Fidelity Investment Rewards vs. Priceline Rewards

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[Updated 5/25/13: I no longer know of a working landing page for the Priceline Rewards card that displays the 2% cash back offer. However, this FatWallet Forums thread has a link to this application, and if you click on the "Terms and Conditions" at the top of the page you'll see that they still show "2 points per $1 spent on all other transactions."]

[Update 6/29/13: the link above is no longer working, which means the Priceline 2% cash back offer is now well and truly dead. If you know of a working application link, let me know!] 

The two best all-purpose cash back credit cards available today are the Fidelity Investment Rewards American Express, which earns 2 points per dollar, worth 2% cash back when deposited to a Fidelity account, and the Priceline Rewards Visa, which earns 2 points per dollar spent on the card and allows you to redeem those points at 1 cent each for statement credits. Even better, neither card has an annual fee. Today, I'd like to clarify some of the important differences between the two cards.

Issuer

  • The Fidelity Investment Rewards card is issued by FIA Card Services, the credit card division of the Fidelity investment bank.
  • The Priceline Rewards Visa is issued by Barclaycard US. 

Since the Fidelity card is not issued by American Express, you can apply for it at the same time as a credit or charge card issued by American Express, like the Premier Rewards Gold or Platinum Membership Rewards-earning cards, or a Starwood or Delta co-branded card, without an automatic rejection. 

Barclaycard also issues the Arrival World MasterCard (which I just received in April) so you probably won't be able to receive both that card and the Priceline Rewards Visa in the same application cycle.

Signup Bonus

  • The Fidelity Investment Rewards American Express does not have a signup bonus.
  • The Priceline Rewards Visa has a signup bonus of 5,000 bonus points after your first purchase, worth $50 in statement credits. 

Acceptance

 

 

Fewer merchants, especially small local merchants, accept American Express cards than Visa cards, although I find that besides at the smallest grocers and restaurants American Express cards are very widely accepted in the United States. 

If you use the US Bank or Nationwide Visa Buxx cards to manufacture spending, those products only allow you to load using Visa and MasterCard.

On the other hand, if you do much of your shopping at Costco you know that their stores accept only American Express cards.

Minimum Redemption

  • The minimum redemption for the Fidelity Investment Rewards card is 5,000 points, worth $50 in cash deposited to a Fidelity account.
  • The Priceline Rewards card allows a minimum redemption of 2,500 points against a charge of at least $25. No partial redemptions are allowed, meaning you must have enough points to redeem for the entire amount of the charge to your account.

Redemption Method

  • Fidelity allows you to set up automatic disbursements at the end of each month, or you can manually redeem your points for cash deposited to a Fidelity account.  In either case you must have at least 5,000 points, worth $50, in order to redeem them (however, there does not appear to be a maximum).
  • Priceline Rewards allows you to redeem your points for a statement credit against any charge made in the last 90 days.  Since you need to have enough points to cover the entire charge, the best method to make sure you don't have any points left over is to manufacture a transaction of exactly the right size. For example, if you send $1,000 per month using Amazon Payments, you can break that into one $950 transaction and one $50 transaction, which you can then redeem your Priceline Rewards points for.

Conclusion

The Fidelity Investment Rewards American Express and Priceline Rewards Visa are fairly evenly matched, being the only two no-fee cards I know of that offer 2% cash back on all purchases.

The Priceline Rewards card has a lower minimum redemption, and more widespread acceptance as a Visa card, but a slightly more complicated redemption method, which doesn't allow you to redeem your points for cash directly.

 

Maximizing fixed-value travel rewards points

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Today I'd like to take a closer look at the value proposition offered by some of the cards discussed in Chapter 2 of my book: fixed-value travel rewards cards.  When looking at any card, you should ask three questions: is it worth signing up for; is it worth making purchases with; and is it worth renewing when the annual fee is due?

Signup Bonuses

The first question is easy to answer: since the annual fee is waived for all these cards, you can apply for any of them when the signup bonus is high enough to justify the hard credit inquiry, and you aren't applying for any other cards from the same issuer in your current application cycle.

