Schwab Visa Down for the Count?

I've received numerous emails and comments on past posts about updates to the Schwab 2% Visa card. Readers have been getting letters saying that as of September 30 Schwab is no longer supporting the card and that FIA Card Services will be taking over theaccounts. The letter doesn't say anything specifically about the rewards, but the speculation is that the 2% reward will drop to 1% as FIA Card Services makes it a "basic" rewards card (and as I understand the card's structure, it's always been a 1% cash back card with Schwab kicking in the extra 1% -- now Schwab goes away and it just seems very likely that the card will be a 1% card.)

A few comments on this situation:

1. Many of you have asked if I've received my letter yet. No, I haven't. But I've been out of town a couple days and will have three days' mail waiting for me when I get back home tonight. Perhaps it's in there.

2. Thanks for the advance notice, Schwab. If the card really does change over on September 30, they've given us basically no time to make alternative plans. Nice customer service, huh?

3. I think Schwab's image will take a hit on this one. I had been a Schwab customer in the past and had moved away from them because their fees were way too high compared to alternatives (that may not be the case now, but I haven't checked lately.) I opened an account with them once I got the card, I liked it, and they were starting to win me back as a customer. If they kill the card, they've killed their chance with me for a loooooong time.

4. I still have the Amex Blue card as my back up, but it works best when you can load a ton of charges up on it over the course of a year. It won't do me much good at this point.

5. Auto payments, ugh. Schwab had just changed my account number (for some unknown reason -- perhaps to make the transition to FIA Card Services easier) so I recently contacted all the companies I have set up with automatic bill-pay to my card (to give them my new number.) Looks like I'll need to do that again (I'm assuming I'll need to get a new -- better -- card.)

And those get us to the big question: what's the new "best" cash back credit card? I put "best" in quotes because much of the answer depends on how an individual uses a card -- what he buys, where he buys it, how much he buys, etc. The answer is also dependent on whether you like a one-card strategy (like I do -- I don't want to carry a boatload of cards with me) or are willing to deal with multiple cards to give you the best total return (you will get a better return with more cards, but you also will have more hassle. And if you're managing cards with more than one person -- like I am, my wife uses them too -- communicating and executing a multi-card strategy can be difficult.) Let's assume for now that we're looking for the "best" option for a one-card strategy. What would you suggest as the card we all should consider?

Comments

[tom]

I think I'm about to switch to the Fidelity Visa. It has 1.5% cash back on all purchases up to $15,000 and 2% past $15,000. Maybe someone in the PF blogging community can reach out to Fidelity to verify the longevity of their Visa card.

Fidelity also has a 2% cash back AmEx.

I already use the Costco Business AmEx as my Gas and Restaurant card (4% and 3% cash back) so that might have to suffice until I can get my Fidelity card.

[Terry]

I talked to Schwab and was told "at this point" they will still be putting the 2% in my account and no terms will change. I really cant believe this will continue. I have a major purchase I was going to charge, but not with this looming and the risk of loosing it.

I am like you - I like few cards. I would carry only the Amex but I still find a few places that only take Visa. Does the Costco AmEx give you the high cash back on warehouse gas? I know Amex does not consider it a "gas station" so I dont get the higher rate on the blue.

[tom]

@Terry,

Yes they do give the 4% on Costco gas. I verified this with my rewards statement. It also shows up on the statement as "Costco Gas" or something like similar.

[Rockbell]

My current favorite is Fidelity AMEX 2% straight to ROTH IRA

[Apex]

Trying to keep above market rate credit card rewards programs is musical chairs.

It's the same as chasing the highest online savings account rate.

It's fun if you like financial musical chairs.

Lather, rinse, repeat.

[FFer]

My favorite card is my ATM/Debit card from ABNB credit union. If I use the card 12 times per month (easily), I get 3.25% interest on my checking account balance, paid in increments each month.

[KaseyD]

I got the Schwab letter on Monday. And yes, I'm a bit annoyed, particularly about getting only 10 days notice. However, if you read the card agreement closly, the benefits section says: "we may adjust, add, or delete benefits and services at any time and without notice to you." I'm guessing we are safe until September 30th. But if you are a heavy user of this card, it might be wise to wait see what FIA might do. I particularly liked the extended warranty that was offered with the Schwab card and I will be more than a bit annoyed if this feature is removed by FIA. The warranty is not available with the Fidelity Amex serviced by FIA.

I rotate my cards for the best rebate. Right now, I find that Chase Sapphire has the best rebate (currently 5% on most purchases for the 3rd quarter 2010). I'm above the Amex Blue level for a few more months, so that comes in next. Citi Dividend just offered me 1.2% on everything through January 31, 2011. Discover does a rotating 5% on different categories, but this requires close monitoring and signing up each quarter. And, as mentioned above, the Costco Amex is a great back up card (but don't forget the card requires an annual Costco membership fee.)

[Mary Kate]

I received the letter from Schwab this week. If the benefits are reduced I'll figure out what to do then.

[Claire]

I just got that Citicard offer for my diamond card - did you see that you have to call them to activate it? If you don't call...no extra rewards.

[Joe]

I'm actually trying to pay for more with just cash or a debit card. I've started to really hate banks and paying cash seemed like the best way to cut them out of the loop.

[Richard Hurt]

I'm like you. I too was a Schwab client and left them as the fees were getting too high compared to other brokers. This is a real eye opener.

