Fidelity UNIQUE College Investing Plan Review

Before I applied for the then Fidelity 529 College Rewards MasterCard (now Fidelity 529 College Rewards American Express Card) back in March, I opened a 529 plan with Fidelity in order to invest the 2% rewards I could earn from the card. The plan I chose was Fidelity UNIQUE 2024 plan (which is also Fidelity’s nationally available plan), sponsored by the State of New Hampshire. In addition to the rewards earned from the credit card, I also put $100 every month into the account. The fund has annual expense ratio of 0.50% and one year return of 9.09%.

Today, I received a letter from Fidelity about some changes to the plan:

  • The annual account maintenance fee of $20 has been eliminated;
  • Account minimums have been lowered from $1,000 to $50 – or $15 a month with automatic investment;

The elimination of the account maintenance is definitely a welcome change as the $20 is about 1.67% of the total annual contribution. I have another 529 plan with Vanguard which is linked to my Citi Upromise Credit Card. That account, however, continues to charge $20 maintenance fee, though it has a one-year return of 15.94% (I chose Vanguard Aggressive Growth Portfolio for my daughter’s 529). According to a BusinessWeek online article in May, “Vanguard and Upromise charge a premium.”

In 529s where Vanguard teams up with rebate-outfit Upromise to provide administrative services – or where Upromise runs the plan alone – account holders may be paying up to twice as much in fees as their counterparts in other plans with Vanguard funds.

The plan itself has another 0.65% annual plan fees, higher than what Fidelity charged for its 529 plans, though the rebates from Upromise can offset the fees a little bit.

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3 Responses to “Fidelity UNIQUE College Investing Plan Review”

  1. Golbguru |  Dec 03, 2006 at 4:04 pm

    Sun, congrats on being named as the blog of the week at AFM blog. :)

  2. Nick |  Dec 19, 2006 at 10:16 am

    Fidelity has replaced credit card with American Express. I found that from
    http://www.plans529.com/Directory/tabid/145/rrcid/41/rrepp/5/Default.aspx

    It allows to earn rewards points at a rate of 1.5% of net retail purchases which convert to cash when they are automatically contributed to your Fidelity managed 529 plan account.

  3. The Sun |  Dec 21, 2006 at 12:01 am

    Actually, the new card offer from Fidelity is not as good as the one they had before. They used to give 2% back with their MasterCard, but now with the AMEX card, as you said, you can only get 1.5% cashback. I got the Mastercard early this year, and they said, at least for now, my card won’t be converted to the new AMEX card. So I can continue to earn 2% cashback to invest the rewards in Fidelity 529 plan for my daughter. Are also using Fidelity card? 1.5% is not as good as before, but still better than other cards which usually offer 1% reward.