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 and 2019, but should you get it?
How it works
Their cash back structure is the simplest on the planet – you earn 2% in points on everyday purchases with no limit and no expiration date when redeeming into an eligible Fidelity account.
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 – everyday 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 account such as a 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 an eligible Fidelity account. Other credit cards may issue a statement credit, or payout by check, or some other mechanism – the Fidelity Rewards card transfers money into an eligible Fidelity account.
If you opt for gift cards or statement credits – the conversion rate makes it effectively a 1% cash back card. So it’s better to deposit into an eligible Fidelity account.
This means you’ll need an eligible Fidelity account. The cash back can be nearly any Fidelity account such as: 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 6.5% on travel purchases through Chase Ultimate Rewards, 4.5% at drug stores and dining in restaurants, including takeout and eligible delivery services, plus 3% on all other purchases (on up to $20,000 spent in the first year). There is a new account bonus of up to $300 cash back with an additional 1.5% cash back on everything you buy (on up to $20,000 spent in the first year).
Also, the Chase Freedom Card has 1% on all purchases and 5% on rotating categories. The Chase Freedom Card comes with a up to $300 cash back with an additional 1.5% cash back on everything you buy (on up to $20,000 spent in the first year). 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!
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.
- ID Navigator from NortonLifeLock – Identity theft protection that includes dark web monitoring, data breach notifications, stolen wallet assistance, credit monitoring as well as account freezes and Restoration Assist.
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 your dependent children. The costs of those accommodations are your responsibility but they can help you sort it out.
In early 2021, they removed the Extended Warranty Protection and Auto Rental Collision Damage Waiver benefits and added ID Navigator (effective the end of April).
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.
If you have a brokerage elsewhere and aren’t interested in opening a Fidelity brokerage account, this offer doesn’t make sense.