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.
Random Thoughts of a Jersey Mom says
Sounds like a good deal! I didn’t abt that. Thanks for the info.
WT says
I use a Schwab Visa that gives 2% cash back on everything that takes credit cards with no limits. I pay it off every month and use it to pay everything that will accept a credit card including my cable and wireless phone bills. I get the cash back via a Schwab brokerage account where I can either move the cash or invest with Schwab.
SarahA says
I have that card, too and I love it. I have already put $50 into my IRA this year. The process of moving the points is pretty hassle free, in my opinion, which makes it even better.
Helen says
Good to see others who use credit cards smartly and taking advantage of its perks! And not just spending points on frivolous items.
When I went through the Fidelity site, I saw that they also offer a Visa version on a points system. I did the math and although you do yield a better amount with the AmEx, Visa is more widely accepted. Just something to point out.
Great post!
Sharon Warden says
Paying off my rewards card eliminates interest too. Get 1% basically, 5% on gas, restaurants, supermarkets and drugstores. Probably the Amex would be more payoff but mine is fine for me. I put EVERYTHING on the card including wireless, internet, tv, donations, and I use Bill Pay from my bank for the other things that can’t be paid by credit card. Like rent (to my son and daughter in law), the electric bill for some unknown “redneck” reason, church donation. I love the bill pay and the credit card automatic features. Absolutely, everything is automated. I know exactly how much money I DON”T have to spend wildly–keep absolute track of every thing that comes in or goes out, belong to several making money, survey sites on the internet, etc. Gasoline seems to be my biggest expense; I budget $100 per month for supplies and groceries (just me, 75 so I don’t eat much, well I don’t eat much meat anyway), and live on an income of about $2,000 per month, that is paying out $700 on old balances (but never late, never, knock on wood late). But it’s all good and I have social security and a pension, it comes in regularly, don’t have to worry, sort of recession free, do lots of volunteer work and keep busy helping others less fortunate than I am. but I would not change any of my expenditures that put me in debt — they were all for a good cause, honestly done and with no extravagance. It’s interesting being frugal (tight-fisted?) anyway.