The 2% cash-back rewards card formerly known as Schwab Invest First Visa lasted a year and a half after Schwab officially ended its sponsorship back in April 2010. Like many other cardholders, I received a notice from the card issuer that it will be replaced effective Nov. 1, 2011.
The replacement card offers 3% cash-back for gas, 2% for groceries and 1% for everything else. Because I buy a lot more outside gas and groceries, the blended cash-back rate will be barely over 1% – not very appealing.
In addition, if I want a card just for gas and groceries, other cards pay a higher cash-back percentage for these two categories. For instance PenFed Platinum Cash Rewards Visa pays 5% cash-back on gas.
I like simplicity. I don’t want to juggle that many cards. Two cards are ideal for me: one primary card, one backup. My two best candidates for this setup come from the same issuer FIA Card Services. They are marketed by the same brokerage firm: Fidelity Investments.
Fidelity Rewards American Express Card offers 2% cash-back and no annual fee, just like the old Schwab card, except it’s an AmEx card. This one can be the primary card.
Some smaller places don’t take AmEx because AmEx charges a higher fee to the merchants. The cash-back is higher for that exact reason. Higher fee pays for higher cash-back, which makes the customers use the card more often, which generates higher fees to the issuer and more sales to the merchants. Win-win-win for the customers, the issuer, and the merchants. Other customers who don’t use an AmEx card lose.
At those places that don’t take AmEx, Fidelity Investment Rewards Visa can be a good backup card. It pays 1.5% for purchases up to $15,000 a year and 2% after that.
Both cards will deposit the cash-back rewards into a Fidelity account, which has no minimum balance nor annual fee. You can link a bank account to it and transfer the rewards out. Or you can use the money to buy ETFs with no commission.
None of the companies mentioned pay me anything if you decide to open an account.
Refinance Your Mortgage
Mortgage rates hit new lows. I saw rates as low as 3.25% for 30-year fixed, 2.625% for 15-year fixed, with no points and low closing cost. Let banks compete for your loan. Get up to 5 offers at LendingTree.com.