Adieu to the 2% Charles Schwab Credit Card - NerdWallet
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Adieu to the 2% Charles Schwab Credit Card

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Holders of the Charles Schwab credit card will receive some unhappy news in the mail this week. The fantastic 2% credit card (which I love, and consider to be one of the top cards in the business) will be discontinued, and the replacement Bank of America® credit cards simply don’t compare. The Schwab Bank Invest First has been my one and only credit card, and it pains me to lay it to rest. While the replacements haven’t impressed me, the Capital One® Venture® Rewards Credit Card and the Chase Freedom® retain some of the Schwab card’s better qualities.

For Schwab cardholders

While the letter reveals little more than the fact that the Schwab card is being replaced with a Bank of America®-branded card, we were able to get a bit more information out of a customer service rep. In an email brief, reps were told that starting later this month, cardholders will have a choice between two cards: the BankAmericard Travel Rewards® credit card and the BankAmericard Cash Rewards™ credit card.

Details are still up in the air on both of these cards, and could change again before cardholders are informed, but full details are to come in a letter that will be sent out on September 23rd. Below we’ll go through the little we were able to determine, some of which is admittedly hearsay.

And while these presumed rewards programs certainly aren’t terrible, they don’t exactly fare well against either the hallowed memory of the Schwab card or our best rewards credit cards.

BankAmericard Cash Rewards™ credit card

This card has a 0% Introductory APR on purchases for 12 billing cycles and 0% Intro for 12 billing cycles for balance transfers made in the first 60 days, and then the ongoing APR of 12.99% - 22.99% Variable APR. Its annual fee is $0.00 and its rewards program is as follows:

  • 3% on gas and 2% on purchases at grocery stores, up to a combined spending of $1,500 a quarter
  • Unlimited 1% elsewhere
  • $100 online cash rewards bonus after you spend at least $500 on purchases in the first 90 days of account opening
  • 10% bonus on rewards if you have them deposited into a Bank of America® checking account

So it’s not a terrible rewards program. But it’s a pretty big step down from 2% on all purchases. Bonus rewards on gas and groceries?  Compared to no-fee rewards cards like the  Chase Freedom® and Citi Forward® Card (both of which give 5% back in bonus categories), the BankAmericard Cash Rewards™ credit card is the runt of the litter. Our verdict? Not worth it.

BankAmericard Travel Rewards® credit card

The BankAmericard Travel Rewards® credit card gives 1.5% back on all purchases. Plus, you get up to 75% more cash back if you deposit your rewards into a Bank of America® checking account or have a Merrill Edge or Merrill Lynch account with an eligible balance. If you have a Merrill Lynch account, that’s great, but Bank of America® doesn’t offer straight-up free checking. You have to meet certain qualifications in order to avoid the monthly fee: minimum balance requirements, direct deposits or steering clear of brick-and-mortar locations, depending on the checking account. It’s a bit of an inconvenience, especially if you don’t already bank with Bank of America®.

In addition to a pared-down rewards program, the BankAmericard Travel Rewards® credit card has way more fees than the departing Schwab Bank Invest First. It’s annual fee is $0.00. Plus, the card charges a 3% foreign transaction fee, where the Schwab Bank Invest First charged 0% on overseas transactions. I loved the Schwab card because it gave a simple, flat 2% back and didn’t have an annual fee. I’m not in love with this new guy.

Substitutes for the Schwab Bank Invest First

I’m not sold on the BankAmericard Travel Rewards® credit card, and I’m really not sold on the BankAmericard Cash Rewards™ credit card. Thankfully, the hunt for credit cards that can hold their own against the Schwab Bank Invest First was pretty successful. Depending on your favorite features of the Schwab card, you can find some pretty good alternatives.

No foreign transaction fee: See our blog post for a list of credit cards with no foreign transaction fee.

