Why no Vanguard 2% cash back Visa card?

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Inframan4712
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Re: Why no Vanguard 2% cash back Visa card?

Post by Inframan4712 »

anon_investor wrote: Tue Apr 12, 2022 11:06 pm
egri wrote: Tue Apr 12, 2022 10:58 pm Curious to hear what people's thoughts are now that Vanguard is branching out into higher fee products, they advertise, and the industry has caught up to them on low-fee funds. I personally would be interested, depending on what the fee is, and rewards structure looks like.
2% cash back is par for the course now, so companies offer it now. With Bank of America Platinum Honors tier Preferred Rewards status with 2 no annual fee cards you can get 2.62% cash back on all purchases, or even 3.5% or 5.25% cash back for some categories.
This is the right answer. If one wants a credit card to funnel rewards to a brokerage, the BOA Platinum Honors combined with Merrill Edge is the way to go.
hachiko
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Re: Why no Vanguard 2% cash back Visa card?

Post by hachiko »

I don't understand the desire to have a credit card with the same firm you have a brokerage account with.

First, for almost any credit card, you're better off not having the card with an issuer that has unfettered access to your cash, due to the right of setoff language in most card agreements. For most people, this will never matter, but why risk it?

Second, if the whole idea behind the boglehead strategy is to set it and forget it, why do you need to login to your account frequently? Having your credit card outside of vanguard isn't going to double the amount of time you spend logging into online accounts.

Third, since the card would be issued and serviced by a third party it's not as if you can be talking to customer service about your Roth IRA then say "also, I have a question about my credit card" and get an answer from them.
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Charles Joseph
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Re: Why no Vanguard 2% cash back Visa card?

Post by Charles Joseph »

stan1 wrote: Wed Aug 28, 2013 1:04 pm I'd rather Vanguard have low expense ratios than a 2% cash back credit card.
Fidelity index fund expense ratios are lower than Vanguard's. I'll say nearly all of them anyway, without looking.

I love the Fidelity 2% cash back credit card.

I also love Vanguard and have more than half my savings there!
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
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Charles Joseph
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Re: Why no Vanguard 2% cash back Visa card?

Post by Charles Joseph »

nisiprius wrote: Wed Aug 28, 2013 3:24 pm I recently got an email from someone at Vanguard that contained the slogan

"Vanguard's core purpose: To take a stand for all investors, treat them fairly, and give them the best chance for investment success."

Fidelity says "Fidelity Investments is among the most diversified financial services companies in the world, offering a full range of product solutions for individual investors, employers, institutions and intermediaries. Our fundamental mission is to help customers and clients achieve their financial objectives." I don't know how much to make of mission statements and corporate gobbledegook but that sounds a little broader than Vanguard's.
Great post nisiprius.

Vanguard: "To take a stand for all investors..."

Fidelity: "to help customers and clients achieve their financial objectives..."

IMO, Vanguard's mission is crystal clear. Fidelity? More murky. There are lots of Fidelity customers and clients who are not investors. I use both, and for specific reasons, but at Fidelity, there are sharks in the water if you don't know what you're doing. If I were forced to use one and trust one, it would hands down be Vanguard.

My wife and son both have written instructions to call Vanguard PAS when they pull the sheet over my face and let Vanguard guide them. My portfolio is not too complicated now but I don't use PAS at the moment. I might as the odds of cognitive decline increase over time.
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
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jeffyscott
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Re: Why no Vanguard 2% cash back Visa card?

Post by jeffyscott »

hachiko wrote: Fri Jun 02, 2023 5:16 pm I don't understand the desire to have a credit card with the same firm you have a brokerage account with.

First, for almost any credit card, you're better off not having the card with an issuer that has unfettered access to your cash, due to the right of setoff language in most card agreements. For most people, this will never matter, but why risk it?
While I don't really care about who's credit card I use, mostly just use whatever gives the best rebate for a given transaction. Isn't your point about "unfettered access to your cash" refuted by your own comment that: "the card would be issued and serviced by a third party"?

For example the Fidelity credit card is issued and serviced by Elan Financial Services, not Fidelity. So whatever this "right of setoff" is, I would assume it does not provide Elan any access to money held in a Fidelity account?

The only possible exception to this that I can think of would be B of A cards, since Merrill is actually owned by B of A.
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Charles Joseph
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Re: Why no Vanguard 2% cash back Visa card?

