BOSTON--(BUSINESS WIRE)--Savvy consumers are always on the lookout for ways to save and many choose to use rewards credit cards to get the most out of their regular spending, especially during the holiday season. According to a new survey from Fidelity, more than half (55 percent) of credit cardholders own a rewards credit card, with cash back rewards the most popular choice, held by nearly two-out-of-three rewards card holders (63 percent); 47 percent own credit cards offering points toward merchandise, followed by airline miles (39 percent) and gas, dining or other forms of rewards (39 percent).
“Our cardholders who redeem their rewards into their Fidelity account will average nearly $1,500 in cash rewards by year end(2) -- a significant sum for money they were spending anyway, and money they could surely put to good use, whether it’s paying down debt, saving for college, a new car or their retirement,” said William “Sam” McLimans, senior vice president of cash management at Fidelity.
According to the survey, 50 percent use cash rewards for short-term purposes such as everyday spending and 45 percent use rewards to pay off existing credit card balances. Only nine percent of cardholders elect to invest cash rewards into retirement savings or 529 college savings accounts.
“While using cash rewards cards can be a great way to help manage daily expenses and near-term financial priorities, these cardholders may be missing an opportunity to boost their savings for the long term,” said McLimans.
For example, Fidelity cardholders directing their cash rewards into a Fidelity account will average $1,476 in cash rewards in 2014. If they earn a similar sum each year and direct the cash towards a 529 college savings account every year for 18 years, the total rewards accumulated could exceed $26,000, without even factoring in potential compound annual growth.
“As consumers conduct their last minute holiday shopping, or consider financial New Year’s resolutions, we encourage them to make smart moves that will have lasting impact, including choosing a cash rewards program that will help turn their everyday spending into long-term savings,” said McLimans.
The Fidelity Investment Rewards® American Express® Card(3) earns cardholders an unlimited two percent cash back on purchases, when they direct their rewards into an eligible Fidelity account, such as the Fidelity Cash Management Account that charges no fees of any kind and even reimburses ATM fees(4), or any combination of up to five Fidelity-eligible accounts(5). By directing their cash rewards toward an IRA (individual retirement account) or Fidelity-managed 529 college savings account, for instance, Fidelity Investment Rewards® American Express® Cardholders can help give their future selves the gift of a well-funded retirement, or offer their children the gift of a college education.
To see the full range of benefits to using the Fidelity Investment Rewards® American Express® Card, and to calculate potential rewards and apply for a card, visit www.fidelity.com/creditcards. Investors can also read a Viewpoints article on using credit wisely.
About the Study
This study presents the findings of a survey conducted among a demographically representative U.S. sample of 2,036 adults comprising 1,013 men and 1,023 women 18 years of age and older. To qualify for the study all respondents must have owned both a bank account and a credit card. The online omnibus study was conducted on behalf of Fidelity November 13-19, 2014 by ORC International, which is not affiliated with Fidelity Investments. The results of this survey may not be representative of all adults meeting the same criteria as those surveyed for this study.
About Fidelity Investments
Fidelity’s goal is to make financial expertise broadly accessible and effective in helping people live the lives they want. With assets under administration of $5.1 trillion, including managed assets of $2.0 trillion as of November 30, 2014, we focus on meeting the unique needs of a diverse set of customers: helping 23 million people investing their own life savings, 20,000 businesses to manage their employee benefit programs, as well as providing 10,000 advisors and brokers with technology solutions to invest their own clients’ money. Privately held for nearly 70 years, Fidelity employs 41,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit www.fidelity.com.
Investing involves risk including the risk of loss.
Please carefully consider the Plan's investment objectives, risks, charges and expenses before investing. For this and other information on any 529 College Savings Plan managed by Fidelity, contact Fidelity for a free Fact Kit, or view online. Read it carefully before you invest or send money.
The UNIQUE College Investing Plan, U.Fund College Investing Plan, Delaware College Investment Plan, and Fidelity Arizona College Savings Plan, are offered by the State of New Hampshire, MEFA, the State of Delaware, and the Arizona Commission for Postsecondary Education, and, respectively, and managed by Fidelity Investments. If you or the designated beneficiary is not a New Hampshire, Massachusetts, Delaware, or Arizona, you may want to consider, before investing, whether your state or the designated beneficiary's home state offers its residents a plan with alternate state tax advantages or other benefits.
Units of the Portfolios are municipal securities and may be subject to market volatility and fluctuation.
Fidelity, Fidelity Investments, Fidelity Viewpoints and Fidelity Investments and the Pyramid Design logo are registered service marks of FMR LLC.
Investment Rewards is a registered trademark of FIA Card Services and/or its affiliates.
American Express is a registered trademark of American Express.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917
© 2014 FMR LLC. All rights reserved.
(1) $846 million in cash rewards as of the end of Q3 2014 since the introduction of the cards in 2003.
(2) Based on internal Fidelity business data.
(3) For information about the rates, fees, other costs and benefits associated with the use of these Cards, call the 1-800-Fidelity or visit http://www.fidelity.com/amex. This credit card program is issued and administered by FIA Card Services, which is not an affiliate of Fidelity Investments. American Express is a federally registered service mark of American Express and is used by the issuer pursuant to a license. Investment Rewards is a registered trademark of FIA Card Services and/or its affiliates.
(4) Customers earn 2 points for each $1 in net retail purchases. Once they reach 5,000 points, points can be redeemed automatically or on demand for cash at a $.01 exchange rate into an eligible Fidelity account (i.e., 5,000 points = $50 deposit). The ability to contribute to an IRA or 529 college savings plan account is subject to IRS rules and specific program policies, including those regarding eligibility and maximum annual contribution limits. The redemption value for Points redeemed for rewards other than deposits into an eligible Fidelity account varies. Additional restrictions apply. Full details appear on http://www.fidelity.com/amex.
(5) All Fidelity nonretirement, Fidelity IRA, and Fidelity-managed 529 plan accounts that accept Automated Clearing House (ACH) deposits are eligible for a rewards deposit. If a cardholder intends to deposit points in an eligible account, it is their responsibility to ensure that the account is one for which contributions on their behalf can be accepted and that, under applicable tax law, they are eligible to make contributions to that account for the year that the deposit is made. Refer to the applicable Fidelity account Customer Agreement, Custodial Agreement, or Participation Agreement for information on the terms and conditions of the Fidelity account.