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Replacing the 2% Schwab Credit Card

I’ve mentioned my credit card a few times on this blog. It’s a Schwab credit card that gives 2% cash back on all purchases, which is then deposited into a Schwab brokerage account. (It’s actually the entire reason I initially opened an IRA with Schwab.)

Unfortunately for everybody who emails me to ask for a link to the application page, the Schwab 2% cashback card is no longer available to new applicants.

Fortunately, there’s a darned good replacement: The Fidelity Retirement Rewards American Express Card.*

2% Cash Back on All Purchases

Every time you charge $2,500 on the card, they deposit $50 into your Fidelity account. Almost any type of account works —Roth IRA, 529, taxable brokerage account, etc.  You can then invest the money however you please.

If you’re a regular reader of this blog, you know that I’m a big fan of investing via low-cost index funds and ETFs. But Fidelity’s line of “Spartan” index funds each carry a minimum investment of $10,000, so they’re not really an option if this is the only way you’ll be funding your Fidelity account.

Fortunately, Fidelity has a deal worked out with iShares to allow for commission-free trades of 25 different iShares ETFs, thereby allowing you to put your cash-back money to work immediately, at a low cost, and without having to contribute additional money to your Fidelity account if you don’t want to.

What’s the Catch?

As far as I can tell, there isn’t one — assuming, that is, that you’re planning to pay off the balance every month. If you ask me, the only real drawback is that American Express isn’t accepted as widely as Visa or MasterCard.

*I’m not being compensated by Fidelity or American Express for this article. But if anybody from either company is reading this and wants to change that, you know where to reach me. 😉

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  1. When I lived in the US, I had American Express card (Blue Cash) with 2% (or 1.5% depending on the type of store) cash back, and it worked great for me! Of course, I paid the whole balance each month, and I would get few hundred dollars at the end of the year. There was no catch.

  2. Via an email from a reader: There’s also a Fidelity Visa (as opposed to AmEx) that pays 1.5% cashback on purchases up to $15,000 per year, then 2% on purchases beyond $15,000.

    More info can be found here:

    Thanks for the heads-up, Marty. 🙂

  3. Thats great news about the card. But I think the better news is how the brokerage houses have the no fee ETF’s.

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