More Brokers Are Providing Credit Cards

Chad Morris
November 9, 2017
Brokerage House Credit Cards

A new trend in the brokerage industry is developing, one which has nothing to do with investing. Brokerage houses are offering credit cards, and they offer some nice benefits when linked to a securities account.

TD Ameritrade, for instance, offers the Client Rewards Card. It is a Visa Signature card that comes with a 1.5% cash back bonus on purchases. Points never expire, and there is no limit to how many points can be earned as long as the card remains open and in good standing. Even better, the broker-dealer will throw in a 10% bonus on all points that are deposited as cash into a TD Ameritrade investment account.

For example, say you spent $5,000 using your Client Rewards Card. These transactions will result in 7,500 points ($5,000 × 1.5%) being earned. The 7,500 points can be deposited as $75 into a TD Ameritrade securities account. If you elect this redemption method, the broker will add an extra 10%, producing a total deposit of $82.50 ($75 + $7.50).

Alternative redemptions are available for cardholders who don’t want cash. There are gift cards, merchandise, and travel services that can be chosen instead. On top of the attractive rewards schedule, the credit card comes with no annual fee and offers competitive APR’s for good credit scores.

TD Ameritrade’s Client Rewards Card is issued by TD Bank, an affiliated company. Both firms are owned by the same parent company, TD Bank Group.

Fidelity Investments has seen TD Ameritrade’s 1.5% rewards card and has raised the stakes. Fidelity’s Visa Signature card offers 2% cash back and still manages to do it with no annual fee. The brokerage firm does not impose any restrictive categories for redeeming points. There is no maximum on the amount of cash back that can be earned, and points never expire as long as the credit card account remains in good standing.

Like TD Ameritrade, Fidelity allows reward points to be deposited into a linked brokerage account; although Fidelity doesn’t add any bonuses to these redemptions. Points can be deposited into a single account, or divided among several. The broker permits one credit card to have up to five linked investment accounts. These include both retirement and taxable accounts, 529 college savings plans, and the Fidelity Go account, which is a robo-advisory account. The Fidelity Cash Management Account, the broker’s hybrid securities-bank account, is also eligible, as is the company’s Charitable Giving Account.

Cardholders who don’t want to deposit cash into a linked account can choose other reward options, including merchandise, gift cards, or statement credits.

The Fidelity Rewards Visa Signature Card is issued by Elan Financial Services, one of America’s largest credit card issuers. The card can be used with digital wallets, such as Apple Pay, Microsoft Wallet, Samsung Pay, and Android Pay.

Both Fidelity and TD Ameritrade frequently offer sign-up bonuses for their Signature cards. These prizes can be in the thousands of points for spending a few hundred dollars.

Either the Fidelity or the TD Ameritrade Visa card can be used in conjunction with the cash management tools available at both brokerage firms. Checks and a Visa debit card can be added to a Fidelity or TD Ameritrade brokerage account. The core cash position in one of these hybrid brokerage-bank accounts could be used to pay the monthly minimum payment on the linked credit card.

The debit card could also be used in lieu of the credit card at an ATM, since both the Fidelity and TD Ameritrade credit cards have fairly steep fees for using a cash machine (3% with a $5 minimum with the Fidelity card, and 5% with a $10 minimum using TD Ameritrade’s).

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