Changes to Fidelity 529 College Rewards Credit Card

If you’re a Fidelity 529 College Rewards cardholder like me, you’ve probably already got the letter that talks about some of the changes to this card and also the 529 plans in general. To summarize:

Credit Card Program Changes

  1. The 2% cashback version of the card will no longer be offered to new customers. Existing customers are unaffected (for now).
  2. Although the 2% card is gone from the Fidelity website, the old application link still shows up. It is unknown if any new applications will be approved. (edit: the old application is now gone.)
  3. There is a new 1.5% cashback version of the card, but an American Express instead of MasterCard.

Changes to ALL Fidelity 529 Plans

  1. No more annual fee. This also means no more $50/month automatic transfer requirement to avoid that fee.
  2. Lower expense ratios. Fidelity’s index fund options are now capped at a total expense ratio of 0.50%. This makes Fidelity 529s very competitive overall if you ignore state-specific tax advantages. (I think the Utah plan through Vanguard is cheaper overall.)
  3. California’s 529 Plan is now also managed by Fidelity.

It’s too bad they’re dropping the 2% card, but I’m glad I get to keep mine. Given these new options, I’d rather get 1.5% cash back directly from their Fidelity Investments Rewards card and the freedom to do whatever I want with the cash back.

There is also a new 2% cashback card, but it has an annual fee of $35-59. I would say that this may be worth it for big spenders, but Orchard is mainly a sub-prime lender and the credit limits given may be low.

This is good news for people with the California 529 plan, with the lower fees. I have a CA 529 with $120 in it from some old bonus offer, and now I can merge it with my existing Fidelity 529 plan (I use the New Hampshire one) with just one Change of Beneficiary form. I don’t know if I’m going to even cancel my $50 auto-transfer, since I really don’t even notice it anymore.

Comments

  1. I thought you might be interested in this statement (from the fine print in applications for both cards mentioned above): “Balance Transfers and/or Cash Advances Checks may not be used to pay off or pay down any account issued by FIA Card Services, N.A.”

  2. I have the Fidelity 529 College Rewards cardholder as well, signed up and referred by your web link.

    I remember you mentioned, you chose the 50-50 equity bond ratio. I think chose the 70-30 equity bond ratio. One question I would like to ask you is that how do you find out the fund name and fees of the fund that they use for this plan. All I get to choose is the equity bond ratio investment, no fund name at all.

    Great website, love it.

  3. Anon – Most card issuers don’t let you balance transfer to their own cards.

    Luu – All the investments should be on the Fidelity site now, either targeted dated or static portfolios.

  4. Is there a way to avoid the balance transfer fees? Most of the cards state that it will charge MIN. $xx and MAX. $xx, mostly 3%. It feels liketransferring the balance to 5.05% savings account isn’t worth much, if i’m getting 3% fee right off the bat. Thanks!

  5. Goodbye automatic investments! Welcome less of a hassle 2% cash back card!

    My automatic investments came from my money market account, which has limited monthly transactions. The automatic investments is not something I will miss.

  6. It appears that Orchard Bank is run by HSBC. I was offered a $39 “Platinum” 2% card. I’d have to spend about $2,600 extra to beat the fee-free 1.5% Fidelity card I now have. Think I’ll pass.

  7. Glad to hear you don’t have to do the 50 dollars anymore. Where did you find this information from, because I did get the letter, but this little information I wouldn’t have known unless I came here?

    I’m used to sending the 50 dollars a month, but I’d rather send 50 dollars a month to a taxable investment that I have more flexibility over.

  8. I found out about this initially because I got notice that my CA 529 was being moved to Fidelity. But the CA 529 has no minimums or annual fee, so I called Fidelity to make sure. They assured me that there would be no new fees, and that in fact all their 529s were undergoing an facelift in which all annual fees would be gone across all accounts.

    I think all this is on the Fidelity site now that the migration is complete.

  9. link

    Taken directly from Fidelity’s FAQ on their website:

    “What are the fees and expenses?
    There is no annual account fee associated with any of the Fidelity-managed 529 Plan plans.
    There is no annual account fee associated with any of the Fidelity-managed 529 Plan plans. There is a program management fee that covers the cost of trust administration services, such as recordkeeping, statements and customer service.
    The program administration fee, including the state fee, for the Actively Managed Fund Portfolios is 0.30%.
    The program administration fee, including the state fee, for the Index Fund Portfolios varies by Index Portfolio, between 0.30% and 0.40%.
    In addition, each of the underlying mutual funds in which Portfolios assets are invested also has investment management fees and other expenses. The Plans do not invest in any mutual fund with a sales load. Underlying mutual fund fees vary by Portfolio. Please see the respective plan Fact Kit for more detail on fees and expenses. “

  10. I also have a 529 account which was recently transferred to Fidelity (CA scholarshare), so I have been planning to sign up for the card, but had not gotten around to it. I became worried that I missed the boat when I read about the card closure here, so I signed up through the link on Monday Nov. 20th. I am happy to report that I just received the card in the mail yesterday, and the paperwork states that it is indeed the 2% deal. Just thought I should report my experience to those who may think that the door is completely shut… it may not be.

  11. I just got through my back log of mail and read the stuff about the newly expanded list of 529 investment options with Fidelity. Have to say I am very happy to see all those index funds in there!

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