No annual fee, part 1: We mentioned that the Chase Freedom® is comparable to (in fact, superior to) the BankAmericard Cash Rewards™ credit card. Here’s why. It comes with a signup bonus: Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening. It also gives 5% back on bonus categories (up to $1,500 in spending a quarter) that rotate quarterly and can include department stores, movies and groceries. This quarter’s categories are gas, hotels and airlines. The Chase Freedom®’s rewards program beats out the BankAmericard Cash Rewards™ credit card’s for a couple of reasons:

  • You probably spend more on the Chase Freedom®’s bonus categories cumulatively than you do on gas and groceries, so you’re getting 5% on more spending.
  • Essentially, the Chase Freedom® gives 2% back on all its bonus categories, throughout the entire year. This is because you earn 1% for 3 quarters and 5% for 1, averaging out to 2%. You’re earning 2% back on gas, groceries, hotels, airfare, clothing…the list goes on. Much better than getting bonuses on just gas and groceries.

Technically the BankAmericard Cash Rewards™ credit card gives 1.1%, 2.2% and 3.3% if you deposit your rewards into a Bank of America® checking account. But the difference is pretty negligible. In any case, the Chase Freedom® rewards program is much broader and much better.

No annual fee, part 2: One of my favorite aspects of the Schwab card was that it has no annual fee. Now, while the  card’s cousin, the Fidelity American Express, gives a flat 2% back and also has no annual fee, it suffers in a few different ways.

  • It’s an American Express, so it doesn’t have the same acceptance as Visa and MasterCard, especially in Europe.
  • It charges a foreign transaction fee of 1%.
  • It has no signup bonus.
  • It deposits your rewards into a Fidelity account (investment, retirement or 529), so they aren’t as easy to redeem as cash dumped into a checking account.

The Fidelity American Express is a decent card for those who a) want a 2% card, b) don’t want to pay annual fees, c) don’t travel all that often and d) have Fidelity accounts. But if you don’t meet all of those criteria, a more flexible card might be in order. The Chase Freedom® also has an annual fee of $0, but it’s a cash back credit card, so its rewards are far easier to use.  Plus, it has a signup bonus: Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening. Compare that to the Fidelity American Express’s signup bonus: None.

While the Schwab 2% Visa’s demise is a loss for cardholders everywhere, thankfully, there are other credit cards to fill the void left in our hearts. Goodbye, Schwab Bank Invest First. You will be missed.

  • Brian

    “In the letter bearing bad news, FIA Card Services suggests getting the Bank Americard Privileges credit card.”

    Just curious, have you seen this in writing?  The letter I received basically just said “changes are coming” with no details yet.  Based on other speculation I wouldn’t be surprised if you’re right, but I’m just wondering if there’s firm info yet.

  • sean credit

    i thought i was the only to feel so bad about this decision fron Charles Schwab about the credit card. However, upon analysing my circumstances, i realize there are still some better deals out there. I decided to go fullly in for the British Airline credit cards with some of the most amazing offers for me, as a frequent traveller.

  • slug

    I too am very sad to see this go (if I get the letter), but I had a backup waiting in the wings.  Why not mention the Fidelity Retirement Rewards AMEX?  It’s basically the same card except it’s an AMEX and it has foreign transaction fees and the transfers are less automatic.  However, it is still the same 2%.

    • Tim

      Thanks slug, we actually did give the card a brief shout-out up there, with most of the same caveats you mention. I still prefer the Venture myself, and I know that a lot of people like the lure of 5% cash back.

      • slug

        Ah, I see that now.  I still think it’s the best alternative.

        My letter did not have an official end date so I plan to keep using it until they pry it from grasp.

  • Dclawyer

    The letter I got did not suggest another card.  I called FIA and they said the rewards will not change – only the name on the card.

    • Anonymous

      You spoke to either an ignoramous or a liar.

  • Brian Topping

    For those of us getting a letter saying “We’ll be replacing your current card with a new Bank Of America credit card” (it came in a black-and-white FIA envelope with BofA letterhead), be sure that your Schwab Visa is not actually a 1% Visa.  I just called them and found that I have a 1:1 point-for-dollar plan, but when one looks at the “cash out points” options, they are at 1% of spending.  Too bad I wasn’t watching and didn’t realize I was on the wrong plan!  

    I was actually a bit curious because I just paid off my card in full last month and thought they were dumping me into some other product as a result.  

