January 20,2009
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CC ‘Reward Points' Toward Retirement, Pt.1
– What's the low-down?Major credit card companies are getting creative with new innovations in their ‘Rewards Points' packages. The rumors are finally materializing. More practical rewards packages are being offered by big credit card lenders like Amex, B of A and some smaller names like NestEggz, as well as some big names in retirement investing like Chas. Schwab. Each are different and original but, they all offer attractive retirement incentives. The ‘Air Miles' and luxury spending discounts are giving way to more practical applications and ‘baby-boomers' nearing retirement who are disappointed with the conventional retirement savings methods are diverting 401K contributions to ventures that feed their credit cards rewards programs.
One of the premier packages right now is offered by an associative venture between American Express and Fidelity. The card holders can now have their credit card rewards points diverted directly into their retirement accounts. Other good news is that they no longer have to live extravagant to accumulate these points, either. Instead of having to fly all around the world and buy expensive traveler's gifts along the way, they only need to have medical needs attended (much more practical). Purchases of prescription drugs and other health-related items carrying the medical ‘MCC' (merchant category code) designations on their purchases will be eligible. Some typical areas of these other categories would be things like vitamins, medical co-payments, dentist's charges, physician's fees and office visits and even hospital treatments. The credit card lenders already have the ability categorize purchases by use of four-digit codes that denote different types of businesses and the kinds of service or merchandise each merchant provides or sells.
As far as the retirement portion goes, the different plans each have their own way of doing things. Some of the typical amenities offered are transferal to HSAs (Health Savings Accounts), SEP or Roth –IRAs in their traditional forms. Of course, HSAs are tax exempt already but, some of the other forms being employed are still under IRS study to determine if they will receive full tax-exempt status.