Fidelity Offers Credit Card Rewards for Retirement Accounts

You may already have a credit card that offers rewards in the form of airline miles, merchandise, hotel stays, or other perks. Fidelity has introduced a credit card that allows 2% of purchases to be deposited into retirement accounts.

The Fidelity Retirement Awards American Express Card has no limits on cash rewards or annual fee. However, the annual percentage rate (APR) is 16.99%, so people who pay their balance in full each month are the most likely to reap the benefits of this card. The rate for cash advances is a whopping 24.99%. Being late with payments will result in a default APR, a variable rate that is currently 28.99%.

However, the credit card offers two points for every dollar spent. When you reach 5,000 points after $2,500 in purchases, a $50 credit will automatically be swept into your Fidelity retirement account. Money can also be deposited into other Fidelity accounts or used for merchandise and travel.

If you’ve already deposited the maximum allowed for the year into your IRA, the points will carry over to the next year. You can contribute a maximum of $5,000 to IRAs for 2008 and 2009. If you’re over 50 you can deposit another $1,000 catch-up contribution.

Fidelity already offers the Fidelity Investments Rewards Visa Signature Card that has a 1.5% rebate that can be deposited into a nonretirement Fidelity account. It also offers the Fidelity Investments 529 College Rewards American Express Card, also with a 1.5% rebate for 529 accounts. Fidelity plans to boost the cash back rebate on both these cards to 2% next year, according to the Wall Street Journal.

If used wisely, these rewards cards can help boost your retirement savings. But as with any credit card, it doesn’t make sense to make purchases with them if you can’t afford to pay the bill when it arrives in the mail.

This entry was posted on Friday, December 12th, 2008 at 9:01 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.