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Schwab Invest Visa? 2% cash back on everything? [Discontinued card]

Schwab Invest Visa? 2% cash back on everything? [Discontinued card]

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Old Dec 9, 08, 3:33 pm
  #16  
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Originally Posted by Mountain Trader View Post
I think the 1.5% Fidelity card used to have no foreign exchange fees but they added one after a while. Anyone remember?
You are correct. The fee was added right after (or soon after) MBNA was bought out by B of A. Now it's 3%.

I'm using PFCU's Visa with 1% fee with 1.25% cash rebate for my oversea travels.
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Old Dec 9, 08, 5:09 pm
  #17  
 
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Originally Posted by mia View Post
Fidelity has announced a substantially similar offer...

With enhancements scheduled for early 2009, the new Fidelity Investment Rewards American Express Card and the Fidelity Investments 529 College Rewards American Express Card will be offering a new 2 percent earn rate on retail purchases
I read this offer is that to earn the 2% it must be deposited into a Fidelity IRA or 529 plan.

I'm no financial genius, but if I understand this correctly the Schwab plan is *much* superior in that you get the 2% rebate NOW and effectively tax free. Any deposits to the Fidelity IRA would be taxed upon distribution. Moot point for those of us with a 401(k) anyhow since a lot of us are ineligible for an IRA.
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Old Dec 9, 08, 6:03 pm
  #18  
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Originally Posted by DoubleJ View Post
According to the Schwab Bank Invest First card website FAQs:

Still, as you point out, it would only really be a good deal if one intends to keep a Schwab brokerage account (as there's no other way to get the 2% rebate without it). Thanks for the reply, Happy.
My take is, if your spending is small, then the 3% forex fee is nothing to sweat about, just use your regular card which may already have some sort of reward anyway, like 1% (mileage card) or 3% (Citi Plat AMEX) - so it basically offset some, or all of the forex fee. Your net cost would be either 2% or 0% - breakeven - so why bother to get a new card just to avoid the forex fee?!

When your forex spendings are big, then you would not only want to avoid the fee, but you dont want to lose the rebate as well. That is why you would still open the Schwab brokerage account.

Originally Posted by mia View Post
Fidelity has announced a substantially similar offer...

http://www.marketwatch.com/news/stor...00F7828103B%7D

Useless for 2 things:

With enhancements scheduled for early 2009, the new Fidelity Investment Rewards American Express Card and the Fidelity Investments 529 College Rewards American Express Card will be offering a new 2 percent earn rate on retail purchases
1) it is an AMEX which is not accepted by many merchants. Our recent trip to BCN the appartment owner would not take AMEX but would take Visa or MC, for our weeklong rental, for example.

2) for those who are not eligible to put money into IRA accounts.
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Old Dec 9, 08, 9:10 pm
  #19  
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Today I visited my Schwab office. I asked
  • Most brokers object to a brokerage account being used solely as a bank account. But the Schwab bank account and credit card offers seem to indicate otherwise. Will Schwab object if I use the credit card but never do a transaction in the brokerage account. Answer: Schwab won't mind, but the S.E.C. requires at least one trade a year to keep the account open. For infrequent traders the commission for a trade is $12.95 for the first 1,000 shares, plus $0.015 for each additional share.
  • Is the 2% rebate taxable? The rep typed on his computer for awhile and then said yes, that is what he is being told. He did not say who told him this, let alone the qualifications of that person to know. I asked to speak to someone who would know for sure.
  • He gave me a phone number to call and a phone to use to call it. The number was for the Schwab brokerage company tax people, who knew nothing about the credit card. They told me to call the Schwab Bank, a separate but related company.
  • I called the number for the bank that I found on the application handed to me at the local office - (877) 226-8964. I was told that definitely the rebate is not taxable. I said that we have a tie between definitely yes and definitely no. I asked if this person worked for the bank. No, he worked for both companies. I asked to talk to someone at the bank credit card division.
  • I was connected with the bank. After I chose the appropriate option, I was put on hold for a few minutes, then disconnected.
  • I called back to the previous number. I was connected with a different rep, who said he did not know if the rebate was taxable. He also did not work specifically for the bank. I asked for the correct number of the credit card department of the bank. I was given (866) 724-9220. He then transferred me to the bank. Again I was put on hold and disconnected.
  • So I called the number directly. Ta Da! Option 1 is specifically for the Schwab Bank Invest First Visa Signature Credit Card. Alas, the rep with whom I was connected didn't know if the rebate was taxable. But she put me on hold for about 10 minutes, and returned saying she spoke with all of her supervisors, and the consensus was no, the rebate is not taxable, but no one was absolutely sure of this.
  • I explained to the rep the one trade for a year rule. I asked if the points on the credit card expire or accumulate, as I would like to be able to wait one year and 11 months to do a trade, rather than one year. She understood, but asked a supervisor again. The points expire in 5 years. Until then they accumulate and can be transferred as cash whenever I open a Schwab brokerage account.

