Credit Cards That Let You Invest Cash Back

I have heard some rumors that Chase no longer gives 3% cash back to Freedom Card holders for shopping at gas stations and grocery stores. I haven’t got the notice from Chase myself yet and my latest statement on May 13 still shows 3% cash back for every $1 of eligible purchases made at gas stations, grocery stores and fast food restaurants. So I assume I can still enjoy the *generous* reward, for now. But if Chase is sending the letter to every cardholder, sooner or later I will get mine.

Of course, Chase won’t be alone in changing the terms (for example, Bank of America also plans to hike card interest rate next month)  and what Chase did didn’t surprise me at all. After the CARD Act of 2009 was signed into law last week, more and more banks will adjust their practices, not to really protect their customers, but make up their losses from other areas. There are predictions that, under the new rule, card issuers will not only tighten the standard on credit card applications, but also cancel card reward programs and impose annual fees on cards that are currently free.

As for the Chase Freedom Card, if the cash back is slashed to just 1%, then I will abandon the card and start to use my Fidelity 529 College Rewards card exclusively because it gives me 2% cash back on every dollar spent, no category restriction and no cash back limit. It’s one of my favorite cash back rewards cards. Actually, if I can choose between cards that give me the rewards as cash and cards that let me invest the cash back, I will go with the latter. The reason is simple: $20 invested today could mean a lot more 5 or 10 years later. If I get the cash, I could just spend it without notice :) If you agree with my argument, then there are a few choices that let you invest your cash back from credit cards.

Fidelity Rewards American Express Cards

This program currently offers three cards from American Express, all allowing to earn 2% cash back on every dollar spent (when the program was first launched a few years ago, the cash back was only 1.5%) on any purchases and there’s no annual fee. The three cards are:

  • Fidelity Investment Rewards American Express Card: Rewards are invested in a Fidelity brokerage account;
  • Fidelity Retirement Rewards American Express Card: Rewards are invested in a Fidelity IRA account;
  • Fidelity Investments 529 College Rewards American Express Card: Rewards are invested in a Fidelity managed 529 account.

Besides, there’s no limit on how much rewards you can earn with these cards. The only requirement for these cards is that you need a Fidelity account so you can invest your rewards. Every time you earn $50 in rewards, the money will be automatically invested. If you don’t want to invest your cash back, you can also redeem for travel, gift certificate, or other items, but you can’t take out the cash.

Schwab Bank Invest First Visa Credit Card

The Schwab Invest First Visa Card is relatively new, but it generated quite some interests when the card was launched last December. Similar to the Fidelity Rewards cards, the Schwad card also let you earn 2% cash back on everything, but requires a Schwab brokerage account in order to get the cash back. This card has no annual fee and there’s no limit on how much cash back you can earn. However, one drawback of the card is that there’s no pre-set spending limit. When a credit card has no pre-set spending limit, the credit line on credit report will appear as zero, which may not be a good thing as far as your credit score is concerned.

UPromise Credit Card from Bank of America

The UPromise Credit Card is the most flexible card among cards mentioned here in terms of how you can get the rewards you earned. You can link the card to a UPromise 529 College Savings Account and invest the cash back if you choose to do so (I use this card to invest in my daughter’s 529 account), but unlike other cards, this is not required. Probably because a brokerage account is not necessary, the rebate from the UPromise card isn’t as good as cards listed above: You only get 1% rebate for most of your purchases and there are some categories that let you earn a little more.

One more thing. There are a lot of unhappy customers since Bank of America took over the UPromise card from Citibank early this year because their payments were messed up during the transition. Otherwise, I still think this is a good option.

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14 Responses to “Credit Cards That Let You Invest Cash Back”

  1. Patty D |  May 31, 2009 at 9:34 am

    For some reason I still like my Amazon Chase visa with the 1% Amazon reward cert. Buy some $1 direct ship coins from the US Mint every so often and the rewards rack up! Of course I wish it was more that just 1% and they did have a promotion for a little while and I believe it was like 2%..That was nice!

    The coins are a good way to stash some cash in the house in case of any disaster. I am the one that believes it stinks to lose all your money if you need a nursing home, so this way….I have something to fall back on. I am sure one day I will change my thinking but for now…screw it…I want a safety net at home. I have seen too many old folks lose everything. Granted I am only 42 but still you never know.

  2. Steve |  May 31, 2009 at 10:51 pm

    Are the $1 direct ship coins still available? Free shipping?

  3. Patty |  Jun 01, 2009 at 8:07 am

    Yes there are still $1 direct ship coins left. And they do not charge you shipping. You will see a shipping charge of I think $4.95 but when you get to the end process of ordering it goes away. I was never charged shipping. They even shipped my orders next day air with no charge. Just keep in mind this is only for the direct ship $1 coins.

  4. Patty |  Jun 01, 2009 at 8:43 am

    Oh just to let you know. I am pretty sure you have to buy over $500 to get the free next day air shipping. I think if you only buy 250 you will still get free regular shipping.

    Here is the website that I found out about these coins on. do a search for USMINT coins …(no space between USMINT) There is a long thread there about the coins and many people that have bought them. Most return them to the bank and dont keep the coins. They do it just to get credit card rewards. I am keeping mine for a while and using them to spend also. Thats kinda why the US mint is doing this direct ship program after all.

  5. Steve |  Jun 05, 2009 at 12:50 pm

    Thanks, Patty. I just put in an order with regular shipping — didn’t see your second comment about free next day air shipping until now. I had done this before, but I didn’t realize the program was still in effect.

  6. Patty |  Jun 05, 2009 at 2:04 pm

    no problem steve. Dont give up hope if it takes several weeks to get your order. It will eventually ship. They send an email the night before. I always ordered at least $500 worth and always got my order the next day after the email. Maybe once it was two days after the email I got around 930pm. You do HAVE to sign for the package. I read on the site that they used to just leave it at your doorstep. Not a good idea since its MONEY!

    so if you ordered 500 or more they will still upgrade you to the free next day air shipping… just to let ya know.

  7. Sun |  Jun 05, 2009 at 10:45 pm

    @Patty Thanks for the information. I have heard about it, but never checked it out. What credit card did you use to get the rewards? The most cashback I can get is 2%. I’m wondering whether it’s worth it even with free shipping.

  8. Patty |  Jun 06, 2009 at 7:07 am

    Sun, I just used my Amazon Chase Visa. It only gets 1% back in Amazon rewards. So its not that great. I have yet to figure out a card that will give 2% on everything so I have stuck with Amazon for now. Many people think its not worth the hassle of buying these $1 coins and then depositing them in the bank just for 1%. Many feel its totally worth it for free money in a cash back reward. I am keeping the ones I have bought so far and try too spend them when I can. I will probably end up deposting them in the bank some day.

    Btw, I love your website…its one of my favorites!!!

    Patty :)