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Adieu to the 2% Charles Schwab Credit Card

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Updated September 6th and 29th: The replacements for the Charles Schwab credit card aren’t great. A completely unscientific poll of the NerdWallet staff shows that none of us will be going with the Bank Americard Privileges and since there’s, like, a ton of better cards out there, we won’t actually use the regular Bank Americard Cash Rewards for anything other than unlocking stubborn doors.

Lucky cardholders 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 doesn’t compare. The Schwab Invest First Visa 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 and the Chase Freedom retain some of the Schwab card’s better qualities.

Methadone for Schwab Cardholders

While the letter reveals little more than the fact that the FIA card is being replaced with a BofA-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 credit cards: the Bank Americard Privileges and the Bank Americard 1-2-3 Cash Rewards.

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:

This card has no annual fee, and has a 0% intro APR period on purchases and balance transfers for 12 months. Its rewards program is as follows:

  • 3% on groceries and 2% on gas (or vice versa, our rep’s memory was hazy), up to a combined spending of $1,500 a quarter (update: it’s 3% on gas and 2% on groceries, up to $1,500 spent a quarter. Thanks a lot, BofA.)
  • Unlimited 1% elsewhere
  • $50 signup bonus if you spend $500 in the first 60 days
  • 10% bonus on rewards if you have them deposited into a BofA checking account [Update September 30th: see below for checking-account-based tirade]
  • No word on the foreign transaction fee, but I’m not optimistic

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? A paltry $50 signup bonus? Compared to no-fee rewards cards like the Chase Freedom and Citi Forward (both of which give 5% back in bonus categories), the Bank Americard Cash Rewards is the runt of the litter, still working out the intricacies of depth perception while its brothers and sisters are off hunting geese and saving trapped children. Our verdict? Not worth it.

Bank Americard Privileges:

The Privileges card gives 1% back on all purchases and 3% back in rotating bonus categories. Plus, you get 50% more cash back if you deposit your rewards into a BofA checking account [updates below, in bold], Merrill Edge or Merrill Lynch account. Now, if you have a Merrill Lynch account, lovely, but BofA 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 BofA. Plus these are WorldPoints that we’re talking about, which are pretty pathetic as far as points programs go.

In addition to a pared-down rewards program, the Privileges card has way more fees than the departing Invest First. It has a $75 annual fee that’s waived in the first year, and in subsequent years if you have a combined $50,000 or more in your BofA and Merrill Lynch accounts, which I most certainly do not. Plus, the Privileges charges a 3% foreign transaction fee, where the Invest First charged a grand total of 0% on overseas transactions. I loved the Schwab Visa because it gave a simple, flat 2% back and didn’t have an annual fee. I’m not in love with this new guy.

The customer service rep we spoke to said that the Privileges is geared towards travelers, but couldn’t elaborate on why. We’ll let you know when we find out.

Substitutes for the Schwab Invest First

I’m not sold on the BankAmericard Privileges, and I’m really not sold on the Cash Rewards. Thankfully, my hunt for credit cards that can hold their own against the 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.
2% rewards on all purchases: If youre a fan of the easy-to-understand 2% rewards rate, youll find the same program with the Capital One Venture. The CapOne Venture Rewards gives 2 No Hassle Miles on all purchases, which can be redeemed for statement credits offsetting travel expenses. These expenses can include anything from airfare to change fees to hotel rooms to gas. One advantage is that No Hassle Miles are easy to redeem in any amount: instead of trading your miles in increments of 25,000, you can redeem 35,908 NHM to offset $359.08 in expenses. The Venture has no complicated bonus programs, or conditional rewards rate increases, or requirement that you have certain checking or investment accounts. Plus, the card comes with a 25k-mile signup bonus and waived foreign transaction fees.

Capital One® Venture® Rewards Credit Card
Capital One Venture Rewards Credit Card
Apply Now

on Capital One's
secure website

starstarstarstarstar
  • Enjoy a one-time bonus of 40,000 miles once you spend $3,000 on purchases within the first 3 months, equal to $400 in travel
  • Earn unlimited 2X miles on every purchase, every day
  • Fly any airline, stay at any hotel, anytime
  • Travel when you want—no blackout dates
  • Miles don't expire and there's no limit to how many you can earn
  • No foreign transaction fees
  • No annual fee for the first year; $59 after that
  • 100% free Capital One® Credit Tracker — see your monthly credit score anytime and get automatic alerts
thumbsupPros
  • High rewards rate
  • No foreign transaction fee
thumbsdownCons
  • Has annual fee
Annual Fee Signup Bonus APR , Variable* APR Promotions
$0 intro for first year; $59 after that Enjoy a one-time bonus of 40,000 miles once you spend $3,000 on purchases within the first 3 months, equal to $400 in travel 13.9% - 20.9% (Variable) Purchase: None
Transfer: None

No annual fee, part 1: We mentioned that the Chase Freedom is comparable to (in fact, superior to) the Bank Americard Cash Rewards. Here’s why. It gives a $100 signup bonus, 4x the Bank Americard’s. It also gives 5% back on bonus categories that rotate quarterly, and can include department stores, movies and groceries. This quarter’s categories are gas, hotels and airlines. The Freedom’s rewards program beats out the Americard’s for a couple of reasons:

  • You probably spend more on the Freedom’s bonus categories cumulatively than you do on gas and groceries, so you’re getting 5% on more spending.
  • Essentially, the 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.

Okay, okay, technically the Bank Americard gives 1.1%, 2.2% and 3.3% if you deposit your rewards into a BofA checking account. But the difference is pretty negligible. In any case, the Freedom’s rewards program is much broader and much better.

Chase Freedom®
Chase Freedom Credit Card
Apply Now

on Chase's
secure website

starstarstarstarstar
  • Earn a $100 Bonus after you spend $500 on purchases in your first 3 months from account opening
  • Earn a $25 Bonus after you add your first authorized user and make a purchase within this same 3-month period
  • 0% Intro APR for 15 months on purchases and balance transfers. After the intro period, a variable APR of 13.99-22.99%
  • 5% Cash Back on up to $1,500 in combined purchases between 1/1/15—3/31/15 at grocery stores (not including Walmart® and Target® purchases), movie theaters, and Starbucks® stores
  • You'll enjoy new 5% categories every 3 months like restaurants, gas stations, and Amazon.com. It's free and easy to activate your bonus each quarter!
  • Unlimited 1% Cash Back on all other purchases
  • No annual fee and rewards never expire as long as your account is open
thumbsupPros
  • Bonus cash back categories
  • No annual fee
  • 0% for 15 mos on transfers
Annual Fee Signup Bonus APR , Variable* APR Promotions
$0 Get a $100 Bonus after spending $500 on purchases in your first 3 months from account opening. 13.99% - 22.99% (Variable) 0% APR for 15 months on purchases and balance transfers

No annual fee, part 2: One of my favorite aspects of the Schwab Visa was that it has no annual fee. Now, while the FIA 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 no annual fee, but it’s a cash back credit card, so its rewards are far easier to use.  Plus, it has a $200 cash back signup bonus, compared to the Fidelity AmEx’s $0.

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, Invest First. You will be missed.

  • 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

  • http://www.atlasomega.com 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.

    • http://www.nerdwallet.com/ Tim

      That is a great card, we have more information on it here: http://www.nerdwallet.com/blog/2011/capital-cash-rewards-card-50-cash/
      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.

  • http://www.orensmoneysaver.com 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

    FYI
    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.