I really don't need the checking account. I already have debit cards (Bank of Internet and American Bank) that refund ATM fees of foreign banks, and the Bank of Internet account pays much higher interest. And the Schwab commission schedule is much more expensive than that of my current TD Ameritrade account, as my trades are usually much larger than 1,000 shares. So I plan to get the credit card and accumulate points for awhile before opening a Schwab brokerage account to cash them in.
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Old Dec 9, 08, 9:19 pm
  #20  
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(Duplicate. Sigh. Never click on a second button before the first one connects, I guess.)
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Old Dec 9, 08, 9:51 pm
  #21  
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I closed my Schwab account years ago when they charged me for minimum account balance fees. I don't think it was called SchwabOne back then.

But this card perked my interest because I don't see the point in paying $135 a year for my DL Platinum Amex when the Always Double Miles and the double and triple miles promos are gone.

So I called to find out and this card is serviced by FIA, which says the Signature card offers the usual benefits like CDW coverage and buyers protection plans.

I went ahead and applied and closed out my other Visa with FIA, which I wasn't using much. They gave me the same credit limit.

I've not opened the brokerage account. I kept getting cut off with them. But I will call and link them, so that I don't have to have minimal balances with them.

I wasn't planning to do any trades but I didn't know about their one trade a year requirement.

Hmm, I have eTrade, Ameritrade and Fidelity accounts already. Really don't see a need to trade with Schwab although I may use some of their other services like perhaps bonds or CDs.
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Old Dec 9, 08, 10:47 pm
  #22  
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Originally Posted by pgary View Post
Today I visited my Schwab office. I asked[LIST][*]Most brokers object to a brokerage account being used solely as a bank account. But the Schwab bank account and credit card offers seem to indicate otherwise. Will Schwab object if I use the credit card but never do a transaction in the brokerage account. Answer: Schwab won't mind, but the S.E.C. requires at least one trade a year to keep the account open. For infrequent traders the commission for a trade is $12.95 for the first 1,000 shares, plus $0.015 for each additional share.
I used to work for the SEC - I'm not aware of that rule. In fact I have a SmithBarney account that hasn't done a transaction in years. Of course, I don't know all the rules, and they change periodically...

Originally Posted by pgary View Post
[*]Is the 2% rebate taxable? The rep typed on his computer for awhile and then said yes, that is what he is being told. He did not say who told him this, let alone the qualifications of that person to know. I asked to speak to someone who would know for sure.
I doubt that is true. Have you ever received a 1099 form for rebates from your CitiDividend card? In theory I suppose the amount is taxable if you report it. It could also be taxable if Schwab reports it - but then presumably you would switch to one of the many cards that don't.
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Old Dec 10, 08, 5:51 am
  #23  
 
