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
- The 2% cashback version of the card will no longer be offered to new customers. Existing customers are unaffected (for now).
- 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.)
- There is a new 1.5% cashback version of the card, but an American Express instead of MasterCard.
Changes to ALL Fidelity 529 Plans
- No more annual fee. This also means no more $50/month automatic transfer requirement to avoid that fee.
- 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.)
- 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.