The 2% Cash Rebate VISA, and What You Can Do With It…

I’ve written frequently about the Fidelity Investment Rewards American Express.

It’s a no annual fee card that earns 2% back on all spending (that you deposit into a Fidelity investment account).

There’s now even a $75 signup bonus after $500 spend within 60 days for the card.

Over the weekend @TheMrPickles tweeted me that he prefers the Fidelity Investment Rewards Visa over the American Express.

The Fidelity Visa is a no annual fee card that offers 2% cash back also — but only after spending $15,000 on the card in a year. Before that it’s just a 1.5% rebate card. That means you are giving up 0.5% on that first $15,000 spend ($75).

The upside of course is that the card has greater acceptance as a Visa than it would as an American Express.

I assume, though, that MrPickles prefers the Visa because he can buy things on Costco’s website with the Visa and then return them in-store where they don’t take Visa.

… purchases made with a MasterCard and Visa credit card could be returned to a Costco store and would be refunded in cash or check. This caused a run on diamond engagement rings bought for tens of thousands of dollars to get frequent flyer miles or 2% cash back rewards….

Soon Costco changed their policy to require that jewelry with a diamond larger than 1 caret in size was to be returned on the credit card that the item was purchased on….

Some miles and points enthusiasts have discovered that there is a workaround (just don’t buy diamonds)…

This is a strategy that I have never been comfortable with and haven’t done.

But it’s worth highlighting that there’s a no-fee 2% rebate Visa, not just an American Express. The tradeoff is better acceptance but lower return on the firrst $15,000 spend.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Your discretion here is respected and appreciated! The exploitation people will go through for miles…

  2. I have to imagine that Costco (and any other big box store) has a software algorithm that keeps tracks of an individual’s purchase/return history, flags suspected abusers, and eventually cuts them off.

  3. For some reason my Costco never pays cash for any item returned. Any online purchase with a visa or MasterCard is returned with Costco gift card.

  4. i don’t do this one because it’s borderline unethical but i actually believe costco is at fault here. their credit card policies are simply idiotic, there is no other way to describe it.

  5. Costco is not at fault. That’s like saying a store that puts products out on the street (like my local Whole Foods does with pumpkins, watermelons, flowers) is at fault if somebody walks by and steals them simply because they make it so easy. No… the thief as at fault.

    If you do this, you are knowingly defrauding Costco of the transaction fee as a way to manufacture spending. As far as I’m concerned, **if they can prove intent** (i.e. if you’re stupid enough to blog about it), it should be prosecuted as fraud–which it is, of course.

  6. To be clear, I never suggested Gary is doing this, or is stupid. I was referring to other bloggers…

  7. And for avoidance of doubt let me repeat what I wrote above, “This is a strategy that I have never been comfortable with and haven’t done.”

  8. Justin, I dont do this strategy either but I think you need to be careful with the word fraud. Its a legal term and I dont believe that doing this constitutes fraud.

  9. Every state will have different laws, of course, but from


    n. the intentional use of deceit, a trick or some dishonest means to deprive another of his/her/its money, property or a legal right. A party who has lost something due to fraud is entitled to file a lawsuit for damages against the party acting fraudulently, and the damages may include punitive damages as a punishment or public example due to the malicious nature of the fraud…”

    Now, I’m not saying your garden variety Visa purchase return constitutes fraud. Costco has made the decision to eat the transaction fee and make the customer happy by allowing in-store refunds… good on them [another reason this is a stupid idea… I love shopping at Costco and appreciate they don’t treat their customers as their enemies as so many other stores do. I don’t want that to change].

    However, when you know how the whole game works [and explain it publicly], you are intentionally using a trick to deprive Costco of money. In other words, you know full well that the transaction fee pays for the rewards, and you know that by buying online and returning in store that you’re basically making Costco pay for your rewards, you are knowingly defrauding them in my view.

    Worse, the blogger in question is actually encouraging others to also do it. I would certainly think that qualifies for punitive damages to make an example per the definition.

  10. @Robert Spark for Business is a good card, but there’s only a $16 value spread after year 1 between that and the fidelity card.

  11. It is quite entertaining seeing how peoples minds will run with any old suggestion. For the record:

    “I have NEVER used the Fidelity Visa card at”


    “I have NEVER used the Fidelity Visa card at”

    I used the Fidelity Visa card only as an example in the article.

    @Justin: Costco has negotiated ZERO merchant discount fees from credit cards on purchases on their website. I have spoken directly to’s fraud security department and they do not see it as a fraudulent act and those purchases are not frowned upon. Costco would rather see the merchandise in the customers hands where they may decide to keep the item. I do not encourage people to make refunds just for the sake for making refunds. I only point out Costco’s published refund policy which is also linked. There are no tricks involved.

    Did you miss the opening line “… I saw with my own eyes something that even I thought was beyond the pale…” In the rest of the article I mentioned “…I did this once to verify that it actually worked, but I know of others who have done this several times….”

    Again: I DID THIS ONCE (as in ONE TIME) in the process of researching the article. The purchase that I made was with a Citibank American Airlines AAdvantage credit card. I mentioned the Fidelity Visa card in the article as just an example. i even mentioned that I got American Airlines miles in the article. Nowhere in the article did I state that I used this method over and over. I am just reporting the facts. I am not encouraging others to do it.

    @Justin: Perhaps you need to look up the legal definition of libel and slander.

    Gary: The reason that I like the Fidelity Visa is because many companies do not accept American Express. It has much easier access/uses. The reward program issues World Points which can be used for merchandise, travel or redeemed for for cash in the form of a check. If you redeem into a Fidelity Brokerage account you get the bonus equivalent of 2% cash back, but it is really just a redemption of earned points. Therefore; it is a rebate and no IRS form 1099 is issued.

  12. I think even mentioning the scam at Costco is disingenuous. “I would never do this but…” is a cop out and encourages others to try these type of activities. I think it’s beneath you Gary to even discuss it.

  13. Agree with @JeffG – Why was it even necessary to add the Costco scam? 2% rebate on everyday spend is way better than miles for many people who don’t have the patience or ability to leap through airline hoops to redeem for premium international travel. $2000 cashback on $100k spend with no blackout dates and you earn EQM and RDM or hotel points if used for travel. Almost as good as Barclays and no annual fee.

  14. @JeffG It’s not even the first time today that he’s written something like that:

    “Whatever link you use, Silver status should be instant. It’s simple, they don’t need to check with Accenture’s travel manager to confirm employment, they just give you the status.”


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