Many on-air personal finance money gurus such as Clark Howard have been advocating smarter choices in credit cards lately. These choices being better rewards cards meaning the 2% and higher rebate offers. Schwab and Fidelity were two cards mentioned in Clark’s show the other day and I will take a look at the Schwab card and why its not the best card for most.
The Schwab Bank Invest First Visa Credit Card claims you get 2% deposited into your Schwab One brokerage account once a month and you can either invest the money or get out the cash from there. The problem is that you have to keep a $1,000 minimum in a Schwab brokerage account and that could be a problem if your money is invested with E-Trade, Ameritrade or another online brokerage.
Besides you having to open up a Schwab account with a minimum of $1,000 you can read even deeper and find that their trades are $12.95 a trade which is above the average of online brokerages. And it also states “pay $12.95 for the first 1,000 shares, plus $0.015 per share thereafter” I have no idea what they mean by the “plus $0.015 per share thereafter” but I asked around and found out that:
.015/share is exactly that: if you bought 1010 shares of stock, you would pay [12.95]+ [10 shares times .015=$12.95] for a total of $13.10. This might comes into play when buying small cap stock at maybe $1 a share. E*TRADE uses a similar extra charge for after hours trading – usually not enough to matter.
But why even bother with such tacky charges on the consumer. It makes no sense for brokerages to add on even the smallest of fees when people trade more. I want to be rewarded for trading more not penalized.
The Schwab Bank Visa Card is a better deal than our typical 1% cards if you need a place to invest your money. The idea of a 2% card for unlimited transactions is the kind of freedom we expect. My favorite thing about the Schwab Visa is it has NO foreign exchange transaction fees and could be the only card on the market besides some Pentagon Federal Credit Union Card (that no regular Joe can apply for) and the Capital One cards that offer this true luxury in fee-free traveling. Yes, I did say foreign exchange transaction fees will not be on your statements.
The Fidelity Retirement Rewards American Express Card is nothing to be impressed with. To trade online with Fidelity it is a whopping $19.95 a trade why would anyone even care to invest with this brokerage. It is only $8 if you’re an active trader but that requires over 120 trades a year to get down to that level.
You can turn 2% of purchases into a contribution for your Fidelity IRA and enjoy no annual fee with no limits on cash rewards. No extra incentives to get this card and no Signature Visa status, and you do have to pay foreign transaction fees. How about you drop your Fidelity account and move it on over to Schwab to pay less fees to trade and get more benefits with your credit card. The biggest kicker with the Fidelity Retirement Rewards American Express Card is that you have to put the money in an IRA account with them and if you go over your maximum for the year you have to wait until the next year to carry over that balance. This is a very lame way of earning interest off of our rewards that we should be earning interest or dividends on.
More can be found on this offer at the schwab.com or fidelity.com website directly.
My Gas Discover gas card is still paying 5% back for all gasoline.
My Sam’s Discover does pay back 2% on all purchases, takes a few thousand to reach the 2%; but I spend that pretty quick = all my food, tools, TV’s, junk, comes from Sam’s or Wal-Mart, & I like the extra warranty.