Post by Charles Joseph »

Charles Joseph wrote: Sun Jun 04, 2023 8:33 am
stan1 wrote: Wed Aug 28, 2013 1:04 pm I'd rather Vanguard have low expense ratios than a 2% cash back credit card.
Fidelity index fund expense ratios are lower than Vanguard's. I'll say nearly all of them anyway, without looking.

I love the Fidelity 2% cash back credit card.

I also love Vanguard and have more than half my savings there!
I'm going to reply to myself and add that Fidelity's lower index fund expense ratios will make no appreciable difference in anyone's portfolio. They're loss leaders and marketing tools, IMO. They're good funds, but they are what they are.
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heartwood
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Re: Why no Vanguard 2% cash back Visa card?

Post by heartwood »

I'll make a few observations after reading/skimming all of this 10 year old thread.

In no particular order:
1. Despite the title the thread is mostly about Fidelity. Much of the thread is dated or outdated.
2. Did Vanguard ever have a credit card? I've been a customer for 40 or so years and I don't recall one. Even when they did consumer banking, I don't recall credit cards being part of their vision.
3. Vanguard now describes itself as an investment management company. Vanguard made a decision a few years ago to get out of consumer banking by sunsetting their Advantage Accounts. Now they don't even really offer checking accounts, but do let you write drafts against types of accounts. Unless there's a major change in management I'd be surprised to see them offer a credit card or re-enter consumer services. Most EFT transfers in or out have to originate at Vanguard. There's no longer a billpay feature. I'd vote for billpay before a credit card.
4. A lot has changed in consumer banking in 10 years, especially in the last couple of years. An example is how many smaller merchants, but some larger ones as well, now charge a fee to use a credit card. My independent pharmacy, many restaurants, many of my household vendors (HVAC, plumber, etc.) charge 3% or more to use a CC, Verizon gives a $10 discount for a direct debit from your checking; nothing if you use a CC.

Almost all of our investments are still at Vanguard. Almost all of our banking was at Vanguard until they closed the Advantage accounts. Now our consumer banking (credit cards, checking, billpay, etc) is with Fidelity and BOA (for local convenience). They do consumer banking well enough for us.

Maybe it's time to retire this thread?
FellsGuy
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Re: Why no Vanguard 2% cash back Visa card?

Post by FellsGuy »

For a technology leader like Vanguard I'm amazed they are not in the credit card business...
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hachiko
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Re: Why no Vanguard 2% cash back Visa card?

Post by hachiko »

jeffyscott wrote: Sun Jun 04, 2023 9:34 am
hachiko wrote: Fri Jun 02, 2023 5:16 pm I don't understand the desire to have a credit card with the same firm you have a brokerage account with.

First, for almost any credit card, you're better off not having the card with an issuer that has unfettered access to your cash, due to the right of setoff language in most card agreements. For most people, this will never matter, but why risk it?
While I don't really care about who's credit card I use, mostly just use whatever gives the best rebate for a given transaction. Isn't your point about "unfettered access to your cash" refuted by your own comment that: "the card would be issued and serviced by a third party"?

For example the Fidelity credit card is issued and serviced by Elan Financial Services, not Fidelity. So whatever this "right of setoff" is, I would assume it does not provide Elan any access to money held in a Fidelity account?

The only possible exception to this that I can think of would be B of A cards, since Merrill is actually owned by B of A.
Excellent point, I stand corrected, you're probably right. I checked my Fidelity card agreement and I didn't see any right of setoff language at all. (Obvious caveats like - I may have missed it, other people's agreements may be different, contact your own lawyer for legal advice, etc.)
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afan
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Re: Why no Vanguard 2% cash back Visa card?

Post by afan »

There must be more to it. From the outside, it looks like Fidelity and Schwab make deals with credit card issuers and link them to their accounts. Schwab gives you flat annual payments on AMEX cards, Fido gives you cash back. Seems simple but maybe it is more complicated that it seems.

Obviously, Vanguard knows what the competitors are doing.

As with many others, all our cards have rewards, usually cash back.
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MtnTravel
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Re: Why no Vanguard 2% cash back Visa card?

