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Some cards out there are aimed at helping you save money for goals in life, be it retirement or college savings. These credit cards can be great if used correctly, or hurt you if used improperly. Here’s a quick guide to the top saving credit cards and what to look out for.
Bank of America’s Keep the Change
While this isn’t a credit card, it’s a program linked to your debit card that helps you save money by rounding up purchases to the nearest dollar and depositing the excess in your savings account.
There’s no annual fee for this program and the limit is $250 each year, a part of which is matched by Bank of America, especially for the first three months.
This program is ideal for Bank of America customers that already use a debit card frequently.
American Express One Card’s Savings Accelerator
This program, with an annual fee of $35 that’s waived for the first year, has an APR that ranges from 12.99% to 14.99%. American Express deposits 1% of your purchases with this credit card into an FDIC-insured, high-yield savings account that’s run by an affiliate bank.
There’s no limit to the amount that is deposited. You also receive a bonus $25 when you sign up that’s deposited into your account.
This card is great for people that spend large amounts of money.
This credit card has no annual fee and a reasonable APR. There’s a generous 25 day grace period and the card works like this: Fidelity deposits 2% of your purchases into a Fidelity retirement or brokerage account.
There’s no annual limit to your rewards.
This program is great for current Fidelity customers because the 2% reward is better than most credit cards and there is no tier system.
Fidelity Investments 529 College Rewards Card
This credit card has no annual fee and a moderate APR. The way it works is fairly simple: Fidelity deposits 2% of the purchases you make with the card into a Fidelity-run 529 account. The limit is $1,500 per year and operates in Arizona, New Hampshire, Delaware and Massachusetts.
Here’s the catch: while the rewards are pretty good, they aren’t good enough to move your savings from another account, especially if you’re in a state that has tax breaks for 529 contributions.
This credit card is best for Fidelity customers that are light or moderate spenders.
Citi UPromise Platinum Select Mastercard
This credit card has no annual fee and a low APR (which goes up very high if you default). Citibank deposits between 1-10% of your purchases into a 529 plan that you choose. Gas purchases qualify for a 2% rate while grocery and drug store purchases can be up to 10%.
The credit card needs to be registered at UPromise to earn rebates. There’s a limit of $300 annually for regular purchases and no limit on select drug store and grocery purchases. The catch is the short grace period and very high default rate.
To use this card effectively, pay your bills immediately and make sure you never miss a payment or say good-bye to your savings.
Stockback Visa Credit Card from MBNA
This credit card hasa a low APR of 9.9% with no annual fee and a generous grace period of 25 days. It has a tiered rebate system that’s based on monthly–not yearly–spending. You earn 0.5% for the first $1,500 you spend, 1% for the next $1,499, 1.5% for the next $2,000 and a full 2.0% for anything over $5,000 per month.
All rewards are deposited into an investment account that you choose. There’s a monthly limit on rewards of $120 per month.
This credit card rewards system is rather difficult because it uses a monthly spending system instead of yearly, and requires large amounts of spending to reach even the second level of rewards. If you spend small amounts of money, choose a different rewards card.
NestEggz Platinum Plus Mastercard from MBNA
This credit card, from the same company that brings you the Stockback card, is for retirement savings. NestEggz gives you 1% of the amount you spend on rewards that’s deposited into a retirement account you choose.
Citi Home Rebate Platinum Select Mastercard
Last is the Citi Home Rebate credit card, which applies 1% of your purchases toward your mortgage. There’s no limit on your rewards, although the grace period is only 20 days and the default rate is high.
This card–while not earning the highest rewards–can give you a sense of accomplishment as you make extra payments on your home loan.
Remember, rewards cards and cash-saving cards are only helpful if you use them correctly. Never carry a balance, make a late payment or use your card irresponsibly or you’ll find yourself throwing all of your “savings” away on interest, fees and more.