statement credit or cash distribution once a certain award amount is received. Fidelity awards two points for every $1 purchased. The points can be redeemed for cash at a 1:1 ratio that is deposited into a Fidelity brokerage, college savings, retirement, or checking account. The points can also be redeemed for other rewards like travel options, merchandise, statement credit, or gift cards. Albeit, the exchange rates probably will not be as advantageous as the cash redemption value.
As the cash rewards are the biggest highlight of this credit card, here is some more information. The cash rewards can only be deposited into a linked Fidelity brokerage, Fidelity Cash Management (checking) account, Fidelity-managed 529 college savings plan, or a Fidelity retirement account. The rewards can also be deposited into the account of a friend or family member if desired. Although this policy might seem restrictive, Fidelity is quite flexible in payout options compared to the Charles Schwab credit card that will only deposit rewards into the cardholder’s brokerage account. Plus, Schwab only has a cash back rate of 1% on all purchases. Fidelity investors have the better credit card offering than Schwab loyalists.
One catch to the rewards point system is the redemption minimums. Cash rewards cannot be redeemed until you have spent $2,500 and 5,000 points have been accumulated. Cardholders wanting to redeem points for non-cash rewards after earning 2,500 rewards points.
One final note regarding Fidelity rewards points, they never expire and no annual earnings cap exists.
Beyond the 2% cash back rate, the Fidelity Rewards Visa is also ready for future in 21st-century personal finance. Cardholders can link their card to any of the “big three” digital wallets: Apple Pay, Samsung Pay, and Android Pay. Digital Wallets are still very new to digital cash scene, but they are gaining traction every year. It’s not uncommon for a credit card to have the ability to link to one of the wallets listed above, however, it is unique to have the option to connect to all three.
Fees & Other “Nitty Gritty” Details
The Fidelity Visa does not charge an annual fee, allowing the cardholder to keep every penny earned through the rewards program. International travelers will have to pay a 1% foreign transaction fee, which is still acceptable as other non-travel rewards credit cards charge a fee up to 3%. Current interest rates on purchases and balance transfers is 14.24% and cash advances command an interest rate of 24.24%.
There are a few “fine print” details that need to be reviewed regarding the Fidelity rewards program. Anybody can have the Fidelity Visa credit card, but only cardholders with an eligible Fidelity account can accumulate reward points. Reward points cannot be used to open a Fidelity account, so it’s best to create an account before applying for this credit card. As Fidelity is more flexible than Charles Schwab regarding types of eligible accounts, this can be a great way to finally create a retirement account or college savings plan for your child.
In addition to the ability to earn 2% cash back without an annual fee, cardholders also have access to Visa Signature perks such as exclusive offers and discounts to restaurants, travel, and entertainment.
This credit card is best for those that invest with Fidelity and want a no-hassle cash back rewards card either a primary or secondary credit card. The 2% cash back rate is a great enticement for value seekers and this credit card is one of the best among cash back credit cards. The lack of a sign-up bonus will deter those that do not have an affinity to become a Fidelity customer as other cash back credit cards offer similar ongoing rewards payouts plus the bonus statement credit.
Overall, the Fidelity Rewards Visa Signature credit card is a great primary or secondary cash back credit card for existing Fidelity customers, but, the rewards might not be enough to entice prospective cardholders that are not loyal to Fidelity.