Brokerage Reward Credit Cards: When Spending and Saving Mean the Same Thing

Reward credit cards are nothing new to the credit card industry. But what about reward credit cards that deposit cash-back directly into your brokerage account? The cards, called brokerage rewards credit cards, are definitely something new and the timing could not be better.

Why Open a Brokerage Reward Card?

The loss of home equity, marketable securities, jobs, and confidence has made it tough for millions of Americans to remain committed to investing money every month for their retirement. Of course, the fact that the stock market has tumbled from 14,000 to below 7,000 has dampened the enthusiasm of Americans towards investing.

Brokerage Cards May Instill Competition in Brokers

A brokerage rewards credit card may be an answer to this predicament. These cards reward spenders with a percentage of their credit card purchases back as cash, deposited straight into their brokerage accounts. The Fidelity Investment Rewards Visa Signature Card, for instance, turns 1.5% of purchases directly into cash in a Fidelity brokerage account. The card does not have an annual fee nor does it limit the cash reward. Fidelity will also increase the payout to 2% cash-back after the cardholder has spent $15,000 annually.

Charles Schwab Bank is also offering a great rewards credit card with their Schwab Bank Invest First Visa Credit Card. This card gives an unlimited 2% cash back on purchases with no limits or monthly fees. Both cards come with the typical array of credit card features including introductory balance transfer APRs.

Benefits of a Brokerage Reward Card

A brokerage reward credit card is a savings tool that is tied to money you're spending anyway--like for food, gasoline, and clothing. Why not deposit some of this money into a brokerage account to help supplement retirement savings? Cardholders who generate enough purchases can even set up an automatic investment plan.

Dollar-Cost Averaging for Regular, Smart Investing

This kind of program is also called also called dollar-cost-averaging. When you make regular investments, regardless of the conditions of the markets, you can actually benefit when prices go down (because you buy more stock). When prices come back up, you benefit from owning stock that you already paid for when it was cheaper.

Real People, Real Rewards

Bob Jones, who lives in Arkansas, has owned a reward brokerage credit card for several years and reports only good experiences. Mr. Jones has a card which pays 1.5% of his purchases into a brokerage account every month, but he is now looking for a card paying 2% or higher. Mr. Jones has not noticed any extra fees on his statements from using a brokerage reward credit card, but he did point out that account details can be cumbersome.

What to Watch for with Brokerage Reward Cards

The biggest downside of brokerage reward cards may be the higher rates charged on monthly balances. Of course, smart investment and debt management means not carrying balances on high-interest credit cards, anyway, right? More information and a complete listing of brokerage rewards credit cards is available at CardRatings.com.

Important Note! The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we can not guarantee the accuracy of the information in this article. Please verify all terms and conditions of any credit card prior to applying.

About the Author

Mike Killian is founder of Learning Credit and Debt Management. Mike has been writing about credit and debt management issues that are of importance to consumers for over 8 years. His articles have been referenced by various members of the media, including MSNBC and The Motley Fool. Mike has also offered debt elimination seminars to businesses and community colleges for many years.