  • askmrlee

    NOT TRUE on the difficult to redeem opinion about FIA Rewards Amex. Within my brokerage account, I have a Fidelity MyCash checking account which receives my card rewards. Redemption is automatic once you setup the account destination and as long as you meet the $50 reward minimum, you get the reward, no matter the denomination. So for example, if you earned $40 in rewards one month, no payout. Next month you earn $20 in rewards, you’ll be paid $60. This is a great reward design as you don’t have to wait for $50 increments like Discover Card or the end of a 12 month period like the Costco Amex or Amex Blue Cash. Also zero is better, I’ll accept a 1% foreign fee instead of the standard BofA 3%.

    Also, Anisha’s article is really stretching here making the leap that our card program will be converted right away. My letter said that we would only be getting BofA/ML Edge cards, but it specified that the card rewards and benefits would be the same. Sure this may change in the future, but for now, until they give us notice, there’s NO CHANGE.

  • Rusty Longwood

    I have an ex-Schwab, FIA Card Services 2% back card- haven’t heard anything yet. I’ll keep using it until they pry it from my cold dead fingers…or turn it off. I have a $20k limit on the card when everything else is around $5-$10k, so I hope I don’t have to worry about that changing if I do need another card.

  • Anonymous

    Just got the Sept first dated letter from BofA and it indicates that, on a rotating basis between 11/4 and 12/17, they will be ending benefits such as theft protection, price protection and reducing travel insurance as consequences of the new card program.  Implication is that these are the only changes resulting from the transition. No mention of any other changes but it does state that present card will be replaced with one of two of their own cards.  Kinda sneaky as you must then deduce for yourself that these two alternatives have much weaker rewards program than the Schwab FIA Card. I have a Chase Freedom which I never use but may now for some purchases.  I am also looking at the Capital One Cash Rewards to possibly be my main card (which pays 1 1/2% and, most importantly for me, has no foreign transaction fee).  

  • David

    I am very disappointed by the lack of information coming from both FIA and BofA. And isn’t FIA a sub of BofA? At the suggestion of this web site I applied for the Capital One Venture Rewards Card and was approved online. I hope Capital One customer service is good.

  • Jeff68005

    IF you like the Charles Schwab card, consider the Fidelity AMEX card which is a straight 2% Rewards as well.

  • Christi

    I got a letter in the mail 9/8 saying my card will be switched to the BOA 1/2/3 plan :-(
    Not excited about having to open a free BOA account since I don’t trust them, but I’m not going to just not bother with the extra 10% redemption. I freaking love this card and can’t believe they’re ending it. I plan on using it until my 10/31 shut off date :-(

  • Margolane

    re: BOA Privelege (upgrade to 1-2-3 ‘new’ Schwab card option) – linked account to get 1.5% can be ANY bofa or merrill account – all you need is the $300 minimum balance bofa savings account which will cover you. Also, another option is switch it to the BOA Amex card which gives you 1.25% back – same disadvantages as Fidelity Amex, but at least it’s better than 1%. Finally, all bets are off regarding what this program will look like 12 months from now since the bank announced 30M layoffs today and ‘150’ ways in which they are looking t0 improve profitability in the consumer bank – which cards is part of. Bottom line is take the Privelege card with the fee waiver until something better comes along or changes again – one or both likely to happen within the 12 month waiver period.

    • Bosmuc

      I thought the same…at first. Note: the BOA Privileges Card does not give you 1% cashback plus a 50% bonus (i.e. 1.5%.) if linked to a BOA Acct. It gives you 1 POINT per $1 on every purchase. I just called and asked how this is converted back to cash. Awards (including cashback ) start at 2500 POINTS. The agent told me that you’d receive $12.50 for each 2500 POINTS. This is 0.5% or 0.75% if you qualify for the 50% bonus. This low cashback rate is ‘hidden’ by the 1POINT/$1 text in their letter.

      Overall, the new basic 1-2-3 card is just ok…sure wish it kept Foreign Transaction fee at Zero, however. Are we sure that the FT fees will rise?

      • Tim

        You’re absolutely right, these rewards are in the form of Worldpoints, which have some of the worst redemption options available:

      • Bosmuc

        Or maybe you’re right Margolane. They make it so difficult to get clear, accurate information. I just found the following on BOA’s Privileges website:

        Get extra rewards with 1.5% cash back.
        Every time you redeem points for a cash deposit into a Bank of America checking or savings account, IRA account with Bank of America or Merrill Lynch, Merrill Lynch Cash Management Account®, or a 529 account with Merrill Lynch, you’ll get 1.5% cash back. It’s just one more way you benefit from being a customer.

