When you think of Fidelity, you probably think of their mutual funds and brokerage.
But what if I told you they also offered a Visa Signature credit that gives unlimited 2% cash back, has no annual fee, and also a $100 bonus when you spend $1,000 in the first 90 days?
They do and it's called the Fidelity Rewards Visa Signature Card.
Kiplinger's Magazine named them the Best Rewards Credit Card for Cash Back Savers in 2018, but should you get it?
How it works
Their cash back structure is the simplest on the planet – you earn 2% in points on all purchases with no limit and no expiration date.
They don't have complicated schemes to earn higher cash back. Some cards ask you to activate bonus categories or you only earn the base amounts. Some put limits on how much cash back you can earn in a month. Not here – all purchases earn you 2% cash back.
And when you get the cash back, you get it as “points” but you convert them into cash deposited into an eligible Fidelity brokerage, IRA, 529, or cash management account. You redeem the points in 2,500 point blocks and each block is worth $25 deposited. The math is simple too.
The cash back mechanic works slightly differently than other cards though. When you redeem the points, they are cash transfers into a Fidelity brokerage account. Other credit cards may issue a statement credit, or payout by check, or some other mechanism – the Fidelity Rewards card transfers money into a Fidelity account.
If you opt for gift cards, statement credits, or charitable donations – the conversion rate makes it effectively a 1% cash back card. So it's better to deposit into a Fidelity account.
This means you'll need a Fidelity brokerage account. The cash back can be nearly any Fidelity account – most non-retirement accounts, IRAs (Traditional, Roth, Rollover, SEP), Fidelity Charitable Giving Account, HSA, and even 529 College Savings Plans.
How does it compare with others?
There aren't many 2% cashback cards on the market right now but there are a few out there.
The best competitor in this market appears to be the Chase Freedom Unlimited Card with its first-year offer of 3% cash back on all purchases on up to $20,000 of spending. After that, it's 1.5% cash back on all purchases. There is no new account bonus though as the 3% cash back is the bonus.
Also, the Cash Freedom Card has 1% on all purchases and 5% on rotating categories. The Chase Freedom Card comes with a $150 bonus after you spend just $500 in purchases in the first three months so you could achieve the same amount of cash back in the first year using this card. But once you hit year 2, you're back to just a 1%/5% credit card.
As you can see, very few 2% cash back cards on the market and very few that don't require activating categories or other hoops.
This card can help you save
It's easy to see the cash back mechanic as an annoyance but I think it's not.
When you make a purchase, you usually aren't thinking about cash back. You're thinking about why you need the item or service you're buying. The cash back is a nice afterthought when you see the rewards accumulate, but it's usually separate.
By depositing the 2% cash back into a Fidelity account, your effectively saving an extra 2% of your spending each year. You can withdraw it whenever you want or you can opt to deposit into an account you can't easily access, like a retirement, 529, or HSA.
It's a little like forced savings but it's such a small drip you likely won't even miss it!
How to get the $100 Bonus
The sign up bonus is really simple – spend $1,000 within the first 90 days and you'll get $100 in value.
Technically, you'll earn 10,000 Bonus Points and you can cash that out for $100 deposited into an eligible Fidelity account. It's simple and there are no other hoops to jump through.
Visa Signature benefits
It is a Visa Signature card, with no annual fee too, which means you get a lot of the perks of the Visa Signature platform.
This includes, but is not limited to:
- Extended Warranty Protection: It extends the manufacturer's warranty by the original amount up to a maximum of one additional year. A six-month warranty is now covered for 12 months, with the card covering the additional six months.
- Roadside Dispatch: Roadside assistance similar to what you get through your auto insurance or third-party groups like AAA.
- Auto Rental Collision Damage Waiver: You can decline the insurance from a rental car company when you pay for your rental with your card because the card covers you.
- Travel & Emergency Assistance Services: If you find yourself in trouble when traveling, you can call up their assistance services and they can help solve the problem for you, your spouse, or dependent children. The costs of those accommodations are your responsibility but they can help you sort it out.
Visa Signature offers some of the best benefits and very rarely will see a Visa Signature card without an annual fee, so this is an added bonus.
Should you get it?
If you have a Fidelity brokerage account, it's practically a no brainer. There's no easier way to get unlimited 2% cash back on all your purchases and have all the other perks this card has. It also has the added bonus pushing that cash back directly into your investments and savings, which reinforces saving even as you spend.
If you don't have a Fidelity brokerage account, you'll have to weigh whether or not it's worth opening one. If you don't have an investment account anywhere, Fidelity is a solid option though I've always had a soft spot for Vanguard. Either are very solid options so you aren't losing too much by going with one over the other.