Post by MtnTravel »

I can't imagine a Vanguard credit card. Card lost or stolen? You can only call M-F from 8-5 and expect to wait on hold for an hour. And then you'll need a medallion signature on a paper form that you have to fax in. 8-)

As someone above pointed out, the Fidelity card isn't a Fidelity card, it's an Elan Financial card. So if you have a problem with your Fidelity card, you aren't dealing with Fidelity's excellent customer service people, you are dealing with Elan, who provides the "back end" for a ton of banks' in-house credit cards, and seems to have pretty mixed reviews on CS. That's something to consider.

It would be great to optimize, but I've been a loyal amex customer for going on two decades. To me it's worth not getting the absolute best returns (maybe 1.5% instead of 2%) in exchange for stellar customer service and a company that actually seems to care about its customers.
Nver2Late
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Re: Why no Vanguard 2% cash back Visa card?

Post by Nver2Late »

I would guess that Vanguards credit card would start with a $25 annual fee (waived for assets over $5MM).
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Rex66
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Re: Why no Vanguard 2% cash back Visa card?

Post by Rex66 »

Well usaa cut theirs back. So being mutual isn’t a guarantee that it’s easier to make it work.
manlymatt83
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Re: Why no Vanguard 2% cash back Visa card?

Post by manlymatt83 »

heartwood wrote: Sun Jun 04, 2023 12:14 pm I'll make a few observations after reading/skimming all of this 10 year old thread.

In no particular order:
1. Despite the title the thread is mostly about Fidelity. Much of the thread is dated or outdated.
2. Did Vanguard ever have a credit card? I've been a customer for 40 or so years and I don't recall one. Even when they did consumer banking, I don't recall credit cards being part of their vision.
3. Vanguard now describes itself as an investment management company. Vanguard made a decision a few years ago to get out of consumer banking by sunsetting their Advantage Accounts. Now they don't even really offer checking accounts, but do let you write drafts against types of accounts. Unless there's a major change in management I'd be surprised to see them offer a credit card or re-enter consumer services. Most EFT transfers in or out have to originate at Vanguard. There's no longer a billpay feature. I'd vote for billpay before a credit card.
4. A lot has changed in consumer banking in 10 years, especially in the last couple of years. An example is how many smaller merchants, but some larger ones as well, now charge a fee to use a credit card. My independent pharmacy, many restaurants, many of my household vendors (HVAC, plumber, etc.) charge 3% or more to use a CC, Verizon gives a $10 discount for a direct debit from your checking; nothing if you use a CC.

Almost all of our investments are still at Vanguard. Almost all of our banking was at Vanguard until they closed the Advantage accounts. Now our consumer banking (credit cards, checking, billpay, etc) is with Fidelity and BOA (for local convenience). They do consumer banking well enough for us.

Maybe it's time to retire this thread?
Vanguard is bringing banking back with the cash+ account.
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heartwood
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Re: Why no Vanguard 2% cash back Visa card?

Post by heartwood »

this ^^^^^

I'm not in the pilot and the online details are scant. I see reference to a "savings" account?

checking?
bill pay?
credit card?
push/pull originating from an outside account?

any details would be appreciated.
JSPECO9
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Re: Why no Vanguard 2% cash back Visa card?

Post by JSPECO9 »

stan1 wrote: Wed Aug 28, 2013 1:04 pm I'd rather Vanguard have low expense ratios than a 2% cash back credit card.
Fidelity index funds have lower ERs than Vanguard's + 2% cash back card.

The balls in your court.
leehamster
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Re: Why no Vanguard 2% cash back Visa card?

Post by leehamster »

JSPECO9 wrote: Thu Jun 08, 2023 12:29 pm
stan1 wrote: Wed Aug 28, 2013 1:04 pm I'd rather Vanguard have low expense ratios than a 2% cash back credit card.
Fidelity index funds have lower ERs than Vanguard's + 2% cash back card.

The balls in your court.
Ok, here's return of serve:

All brokerage accounts have to have a settlement fund.

On Vanguard, mine is VMFXX. Current SEC 7-day yield of 5.04%, and expense ratio of 0.11%
On Fidelity, mine is SPAXX. Current SEC 7-day yield of 4.75%, and expense ration of 0.42%.

Vanguard is simple, but always on my side.
Fidelity is complex, and I have to watch when they are offering me a deal or when they are making back their money.
JSPECO9
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Re: Why no Vanguard 2% cash back Visa card?

