- Stash's promise of earning fractional shares instead of points and miles piqued my interest.
- A low rewards rate, monthly fee, and fewer protections mean it can't beat traditional rewards cards.
- Many no-annual-fee cash-back cards have higher earning rates and better benefits.
- Read Insider's guide to the best rewards credit cards.
At the end of last year, I made myself a promise that 2021 would be a year of re-evaluating my definition of "rewarding" for credit card spending. While my Chase Ultimate Rewards points had played a helpful role in the decision to quit my day job, travel wasn't going to be a major focus for me (or anyone), and I wanted to see if embracing an alternative approach to racking up miles and points could make a difference.
This spring, I decided to give Stash a test drive. It's an investing app, and it aims to differentiate itself from Robinhood with a focus on long-term investment strategies rather than day trading and meme stocks.
Read more: Stash review: Investment app that's good for beginners who need help finding money to invest
I opted for the entry account level – $1 per month – which comes with a prepaid rewards debit card. Use it for your transactions, and you'll automatically be issued an investment reward at the company if it's public. So, for example, if you buy a new laptop charger at the Apple Store, your rewards are a small piece of a share in Apple.
If you buy at a small business or non-public company, you can choose from a range of different investment options for your rewards points. The thinking is simple: Instead of earning points you want to spend next month, earn a piece of equity that will help you grow your savings.
Every time I open the Stash app, the top of the screen greets me with a "Get $500" message — an invitation to refer friends and get extra cash. Here's the thing, though: I wouldn't refer it to anyone.
It has a punishingly low rewards rate
Take a look at the best rewards credit cards for your wallet, and you'll find that 1% cash back is the bare minimum. Depending on what you're buying, you can score significantly higher payouts like 3% back at restaurants and drugstores from the
Read more: The best cash-back credit cards in 2021
Over two weeks, I spent $89.85 and earned $0.11 of stock rewards. So, while I would have scored 89 cents back (1%) with the most basic kind of rewards program, my stash to put in my Stash investments was nearly 90% lower at just 11 cents. Over a full year, that measly payout — 0.125% back — would put a serious dent in my rewards earning power.
Limited protections = limited reasons to ever actually use it
A Stash advocate might offer a guiding principle to rebuke my initial scoffing at the rewards rate: The more you invest now, the more you could make in the long run. That is indeed correct. So if I shifted all my spending to Stash now, maybe those rewards would earn dividends, accelerate in a healthy stock market, and jumpstart my path toward retiring in a beachfront property.
Read more: 4 reasons why you should use a credit card instead of a debit card
However, the big drawback to most debit cards — not just Stash — is that there are fewer safeguards in place, which makes using it a not-so-wise decision. I went to Denver last month, and I stuck with my
Outside of travel, I wouldn't have used the Stash card for big-ticket items, either. The
The fee still adds up
Plenty of credit cardholders started to question whether high annual fees were worth the cost, particularly as they stayed at home throughout the pandemic. Stash's fee seems almost nominal at just $1 per month, but the reality is that $9 per year still puts a drag on your bottom line. Remember, too, that my 11-cent reward payout means the card has actually cost me 89 cents. I would need to spend quite a bit more to even hit a break-even point.
Instead of paying a fee for this card, I would highly recommend browsing the best credit cards that don't charge an annual fee and consider putting the cash back you accrue into convenient low-cost or free investing options. There is nothing standing in your way of using the cash back you earn as a chunk for investing. That's the beauty of cash back: You can do whatever you want with it.
Read more: The best credit cards to turn rewards from everyday spending into investments
While I didn't love using Stash's card, I did appreciate the closer scrutiny that comes with a debit card. Since I had to move money into the account, it forced me to take a closer look at every transaction. That's served as a good reminder for my credit card spending.
To make sure I'm maximizing my rewards, I'm regularly reviewing offers within Chase's Ultimate Rewards portal, and I'm immediately paying off my purchases. So, for now, my definition of rewarding remains the same. Traditional points and miles are tough to beat.