  • Margolane

    one more thing re: BOA Privelege – no foreign transaction fees, like the existing 2% card, for now.

  • David

    My letter arrived today. The letter clearly states the cash rewards program is ending. I have no interest in either BofA card offered and am switching to the Capital One Venture Rewards Card. The Schwab Card was nice while it lasted.

    • David

      Venture Rewards card arrived yesterday. Anyone have any experience with Cap One customer service?

  • sosnovska

    Got my letter today. Schwab was my favorite card. RIP.

  • hatesbofa

    This was my go to card in all situations. Looks like I’ll be opening up a fidelity account and have to find another visa for places that don’t take american express. Also bummed about the loss of no foriegn transaction fees. I didn’t know it was possible to hate B of A anymore. Now I guess I do.

  • Jason

    What a sad day. Got my letter today. Very disappointed. Loved the 2% cash back every month and got full use of the 0% foreign transaction fee. I used to have a Capital One account many years ago and based on their service I vowed to never go back. Capital One is the worst credit card company in existence. Looks like I am going to need to carry around multiple credit cards. Joy.

  • BigD

    I guess the old saying, “if its to good to be true, it probably is”

  • Rusty Longwood

    I still haven’t gotten my letter, any chance they forgot about me? 😛

    • Rusty Longwood

      Still haven’t gotten a notice or anything…kind of odd, huh?

      • paulbelmont

        I haven’t gotten my letter either. I wonder what it means

        • Brett C Brown

          I was told I should get my new 3-2-1 card to automatically replace my Schwab card in the next 7-10 days.

  • JD

    Does anyone know if accepting the pricier BankAmericard Privileges card ($75 annual free/waived for first year) offered as part of this transition will result in a hard credit pull?

  • Largee2006

    Schwab card has served me well over the past few years. I don’t have Fidelity accounts nor any intention to open one. So, the best is to use Chase Freedom for things in its rotating 5% cash back categories, and use Chase Sapphire card for travel (domestic/foreign no exchange fee) and dining (2% rewards). Banks need income. Frank-Dobb enriches the merchants at the expense of consumers like us.

  • BigD

    BOA is scum! They take bailout money and that prick of a CEO says they deserve to make a profit off the backs of its customers by charging a $5 monthly debit fee! Ridiculous! Anyone who keeps money in this bank are fools. Show BOA by closing your accounts and move your money to a locally owned bank. F&8# BOA

  • tang

    I’ll be missing my Schwab Visa just as much as the rest of you, and I’m no fan of BofA.

    I did call them a few times to discuss the new Privileges card. One thing I want to relay is that they said that there would be no foreign transaction fees for cardholders who are converted from the Schwab Visa. I’ve heard this verbally from a few different reps, but haven’t seen it in writing yet, so take it with a grain of salt.

    I’m going to get the Privileges card for the time being, because they don’t do a full credit pull (they just look at your FIA history) and there’s no annual fee for the first year. I’m hoping that something else will come along in the coming year, like the Fido signature visa doing away with the forex fee.

    I’ve switched all my spending from Visa to Amex, unless the merchant doesn’t take Amex (which is the case a significant amount of the time).

    Hope this helps you guys. RIP Schwab Invest First – we had a good run while it lasted!

  • Kannon

    Why do you mention the Capital One Venture card which uses miles (which I abhor) and look at the Capital one Cash Rewards card. This card doesn’t have an annual fee and includes no foreign transaction fees. It gives 1% cash back and a $100 bonus if you spend $500 over the next 3 months.

    • Tim

      That is a great card, we have more information on it here:
      The reason we don’t mention it is because it only pays 1.5%, and this is a review of 2% cards. Also, for what it’s worth, the Capital One Venture “miles” do not work like traditional miles. They work just like cash, with the caveat that the cash has to be used for travel purchases.

  • Stacy B

    I am having difficulty looking at my history for my Charles Schwab rebate card. FIA is being very uncooperative – I haven’t seen my October statement, and had to pay in full so I didn’t get nailed – but could not see my account online and am still waiting for them to mail me a copy. I am not planning on activating the BofA card – already have a replacement. FIA tells me if I sign up with BofA they have my history of purchases…really? Do they? Anyone else having this problem.

