Editor’s Pick: Best Financial Rewards Credit Cards 2010
By Eva Norlyk Smith, Ph.D.
July 19, 2010
Next to the cost of housing and food, saving for your kids’ college and for retirement are generally the two largest financial outlays of American families. Believe it or not, financial rewards credit cards can be a help to either save some of the money needed to put junior through college or to build up your own retirement nest egg. While not offering a magic formula, if you start early and get other family members involved, rewards earnings on everyday expenditures can add up to a respectable amount over the years. Here is our pick for the best financial rewards credit cards of 2010.
The Bank of America Upromise Card
The Upromise MasterCard sounds like a way to have your cake and eat it too, and if used right, it can be. The card’s rewards earnings lets you save money for your kid’s college, or to pay down your own student loan.
Even better, the Upromise MasterCard promises rewards earnings on steroids. Cardholders who shop with UPromise partner vendors can maximize rewards earnings to 3 to 4 percent on clothing and gas, and as high as 14 percent on groceries. Grandma and grandpa can also get involved in saving for their grandkids’ college; by joining the Upromise network, relatives can direct rewards earned on their everyday purchases to your account as well. You can choose to invest earnings in a high-yield savings account or tax-deferred 529 plan; use it to pay down a student loan; or request a check that can be used for college or other expenses.
There is a catch, however. The Bank of America Upromise credit card itself simply offers a 1 percent rewards earnings on purchases, so to get the supercharged rewards, cardholders must shop with the affiliated retailers, online stores, grocery stores, and restaurants in the Upromise network. With these totaling almost 75,000, including leading retail chains and websites, this isn’t really that hard once you know where to look. For online purchases, simply go to the Upromise.com portal and look for affiliated vendors. For the about 22,000 grocery stores affiliated with the program, you must locate the ones near you on the Upromise site and then get a Upromise registered grocery or drugstore card to show at check-out in order to get rewards earnings credited to your account. Not all products are included, however, so look for items with the Upromise logo on items and store shelves, or simply go online to see which products are covered. Retailers typically offer rebates of 1-3 percent, and the Upromise credit card rewards add another 1 percent.
People applying for the Bank of America Upromise card must have a household income of at least $30,000 and be a Upromise member; it is easy and free to register at UPromise.com. Also, to receive eligible retailer rebates, new cardholders must register their Upromise credit card online with Upromise.
While the BofA Upromise card offers no magic formula for saving for college or paying off student loans, everything helps, particularly if you start early. As for all rewards cards, however, keep in mind that if you keep a balance on the card or pay the card late, interest charges or penalty fees will quickly exceed rewards earnings.
Fidelity Rewards American Express Cards
Fidelity investments offer three financial rewards credit cards, which feature an attractive and refreshingly simple rewards structure: cardholders earn a straight 2 percent cash back on all purchases (excluding returns).
The three Fidelity Amex rewards cards only differ in where rewards earnings are directed. The Fidelity Retirement Rewards Amex card, as the name implies, lets cardholders accumulate rewards in their Fidelity IRA account. Rewards earnings for the Fidelity Investments Amex card are deposited into a Fidelity investment account, and the Fidelity Investments 529 College Rewards lets cardholders earn rewards for deposit in their 529 college savings account. Like for the Upromise card, family members can get a card as well and link their earnings to your 529 college savings account, a popular feature with grandparents.
The Fidelity Amex rewards cards have no annual fee, and there is no cap on rewards earnings. You must have a Fidelity brokerage account to apply for the card, however, there are no fees to open or maintain an account.