Changes to Fidelity UNIQUE College Investing Plan
Dec 03, 2006 
Sun
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.
Sun, congrats on being named as the blog of the week at AFM blog.
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.
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.