Ever since we got married, we’ve been using a Visa credit card that gives us 1% cash back on everything we spend. We always take the rewards in the form of a cash credit to our balance, and have always been happy with the card. But after seven years, we’re switching to a new card. We pay off our balance in full every month, so interest rate is not an issue for us. Neither are cash advances or balance transfers… we were pretty much only interested in rewards points.
Last month, we opened an IRA for my husband with Fidelity, and now we have a Fidelity Retirement Rewards American Express. The card gives us back 2% of all our purchases, and will automatically contribute the rewards points to the IRA. We’re keeping the Visa for places that don’t accept AmEx, but most of our purchases will be on the Fidelity card going forward.
We put $2500 into the IRA when we opened it, and we’ll put another $1500 into it sometime this summer. Then we’ll just wait and see how much we spend on our credit card over the course of the year, and make up the difference to get to the $5000 contribution limit sometime in December or January.
Our typical monthly spending on our credit card is usually somewhere between $1500 and $2500 (last month I paid a year of auto insurance on our card, so it was closer to the high end. This month, we’ll likely be under $1500. It varies quite a bit). But every time we reach $2500 in charges, we’ll get $50 deposited into my husband’s IRA. Should happen at least once every two months, sometimes more often than that.
I have a friend who has been using the Fidelity AmEx for years, and has always been happy with the card. As far as I can tell, it’s a pretty sweet deal if you’re consistent about paying off balances in full each month.