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My understanding is that this 2% (like on other cards) is a rebate of previous expenditures and therefore is money back, not new money in. I believe if Schwab sends a 1099, you could attach a statement to your return explaining this treatment and not include the income.
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Old Dec 10, 08, 7:13 am
  #24  
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Originally Posted by Boraxo View Post
I used to work for the SEC - I'm not aware of that rule. In fact I have a SmithBarney account that hasn't done a transaction in years. Of course, I don't know all the rules, and they change periodically...
I haven't heard of the rule either, and I've had idle brokerage accounts, too.
It sounds like a made-up rule. One of Schwab's advertising points is no inactivity fees, etc.
Anyway, if you really need trading activity, you could buy and sell a no-load, no transaction fee money market mutual fund.
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Old Dec 10, 08, 9:39 am
  #25  
 
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Originally Posted by Boraxo View Post
I doubt that is true. Have you ever received a 1099 form for rebates from your CitiDividend card? In theory I suppose the amount is taxable if you report it. It could also be taxable if Schwab reports it - but then presumably you would switch to one of the many cards that don't.
Under what legal theory would a partial rebate of money you took from your own pocket to pay for goods or services ever be taxable? I can't imagine one, though admittedly I am neither a tax attorney or a CPA.
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Old Dec 10, 08, 9:46 am
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Originally Posted by pgary View Post
...And the Schwab commission schedule is much more expensive than that of my current TD Ameritrade account, as my trades are usually much larger than 1,000 shares...
Lose any money doing business with TD Ameritrade and The Reserve, when the latter became only the second to "break the buck" on its money market fund?
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Old Dec 10, 08, 1:57 pm
  #27  
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Originally Posted by itsme View Post
Lose any money doing business with TD Ameritrade and The Reserve, when the latter became only the second to "break the buck" on its money market fund?
  • No, I didn't. I always immediately and electronically (via ACH) move any cash in my account to a better paying bank money market account.
  • Ameritrade switched me from The Reserve accounts to their own money market accounts months before the former broke the buck.
  • I understand that Ameritrade will make up any loss do to the break, though probably not due to lost interest on locked up money. But I haven't been following this too closely.
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Old Dec 10, 08, 2:00 pm
  #28  
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Originally Posted by Boraxo View Post
I used to work for the SEC - I'm not aware of that rule. In fact I have a SmithBarney account that hasn't done a transaction in years. Of course, I don't know all the rules, and they change periodically...
Could be a rule that a broker can use at its option. Or could be that the rep was mistaken, though he was reading something from his computer after he typed in an inquiry.
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Old Dec 10, 08, 2:44 pm
  #29  
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Originally Posted by itsme View Post
Under what legal theory would a partial rebate of money you took from your own pocket to pay for goods or services ever be taxable? I can't imagine one, though admittedly I am neither a tax attorney or a CPA.
Under the same theory that FF miles should be taxable. Also, the "rebate" you receive is not a rebate of amount you actually paid to the merchant, but could be construed as income from the card issuer, similar to interest paid on your bank account. However, the IRS hasn't set up a mechanism to value or report miles, nor does it have one to track cash back from credit cards.
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Old Dec 10, 08, 2:52 pm
  #30  
 
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On the taxability of rebates, the answer is almost certainly not taxable. Here is the best discussion I could find on the web.

Has anybody seen anything about this "at least one trade a year" rule in print? I've been through my SchwabOne documentation and don't see it anywhere. In fact, on this page it even says: "There are no minimum balance requirements, minimum balance charges, or minimum trade requirements in order to open or maintain the Schwab One brokerage account when you also open a linked High Yield Investor Checking account." (emphasis mine)

I find it hard to believe there is an SEC rule dictating a minimum number of trades in an account that somehow goes away simply by opening a bank account to go with the brokerage account. But if there is such a rule without the checking account, you could always open a High Yield Investor Checking account (which has no minimum balance requirements or fees of its own) and just park a penny there to avoid the minimum trade requirements.

My guess, though, is that pgary simply drew a bad spin in his first run at Schwab CSR roulette.
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