    • JF

      I am also having this problem… super annoying. So sounds like I have to go to BofA to get the details?

  • Weeping

    ARGH!!!!!!! I *LOVED* my Schwab cash back card. VISA signature, 2% flat rate cash back, no foreign transaction fees, and no annual fee. Why oh why can’t someone swoop in and offer a comparable card given its popularity?

  • Bosmuc

    So, i called BoA customer service today and I was told:

    1) the new card is a VISA Signature card, although you don’t see it printed on thhe card, the new statements from BoA do say Signature….kinda odd in my opinion.

    2) as a former Schwab card customer I will pay no (zero) Foreign Transaction Fee. Since this is nowhere to be seen online and no new terms and conditions literature was sent with the new card, I asked them to send me at information in writing.

    So, if these two items are, in fact, true….plus no annual fee…the only difference I see right now is their 1-2-3% cash back structure (general-groceries-gas) vs. the Schwab 2% general rate.

    • Tom

      I don’t see much difference, so far, either. I’ve only had the confirmation of the terms verbally, though, and the transition wasn’t exactly smooth; my online access was taken away for two or three weeks. However, I’ve verified that there’s no foreign currency transaction fee; no reward, of course, either. I’m waiting for the other shoe to drop, and would be interested to hear what’s happened to others

  • Unhappy BoA Shareholder

    I just saw this site. I called Fia when I recieved the Bank of america change notice and asked to keep the Fia card. The next day my card was declined. When I called FIA they said my request not to have a Bank of America card was a request to close my account. In order to get amn account I would have to do a new applcation.

    • Nerdwallet To Spamanon

      Yeah… BofA. I’m working on my taxes (last weekend before deadline) and my online access to FIA isn’t working. I call FIA and they tell me that BofA is taking over the account and I’ll get a new card in the mail sometime soon; until then I cannot access my account online. WTF?!?!?! My FIA card isn’t expired (not until next year) and I haven’t received any notice in the mail that BofA is taking over. So why cancel the online access before notifying me?

      I guess they’re just stupid.

  • Oren

    I loved my Schwab 2% card but I am finding that the Fidelity 2% american express is an adequate substitute. I can count on one hand the number of times it hasn’t been accepted because it was American Express. I already have a Fidelity account so it just made sense. I do keep some Visas as backups

  • Tom

    David: Thank you for choosing Card services. My name is David. I will be happy to assist you with your Credit card.
    You: hi I have been offered a replacement credit card for my soon to expire charles schwab card. Does this new card have foreign transaction fees? I was told it has not but I can not find any info on this online.
    David: I’ll certainly check that for you.
    David: I understand you wish to know about the foreign transaction fee on the new card.
    David: To begin with, May I have your full name as it appears on the card?
    You: sure
    You: bjorn
    David: Thank you, Tom
    David: May I have last 4 digits of your credit card your referring to?
    You: xx91
    David: Thank you.
    David: Please, May I have your date of birth?
    You: Dec 14 1977
    David: Thank you for the information.
    David: Please give me some time while I access your account.
    You: sure
    David: Thank you.
    David: Thank you for your patience.
    David: I have reviewed your account.
    David: Tom, please be inform that I do not see any foreign transaction fee on the account.
    You: sounds good
    You: can you send a statement of this for my records by email or as a message to my online account?
    David: Tom, Please be inform that we are able to send it via fax and mail.
    You: ok mail is fine
    David: Thank you for confirmation.
    David: Tom, Could you please confirm me that you want the statement copy of current statement
    You: yes I would like that
    You: send to
    You: PO Box 99752
    You: Louisville
    You: 77437
    David: Thank you for confirmation.
    You: including statement of “no foregn transaction fees”
    David: Tom, I am able to send a copy of December statement to your mail address.
    You: I see, no, I just need some proof about the no foreign fees
    You: Since there are some cardholders with this card that apparantly have 3% foreign transaction fees(?)
    David: Please be inform that for confirmation of foreign transaction fee please copy this chat and paste.
    You: ok will do
    Last text message receivedDavid: I appreciate for understanding in this regard.