Fidelity Considering Parting Ways With American Express & Bank of America And Why This Is Bad News For Us

Update: Fidelity ended up going with Visa & Elan. You can read our review of the card here.

Bloomberg is reporting that Fidelity Investments is considering dropping American Express & Bank of America as their co-branded partners on the Fidelity American Express rewards cards (they already have a Visa version which only earns at 1.5% on all transactions).

There are a number of reasons why Fidelity might be considering this change, but I think two are the most likely:

• They weren’t happy with American Express after they announced that they would issue two co-branded cards with Charles Schwab
• They want a bigger cut of the interchange fee

The main reason Fidelity offer this 2% cash back card (which is almost certainly a loss leader for them) is that cardholders keep on average three and half times more in their Fidelity accounts than non-cardholders. Incidentally back in March, 2014 a representative stated that the 2% cash back rate would be staying for at least 18 months, which means that promise is due to expire shortly.

Why This Is Bad News For All Cardholders

• If Fidelity switch card issuers (e.g somebody other than Bank of America) it means it will likely no longer possible to combine inquiries
• If Fidelity switch payment networks (e.g to Visa, Mastercard or Discover), it means:
  • We’ll no longer have access to AmEx offers
  • Likely no more 2% cash back rate (remember AmEx charges a higher interchange fee than other networks)
  • No more loading Serve