Here are the current signup bonuses available for these cards: 

  • Capital One Venture Rewards.  10,000 Venture miles after $1,000 in spending within 3 months.  Earn 2 points per dollar, redeem them at 1 cent each for statement credits against travel purchases made with the card.  No partial redemptions (you must have enough points to pay for the entire travel purchase).  $59 annual fee, waived the first year.
  • US Bank Flexperks Travel Rewards Visa Signature.  17,500 FlexPoints after $2,500 in purchases within the first 5 months.  Earn 1 point per dollar, 2 points on airfare, groceries, or communications expenses, 3 points per dollar for transactions coded as charity.  Redeem points for travel redemptions using the Flexperks travel booking tool at up to 2 cents per point, in defined tiers.  No partial redemptions.  $49 annual fee, waived the first year.
  • Citi ThankYou Premier.  25,000 ThankYou points after spending $2,000 in the first 3 months.  Earn 1 point per dollar, 1.2 points at supermarkets, gas stations, commuter transportation and parking.  Redeem points at 1.33 cents each for travel purchases using the ThankYou Rewards booking tool, with partial redemptions allowed.  $125 annual fee, waived the first year.
  • BarclayCard Arrival World Mastercard .  40,000 points after $1,000 in spending within 90 days.  Earn 2 points per dollar spent on the card.  Redeem points for statement credits against travel purchases made on the card at 1 cent per point, and receive a 10% rebate after each redemption.  No partial redemptions.  $89 annual fee, waived the first year.
  • Priceline Rewards Visa Signature.   5,000 points after first purchase.  Earn 2 points per dollar spent on the card, and 5 points per dollar spent on Name Your Own Price reservations.  Redeem points at 1 cent each for statement credits against purchases made on the card, with no partial redemptions.

As you can see, the Priceline Rewards card has a signup bonus worth $50, the Venture Rewards card's signup bonus is worth about $100, the Flexperks card $260-$350, ThankYou Premier $332, and Arrival World $444.  In general, it's never worth signing up for the Venture Rewards card except during the periodic promotion when they offer a signup bonus of twice the number of miles you earned on a competing card during the previous calendar year, which can be quite lucrative.

Earning Points

All these cards, except the Venture Rewards and Priceline cards, are worth applying for and spending enough on to earn the signup bonus.  But are any of them worth making purchases on after you've spent enough to trigger the signup bonus?  The answer is usually no, since the Fidelity Investment Rewards American Express card offers 2% cash back on all purchases and the Fidelity Visa Signature card offers 1.5% cash back on the first $15,000 in spending each calendar year, and 2% thereafter, while also having no annual fee. The chart below illustrates the value proposition offered by spending on each of these cards:

This chart makes clear that the standout value among these cards is the US Bank Flexperks Travel card, which offers up to 6% back on charitable spending (which earns 3 Flexpoints per dollar), but also up to 4% back on airfare, gas, or groceries (whichever you spend most on each billing cycle), plus telecommunications expenses, when you redeem your points using the Flexperks booking tool.  

Redeeming Points

This brings us to the most fundamental difference between these cards: the method of redemption.  As you saw above, fixed-value rewards points are divided into two groups: those that require you to make prospective bookings using your points through their travel tools (ThankYou, Flexperks) and those that allow you to redeem your points for a statement credit against a purchase you've already made with the card.

When you have a choice, you should redeem for statement credits against paid hotel stays, and use rewards booking tools for airline reservations.  This is for the simple reason that unlike airline frequent flyer programs, hotel loyalty programs generally only award points for paid reservations made through the hotel's own website.  By booking a paid hotel reservation through the hotel's website, then redeeming your points for a statement credit against the cost of that reservation, you'll earn hotel loyalty points for your reservation, while you won't do so when you make a hotel reservation through a loyalty program's award booking tool.  This increases the value of your fixed-value points by allowing you to double-dip.

Summary

For everyday purchases, only the US Bank Flexperks Travel card can compete with the Fidelity Rewards 1.5% (Visa) and 2% (American Express) cash back cards.  However, several of the other cards discussed here can offer great value when you take advantage of their lucrative signup bonuses.  Just don't be suckered into paying an annual fee for a card that isn't worth keeping!