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Ditch Your Travel-Rewards Credit Card for This …

Ditch Your Travel-Rewards Credit Card for This …

With their outsized sign-up bonuses and promises of trips-of-a-lifetime, travel-rewards credit cards seemingly have a monopoly on travelers’ hearts and minds, and pride of place in their wallets.

But I have long counseled that cards featuring travel rewards should be most consumers’ back-up option, not their first choice.

Rewards cards typically award users with miles or points that amount to a rebate of between 1 and 2 percent, not including periodic bonuses that can improve the value proposition somewhat. The points are generally redeemable only for travel, from a limited number of suppliers. And most of the cards have annual fees, in some cases as high as $450.

What if there were a card that consistently returned 2 percent. In cash. And with no annual fee.

The Fidelity Investments Rewards card, issued by American Express, is just such a card. Cardholders earn two points for every $1 charged to the card, and after every $2,500 in purchases, $50 will be deposited automatically into the cardholder’s Fidelity account. The card’s annual percentage rate is variable, based on the Prime Rate, currently at 13.99 percent.

For the first time that I’m aware of, there’s a sign-up bonus for the card: 7,500 bonus points after spending $500 within the first 60 days. That translates into a $75 contribution to your Fidelity account. It’s a limited-time offer, with no published end date, so it could be pulled at any time.

To be sure, the sign-up bonus is a decidedly modest one, especially compared to those routinely offered by travel-rewards cards. But the real value of the Fidelity card lies in its ability to deliver a solid cash rebate, day in and day out, with no hassle and no annual fee.

Miles and points are nice. But cash is king. It can be used to purchase anything, travel-related or not. Or it can be left in a Fidelity account and invested for the long term.

It’s not the only rewards card in my wallet — I too have succumbed to some of the eye-popping sign-up bonuses for travel cards. But when the bill comes due, the Fidelity card is the one I reach for most often.

Reader Reality Check

Should a cash-rebate card be in your wallet?

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  • larry bradley

    The only problem with this card is it is NOT issued by AMEX. It is issued by FIA card services, which I think is owned by Bank of America. As a result, I am suspect of any service related issues

  • sjcdal

    yep..I have used the Visa version of this (it has a different, not quite as good reward structure. 1.5% for first $20k charged to card per year, then 2%). With cash there are no “available seat” issues, partner airline questions, nuffin. And issued by FIA is not a problem, it is still Visa, or Amex serviced.

  • larry baradley

    It is processed on the AMEX network, but unless something has changed, it is serviced by FIA Card Services.

  • LZ126

    The prospect of having to open (and track) yet another account at a financial institution is an adequate deterrence.

  • Alex M

    I have had this card for quite a while and have almost entirely stopped using anything else (except Chase Freedom on the 5% categories and for places that don’t take Amex). It is true that it is serviced by FIA Card Services, but I have never had any problem with them. They even proactively sent me a new card when some fraudulent activity came up.

    As for the prospect of having to “open yet another account at a financial institution”, if you open the Fidelity cash management account you can actually close your checking account. Free checks, no fees, deposits are held at FDIC insured banks..

  • Tim Winship

    My experience with the card has been very much like Alex’s. Every once in a while, I encounter a merchant that doesn’t accept Amex. No issues with customer service so far.

  • Tabbycat

    I’ve used this card almost exclusively for years.

    There’s one caveat: holders expecting the usual five-star American Express customer service standard are in for a rude shock.

    Just try disputing a charge. Just try.

    You’ll get the worst response ever, from what sounds like a prison in rural Georgia. They’ll often refuse to even submit your dispute, and attempt to ridicule your complaint otherwise. In either case, they will not be very helpful at all.

    Note: this is NOT a real Amex card, actually issued by American Express.
    It is issued by some other bank (one with a deal to use prison labor for CSR’s) and merely stamped with an AMEX logo.

  • hereatpsu

    This card is no big deal and to comply with fcc rules, you better add somewhere in your blog that you are embedding affiliate links and “endorsing” this card

  • Edgar Numrich

    It is amusing folks appear not to realize that “cash back” really just means you overpaid in the first place.

    I’d rather have the bonus miles up front (which can be very beneficial for leisure overseas travel) and for purchases.

  • Ca77andra

    I don’t understand what you say about “overpaid in the first place”. Isn’t the $50 per $2500 based on regular charges to the card?

    I like the bonus miles too but what urks me is the remaining cash I pay for a ticket doesn’t go to more bonus miles. Shouldn’t it?

  • Edgar Numrich

    Hi, Ca77andra ~ Someone is paying that $50 out-of-pocket to the recipients of it. So, where you write “regular”, in the very-old days was simply referred to as “retail”. Another way to look at: “When’s the last time you knew of anyone who paid “full-price” for a mattress??” It’s discounting, no matter how you look at it.

    As to “remaining cash you pay for the ticket”, I’ve never paid more than the $5 U. S. tax/security fee flying from the U. S. to Europe. There is a departure tax from European/U. K. airports when flying from there to the
    U. S., but that’s another matter entirely, and which you pay for “up front” when you purchase the ticket. If you use a co-branded airline credit card, you should get miles for that fee or, for that matter, the $5, too. I always have.

  • Ca77andra

    Thanks for explaining that.

    As to the ticket….I use miles for part of it and pay cash for the rest. I only travel twice a year so try to conserve the miles. The $150 off a $400 ticket helps. The remaining $250 cash isn’t applied to my points. Seems it should be.

  • Edgar Numrich

    Well, you have me on this, and where I’ve never seen the occasion where you can split the payment between miles and cash.

    But, in recent years what air travel I do is mostly on American, Alaska/Horizon, and Southwest.

    I have no credit cards with “points”, so maybe that’s the difference.

  • Ca77andra

    I use the AMEX Delta on the Delta site. It’s amazing all the ways we can get stuff for “free”.

  • Edgar Numrich

    Send me a friend request on FB . . .

  • Tim Winship

    There are no affiliate links on this site.

  • MG

    I’ve had pretty much all the cards anyone on here would suggest are the best, and this is my favorite. It’s my workhorse. Not sure why some of the comments below suggest a bad customer service experience. I’ve actually had a couple of late charges after accidentally missing payments dismissed by them with no problems. Transferring money our of the Fidelity rewards account is easy and shouldn’t be a real deterrent to getting the card. Also, just FYI, FIA Card Services is owned by Bank of America.