Spend to help boost the economy, or squirrel away money to survive the economic trough.
Which should it be?
For Americans wrestling with such issues, there's now a way to do a little bit of both: using credit cards with cash back on purchases that fold into a brokerage or investment account.
In November, Charles Schwab unveiled the Schwab Bank Invest First Visa Signature card. Users get 2 percent cash back on any purchases, and this automatically flows into a Schwab One brokerage account each month.
And in December, Fidelity Investments rolled out its Retirement Rewards Card, issued by American Express. It also provides a 2 percent rebate on purchases. After a cardholder earns 5,000 points, equal to $2,500 of spending on the card, a $50 current year contribution is made to his or her Fidelity IRA.
Fidelity upped the ante in January on two of its existing cards: It raised rebate percentages on its 529 College Rewards American Express card and its Investment Rewards card to 2 percent, up from 1.5 percent. With these cards, cardholders also redeem points for cash back into their Fidelity account or 529 account.
While many cards offer cash reward programs, the 2 percent reward is double what many others offer on all purchases.
Both the Schwab and the four Fidelity cards also have no annual fee and no limit on attainable rewards. In addition, the Schwab card has no foreign-exchange transaction fees.
Cardholders would need to have, or open, an account with Fidelity to redeem their "Fidelity rewards" – versus other possible rebate benefits for using the Fidelity cards. Users of the Schwab Invest First card would need a Schwab One brokerage account to redeem cash rewards.
"These are very aggressive rebate programs," says Curtis Arnold, founder of CardRatings.com. If these cards' balances are paid in full every month, the rebates can be "a nice shot in the arm, especially for people struggling to set aside money for retirement or other purposes."
But paying off balances every month is crucial. The interest charged on unpaid balances –16.99 percent with the Fidelity Investment Rewards cards and 13.99 percent on the Schwab card would quickly dwarf any gains from a rebate.
But if used prudently, the cards may resonate with consumers in these troubled times, some observers hold.
"Who wouldn't want to … chart a course toward a better financial future, versus just getting frequent flier miles now," especially if you "can't afford [to travel] now?" wonders Jim Lowell, editor of Fidelityinvestor.com.
Ben Woolsey, marketing and consumer research director at CreditCards.com, is impressed by the new cards. He says that he and his wife have been using a bank rebate card that provides 1 percent cash back on purchases, capped at $300 annually. But given their level of spending, Mr. Woolsey figures they could earn some $1,000 of rewards each year with either the Schwab or Fidelity cards.
"This would be a good way to augment what we're already doing with our savings and investment," he says.
While the cards might seem especially apropos these days, Fidelity and Schwab officials say their offerings weren't created in response to the recession or the stock market's plunge. Instead, they say the cards had been in the planning stage for some time.
"We are the No. 1 IRA provider, and the card provides a very high and generous earn rate for our customers," says Josh Krugman, Fidelity's director of cash management products. The card, he adds, is meant "to deepen our relationship with our customers and encourage them to save more."
The Schwab card, says Richard Musci, Charles Schwab Bank's chief marketing officer, evolved from clients' desire for a card with "simplicity, transparency, and value" to its rebate. But the rewards "do resonate when people are worried about jobs," he acknowledges. "Hard cash is king these days. This is another way to generate cash from spending you're doing anyway."
Mr. Musci says that Schwab has some 2.4 million retail households as clients, and "90 percent-plus" of them use a credit card. Thus, "it's not unreasonable that over the next two to three years, we'll have 400,000 to 500,000 holders of this new card."