[ACS]

I use the Chase Quicken Visa as my one-card strategy. For every dollar spent I get a point. If I spend at recognized gas, dining, restaurant, and office supply retailers (which I often do), I get 2 points per dollar spent. 2000 points gets me a $25 gift card, 4000 gets me $50 and so on. I redeem my points for stores like Target, Lowe's, Home Depot, and Amazon, since I normally spend money at those places anyway it's basically cash back to me. You can also choose cash in the form of a $100 statement credit (10,000 points), but the gift cards get you more bang for the buck (two $50 cards are only 8000 points).

[rabbit008]

I also received the Schwab letter. Sucks. It was my one main card to use. I liked the no international transaction charges benefit. Schwab is going down hill.

[Eugene Krabs]

Yeah, it's not uncommon for even the investment industry to provide typically-temporary loss leaders to try to attract customers. This one was nice though, and it was running for a little while now.

I think the latest one right now is select ETFs that can be bought without trading fees. There are a few people I know who like and recommend it. I don't mind it either, but I wonder how long that will last as well.

[Bronco]

Just received my letter 2 days ago. Like many of the above posters, I had long ago abandoned Schwab for cheaper alternatives (actually I just stopped all activity, didn't close the account). They drew me back in with the high 2% online savings acct, which has long ago been reduced to almost nothing, as well as the card. I liked the 2% cash back, but also the fee-free overseas use. This change is very disappointing.

[Crystal@BFS]

I'm a loyal Discover More card fan - 1% on everything after $3000 and 5% on rotating categories.

If the rotating categories thing annoys someone, I'd suggest the PenFed Visa - 5% on gas, 2% on groceries, and 1% on everything else with no minimum spending required.

If someone eats out all the time I'd suggest the Citicard Visa - 5 points per dollar spent on dining, books, and movies. If you buy gift cards with the points, it amounts to 3-4% back.

We use a combo of the above, but any one of those cards could be a good idea for certain people's spending habits. The PenFed Visa is probably the most versatile for us. :-)

[David]

I got my letter too... I'm just gonna wait and see what FIA does with it. Even if they reduce the rewards, I'll probably keep the card for the no international transaction fee. If they get rid of that too, well, I'll have to think about it a lot more...

[Jclimber]

I use the Amex Blue Cash. 5% on gas and groceries once you've spent $6500 in your current year, 1.25% on everything else. That is slightly better than the PenFed card, if you hit the $6500 limit.

[td]

I'll probably just stick with it unless I can find another VISA or Mastercard automatic monthly cashback card.

[Mark]

My "best card" is actually 4 or 5 cards:
1. Amex Blue Cash for almost everything. I admit it - I spend a ton of money!
2. Citibank/ExxonMobil Visa for gas. 15 cents per gallon rebate _ in the form of credit against gas purchases, so not really 15 cents per gallon. (My gas is less than $3 per gallon, so approx 5% rebate)
3. Chase Sapphire for other. I may do more with this in future. I just scored a car rental on a similar card - used 25,000 points instead of paying $500, so roughly 2% value.
4. Capital One No-Hassle Cashback for non-US purchases. I travel overseas regularly, and this card pays 1% cashback, and does not hit you with foreign currency surcharges, which is worth another 2%.

I don't take up offers such as first year annual fee waivers because I don't need the hassle of remembering when to cancel. So I choose my cards based on benefits which are quasi-permanent (as permanent as any deal with a bank can be!).

[Terry]

Wondered if someone has compared the Amex Blue with the Costco Amex
TrueEarnings?

I have a Blue and probably spend $10K a year so I make the higher tier. BUT - I also buy most of my gas at Costco - I would guess $2,500 worth. That would mean I get the 3% on that gas rather than the lower Blue rate on warehouse gas.

Are there any other feature (warranty, protection, etc) differences? I am thinking my Costco gas purchases would make up for difference in rewards going to the Costco version.

[David R.]

Disappointing. I signed up for the Invest First card based on FMF's advice, and now they're pulling the rug out from under my feet! I've zeroed out the balance and will likely refrain from using the card for the next few weeks until FIA makes it clear what kind of benefits they'll offer.

The change prompted me to start card-shopping. USAA offers four low-interest cards, one being particularly attractive because I'm active-duty military.

https://www.usaa.com/inet/ent_utils/McStaticPages?key=banking_credit_cards_active_military_world_mastercard

[Aaron]

Just spoke on the phone with Schwab and FIA:

They are planning no change to benefits except that the new card will have no Schwab logo on it and you won't be able to see it on the Schwab website.

The replacement card will be a 2% cash rewards FIA card.

Credit line and APR remains the same.

There will continue to be no fees on international transactions.

Cash rewards will continue depositing into the Schwab brokerage account but you can switch to a non-Schwab account after the transition if you want.

[hotpprs]

All I can say this is very strange that it happened so quickly. There must have been some negative financial consequence that was laid on them with very short notice, especially if they are keeping the rewards the same.
If FIA does change the terms, to 1%, I think I may go with the Venture card which is basically 2% on all purchases just like Schwab, is still a Visa card, but you will just have to use your 2% rewards on travel. I know I will end up using the rewards as I have only two FF tickets on two different FF plans, but need to use 4 tix for all our trips. Just as long as the rewards do not have a time limit, I haven't looked into that yet.

[StevieD]

Since the switch, I've received two deposits to my checking account (not to my brokerage account anymore) for the full 2% on every FIA card purchase. Card still works the same way as before, only difference is you can't see the balance at schwab.com. But schwabbankcreditcard.com still works great, as does www.ibsnetaccess.com and www.fiacardservices.com.