By KELLI B. GRANT | SmartMoney
As credit-card issuers slash bonus miles, flier miles and other perks, "charging it" has become a much less rewarding experience. However, there are still ways to make that plastic pay.
Fidelity and Schwab (schw)
"That's a big carrot they're dangling," says Curtis Arnold founder of CardRatings.com, a credit card comparison site. "It's unusual to see two cards with such aggressive rebates." Typically, cash-back cards offer 1% on most purchases, with up to an additional 5% when you spend money in certain categories like at restaurants or gas stations. Overall, however, even the most reward-savvy cardholder usually earns just 1.5%, he says.
Before you rush to fill out an application, bear in mind that the new offerings are really a bid for deposits. Should the marketing push be too successful in attracting new cardholders, the banks could decide to scale back their rewards, says Arnold. And be sure the investment options (and associated fees) offered by these cards make sense for you.
Also, make sure you can pay your monthly balance in full each month. Both the Schwab and Fidelity cards carry high interest rates of 14.99% and 16.99%, respectively. "You'd be shooting yourself in the foot if you carry a balance," warns Linda Sherry, a spokeswoman for Consumer Action, a nonprofit consumer advocacy group.
If you're looking to put credit card to good use, check out these two new offerings, as well as a standby from Wells Fargo (wfc)
Cards That Help Your Bottom Line Credit Card Rate Details
Card: Schwab Bank Invest First Visa Signature
Details: Earn 2% cash back on purchases, deposited to a Schwab One brokerage account each month. (The investment account has no monthly service charges or minimum balance requirements so long as it's linked to your card. You can also withdraw the funds as cash in lieu of investing them.) There's no cap on the awards you can earn.
Card: Fidelity Retirement Rewards American Express
Details: Earn 2% cash back on purchases, deposited in $50 increments as a current-year contribution to a Fidelity IRA. (IRA has no monthly service charges.) Rewards can also be redeemed for travel, merchandise, and other items. There's no cap on the awards you can earn.
Card: Wells Fargo Home Rebate Card
Rate: 10.65% to 21.65%
Details: Earn 1% cash back on purchases, paid in $25 increments toward the loan principal on most Wells Fargo mortgages. There's no cap on the awards you can earn.
Data from individual card issuers.