Retirement Rewards Credit Card

Just a few days ago we wrote about the new Charles Schwab Visa Card that could help savvy credit card users boost their retirement savings with a 2% reward.

Not to be outdone, we hear today that Fidelity has unleashed a competing 2% reward card: Fidelity Retirement Rewards Card. Like the Schwab card, there is no annual fee for the Fidelity Retirement Rewards Card nor are there caps or limits on the amount of rewards that can be earned:

Using the new Fidelity Retirement Rewards Card, investors earn two points for each dollar spent on purchases. Once a Cardmember reaches a minimum of 5,000 points, or $2,500 in purchases, points can be automatically swept as a $50 current year contribution into the user's designated Fidelity IRA. If the Cardmember has maxed out their IRA contribution for that year(6), they can continue to accrue points and restart automatic deposits to their IRA the next year. Investors also have the flexibility, at any time, to automatically redeem their rewards as cash into other Fidelity accounts or accumulate rewards and redeem them for travel, merchandise and other rewards.

This new breed of retirement credit cards promise to be a great way for many retirement savers to enhnace their savings. Unfortunately, the cards also may be wind up being detrimental to many others. The key to using reward credit cards succesfully is to always maintain control and be able to pay the card balance in full each month.

Buying things with a credit card to earn 2% retirement rewards is senseless if you have to pay 14.99% intereste on outstanding credit card balances.