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Making the Most of the Fidelity Rewards Visa Signature Card

Nov. 17, 2016
Credit Cards, Rewards Credit Cards
Making the Most of the Fidelity Rewards Visa Signature Card
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The rewards on the Fidelity® Rewards Visa Signature® Card are about as simple as it gets: You earn the same rate on every purchase, no matter where you use it. To maximize that rate, though, you’ll have to redeem your rewards the right way. And you can boost your overall rewards by pairing this card with one that offers bonus rewards in categories where you regularly spend money.

If you’re carrying the Fidelity® Rewards Visa Signature® Card, here are a few strategies to squeeze the most juice out of it.

Fidelity® Rewards Visa Signature® Card: The basics

The Fidelity® Rewards Visa Signature® Card helps Fidelity Investments customers keep money in one place: their Fidelity accounts. Rewards are deposited directly into the Fidelity account of your choice, whether it’s your own or someone else’s. While you can redeem rewards for something else, the redemption rate isn’t as high. So to really maximize your rewards, keep them in the Fidelity family.

Here’s a brief overview of the card:

  • It pays an unlimited 2% back on every purchase.
  • The $0.
  • New cardholders can earn a sign-up bonus: None.
  • The interest rate is relatively low: The ongoing APR is 15.99% Variable.
  • For balance transfers, the fee is 3% or $5, whichever is greater.
  • There’s a foreign transaction fee, but it’s 1%, lower than on most cards.
  • Some cardholders have reported higher credit limits on the Fidelity® Rewards Visa Signature® Card compared with other credit cards.

» MORE: Full review of the Fidelity® Rewards Visa Signature® Card

Deposit rewards into a Fidelity account

The Fidelity® Rewards Visa Signature® Card gives you the option of redeeming rewards for gift cards, statement credits or charitable donations. But if you do so, the value is only equivalent to a 1% rewards rate. So always deposit rewards in your Fidelity account. What kind of account depends on your savings goals:

If you want to boost your retirement savings: Although Fidelity does offer workplace retirement accounts, you can’t deposit rewards directly into your 401(k). You can, however, deposit them into other types of retirement accounts, such as IRAs. Any type of IRA is eligible. Your rewards will go into your core holdings account, and from there you can invest them as you please. However, make sure your rewards don’t push you over the contribution limits for the year.

If you want to save for someone’s college education: This is perhaps the simplest option, because your core account in this case is a target-date mutual fund pegged to the beneficiary’s expected enrollment in college. Unlike the retirement accounts, you won’t need to move your rewards into another mutual fund once they’re in the account. You can open a 529 college savings plan with Fidelity regardless of what state you live in.

If you want to be able to withdraw your rewards: There’s no rule that says you have to keep your credit cards rewards in a Fidelity account forever. If you think you might want to withdraw them in the near future, it’s probably best to put them in a regular brokerage account. That way, you won’t face restrictions on withdrawals the way you would with a tax-advantaged account like an IRA.

Pick a card to complement the Fidelity® Rewards Visa Signature® Card

If you’re only going to carry one credit card, a card with a high flat rewards rate is probably the best choice. The Fidelity® Rewards Visa Signature® Card is especially attractive, since the $0.

But if you want to maximize your credit card rewards on every purchase, you’re going to need more than one card. Assuming the Fidelity® Rewards Visa Signature® Card is your main card, here are some pairings that work nicely.

5% rotating bonus categories: Rewards cards that offer 5% cash back for specific spending categories — that in recent years have included gas, groceries, or department stores — are a good second card. Use that card to shop in the current bonus categories, and then pull out your flat-rate card for everything else. Check out the Chase Freedom® or the Discover it® Cash Back.

Higher rewards at U.S. supermarkets and gas stations: Most people buy groceries more often than anything else. If you have a long commute, you may also be filling your gas tank several times a week. You can get rewards much higher than 2% on these spending categories with the Blue Cash Preferred® Card from American Express. The card offers 6% back on the first $6,000 you spend annually at qualifying U.S. supermarkets, plus 3% back at U.S. gas stations and on transit.

Travel rewards credit cards: Most people think of free airline miles when they think of travel cards. But you can also get a lot of other perks and benefits from travel cards. Airline-specific cards often give you free checked bags or discounts on in-flight purchases. General travel cards may offer free travel insurance or access to airport lounges. And many, like the Chase Sapphire Preferred® Card, offer rewards worth more than 2% on travel and dining purchases. If you redeem those rewards for travel through Chase’s site, you can earn the equivalent of 2.5% every time you book travel or eat at a restaurant.

» MORE: NerdWallet’s best rewards credit cards

Use the high credit limit responsibly

The Fidelity® Rewards Visa Signature® Card is known for offering high credit limits, perhaps because it requires applicants to have excellent credit, defined as FICO scores above 720.

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A higher credit limit is kind of a mixed bag. On the one hand, it’s easier to make large purchases without messing up your credit utilization ratio. On the other hand, having more available credit can make it easier to overspend.

But as long as you focus on keeping your spending at a comfortable level, the Fidelity® Rewards Visa Signature® Card can do something very few credit cards can claim to do: build wealth.

Virginia C. McGuire is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @vcmcguire.