Credit Card Rewards in Your Retirement Account

But carrying a balance on this card could cancel out the possible reward


Savvy consumers who never carry a balance on their credit cards have been known to make a little extra cash by using rewards credit cards with no annual fee. A new credit card offers to deposit those rewards into your retirement account.

Fidelity Investments launched a retirement rewards credit card this week. Investors earn two points for each dollar spent on purchases. Once a cardholder reaches a minimum of 5,000 points ($2,500 in purchases), they can be automatically deposited as a $50 contribution into the user’s Fidelity traditional IRA, Roth IRA, or SEP IRA account. If IRA contributions are already maxed out for the year, points can be saved up for next year. Points can also be redeemed as cash in other Fidelity accounts.

I asked Bill Hardekopf, the CEO of, to look into the fine print on this card and compare it to other rewards credit cards. “The APR is extremely high on this card. It’s 16.99 percent,” he said. “The cash reward that can be used for your retirement account is a very nice perk. But if you are a credit card consumer who carries a balance a good amount of the time, then what you are going to make on this card on the reward is going to be eaten up by the very high interest rate that you are going to be paying.” The balance transfer rate is also higher than many other cards, Hardekopf found.

Charles Schwab offers a similar credit card that allows cardholders to deposit 2 percent cash back into their Schwab brokerage account. And Wells Fargo has a card where a 1 percent return on purchases can be applied to the principal balance of your Wells Fargo mortgage.