The Baby Boomers are reaching that age, and credit card companies see a way to entice them. Some credit cards are offering rewards programs are automatically placed in a designated investment or savings account or are deposited into a personal IRA account. It’s seems great to earn while you spend and have your rewards money directly placed into a savings for your future.
For example, Ameriprise Financial MasterCard will give you from 1% to 1.5% of the amount you have charged on their card. Fidelity’s American Express has a card that will offer you $50 for every $2,500 you spend.
But, beware. These cards will give you very low or no interest rates on a balance transferred to them…for the first year. Then you may be hit with higher than ever fees. The interest rate on new purchases for Fidelity’s American Express Card is 13.99% and on the Ameriprise card is 11.24%. These cards also have no annual fee, but they do charge high fees for transfers and cash advances. Because you have to deposit into accounts held by the card issuer (Ameriprise or Fidelity, for instance), you can not add to existing accounts for accumulated interest. And, think about it, if you are transferring a balance, the likelihood of you earning any consistent rewards is pretty low.
It may be best to save on your own. For more information about wise spending with credit cards go to other Pennypinchinghints articles: Everything You Need to Know about Credit Cards to Save Your Pennies or You’re in Credit Card Debt? Here are Some Tips to Save Yourself.