Post by JSPECO9 »

leehamster wrote: Thu Jun 08, 2023 12:41 pm
JSPECO9 wrote: Thu Jun 08, 2023 12:29 pm
stan1 wrote: Wed Aug 28, 2013 1:04 pm I'd rather Vanguard have low expense ratios than a 2% cash back credit card.
Fidelity index funds have lower ERs than Vanguard's + 2% cash back card.

The balls in your court.
Ok, here's return of serve:

All brokerage accounts have to have a settlement fund.

On Vanguard, mine is VMFXX. Current SEC 7-day yield of 5.04%, and expense ratio of 0.11%
On Fidelity, mine is SPAXX. Current SEC 7-day yield of 4.75%, and expense ration of 0.42%.

Vanguard is simple, but always on my side.
Fidelity is complex, and I have to watch when they are offering me a deal or when they are making back their money.
Touché
Cubs Fan
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Re: Why no Vanguard 2% cash back Visa card?

Post by Cubs Fan »

I have been a Platinum Preferred Honors customer at BofA for over 8 years. Dave Ramsay stated on a YouTube video that bank bonuses are insignificant; however, when I combine the Rewards Bonus along with ACATS transfer bonuses at Merrill and BofA the grand total is $11,000. I transferred most of my investments back to Vanguard because I like Vanguard much more than Merrill. I still keep at least $100,000 at Merrill so that I can qualify for Platinum Preferred Honors status at BofA. All banking services have been free for the last 8 years. I keep no more than $5,000 in my required $0.03% checking account at BofA. When the amount exceeds $5,000 I transfer the excess to Vanguard's Federal Money Market Account. When I need more money in checking I transfer the needed money back to B of A checking. I rebalance my Asset Allocation as needed.
Last edited by Cubs Fan on Thu Jun 08, 2023 2:06 pm, edited 1 time in total.
wait until next year!
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munemaker
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Re: Why no Vanguard 2% cash back Visa card?

Post by munemaker »

lhl12 wrote: Wed Aug 28, 2013 11:40 am Since Fidelity is able to offer a 2% cash back Visa card (1.5% on the first $15,000 of spending) with automatic direct monthly deposit into a Fidelity account, why can't/won't Vanguard do the same? Perhaps Vanguard could do even better given their not-for-profit status?
There are a number of 2% cards out there. We have 2% cards from Fidelity, Wells Fargo, FNBO and Citibank. No need to be concerned about why some cards offer certain benefits that others do not. Just vote with your feet, er wallet.

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munemaker
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Re: Why no Vanguard 2% cash back Visa card?

Post by munemaker »

MtnTravel wrote: Wed Jun 07, 2023 8:23 pm I can't imagine a Vanguard credit card. Card lost or stolen? You can only call M-F from 8-5 and expect to wait on hold for an hour. And then you'll need a medallion signature on a paper form that you have to fax in. 8-)
If there is one, it would probably be a Vanguard branded card administered by a credit card company, not by Vanguard itself.

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hkcj
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Re: Why no Vanguard 2% cash back Visa card?

Post by hkcj »

It's perhaps noteworthy that in 2010 Schwab took a $30mm charge to buy out BoA from their 2% credit card deal.

It may be that interchange fees (which are public and paid to the issuing bank) might have increased since 2010. From page 7 you can see that for a supermarket transaction an issuing bank might get as little as 1.4%, while for a taxi ride they might get 2.7%.

Seems to me like Vanguard would definitely need to subsidize rewards, though, since the issuer needs to earn money. (See figure 1 in this paper.)

Anyway, I don't really care who issues my credit card, though I am trying to reduce my award-seeking in favor of (as others have said) spending that energy on self-improvement for my career and other interests.
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munemaker
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Re: Why no Vanguard 2% cash back Visa card?

Post by munemaker »

Cubs Fan wrote: Thu Jun 08, 2023 1:47 pm ...Dave Ramsay stated on a YouTube video that bank bonuses are insignificant...
I am guessing we get around $2,500 to $3,000 per year, TAX FREE in credit card bonuses of various types. It is significant to us. We use it to buy a few toys that we would not normally spend money on. I am retired and enjoy the scheming.

I did do a bunch of bonuses for opening bank accounts a few years ago. It seemed like more of a hassle than the credit cards, plus I had to pay income tax on the bank account bonuses.

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Re: Why no Vanguard 2% cash back Visa card?

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