Update: Fidelity ended up going with Visa & Elan. You can read our review of the card here.
Bloomberg is reporting that Fidelity Investments is considering dropping American Express & Bank of America as their co-branded partners on the Fidelity American Express rewards cards (they already have a Visa version which only earns at 1.5% on all transactions).
There are a number of reasons why Fidelity might be considering this change, but I think two are the most likely:
- They weren’t happy with American Express after they announced that they would issue two co-branded cards with Charles Schwab
- They want a bigger cut of the interchange fee
The main reason Fidelity offer this 2% cash back card (which is almost certainly a loss leader for them) is that cardholders keep on average three and half times more in their Fidelity accounts than non-cardholders. Incidentally back in March, 2014 a representative stated that the 2% cash back rate would be staying for at least 18 months, which means that promise is due to expire shortly.
Why This Is Bad News For All Cardholders
- If Fidelity switch card issuers (e.g somebody other than Bank of America) it means it will likely no longer possible to combine inquiries
- If Fidelity switch payment networks (e.g to Visa, Mastercard or Discover), it means:
- We’ll no longer have access to AmEx offers
- Likely no more 2% cash back rate (remember AmEx charges a higher interchange fee than other networks)
- No more loading Serve
Fidelity’s promise to maintain the 2% cash back rate won’t expire until at least November 2016. The 18-month clock was reset in May 2015 per this NYT article:
http://www.nytimes.com/2015/05/09/your-money/credit-and-debit-cards/credit-cards-with-2-rebates-while-or-if-they-last.html
(see third paragraph from bottom)
From what I have heard when AMEX leaves Costco they will offer current card holders a new AMEX card but they will also do a hard pull before issuing the new card. IMHO, I will let my Costco-Amex die a natural death and not replace it with another AMEX unless the offer is great. I’ve learned a lot reading sites like these and don’t intend to leave free miles, points, etc. on the table any more.
I have been using the Fidelity Amex to fund my online Serve loads so I would absolutely hate this if the change occurred. I use Fidelity for my Roth IRA so this card was perfect for me.
Yeah, that’s a $120 loss each year on Serve unless any other Amex cards offer more than 1% on purchases.
The Schwab thing is a canard. Back in the day FIA issued both the Fidelity and the Schwab 2% cards. This is all about the cut of of the interchange.
I hope that they leave the existing accounts alone as I like it as a cashback avenue for BoA preferred rewards. Though that can’t last for ever.
+1 on both, but I think the second is unlikely.
When Schwab ended the FIA relationship, they got converted to Bank of America branded cards (net devaluation, as BankAmericard Cash Rewards with the same benefits as the retail offer). Of course at the time Schwab said they weren’t issuing cards anymore because it basically wasn’t profitable, so I don’t have high hopes for their new Amex (although the old card was a Visa, so there is likely more interchange margin on the Amex, I’m skeptical we will see a 2% cash back Amex directly from Amex).
I was going to apply for this card next week. What would the implications be if they decided to break ties with Amex/BOA? I wouldn’t want to waste a hard pull if they would completely close the account. Do you think they will do product changes to something else, and if not, does it generally show on your credit report that the card issuer closed your account when a bank phases out a credit card product, like Amex is doing with Costco? That would look bad if I only had it for a few months, wouldn’t it? Thanks in advance 🙂
I’m in the same boat. I was hoping to get the Fidelity Amex as a long-term card (just starting churning, need some cards to invest in for AAoA), but now that doesn’t seem like a good option, so I’ll probably go with another unless I hear otherwise.
I’m guessing they’ll offer to PC it to another card if they change it, but I don’t know about that.
They will likely do a forced product change into the new credit card with the new card issuer.
Offers via twitter or Facebook? I never knew such things existed. Thanks for informing me.
Small Business Saturday is also a nice perk of all Amex cards.
Hmmm… my Fidelity card that pays 2% back into a Fidelty cash account does not offer the AMEX rewards anyway, so no loss there.
If they do drop the rewards, then I can fall back on my Capital One card which is 1.5% for most general purchases. Pity, though, That 2% really added up especially when combined with my Costco membership.
Rewards? Who said anything about Amex rewards? It’s Amex offers (via Twitter or FB) that will stop.
You may want to consider Citi’s Double Cash card. Also 2% (1% on purchase and up to 1% on repayment).
Can you really combine pulls with Fid and other BOA Cards offered? Can someone confirm or any data points available?
I want to know too
I too am highly interested to know if B of A and Fidelity combine hard pulls.
I’ve seen reports both ways.
Just to clarify your earlier information–the Fidelity Visa earns 2% after the first $15,000. From 0-$15,000 is only earns 1.5%. https://www.fidelity.com/cash-management/visa-signature-card
If Fidelity switch card issuers (e.g somebody other than Bank of America) it means it will likely no longer possible to combine inquiries
I don’t believe credit pulls are combined when applying for a FIA card and a different BOA card at the same time.
At least that was not my experience.