Fidelity Investments said on Monday it is dropping long-time credit card partners American Express (AXP) and Bank of America Corp (BAC), ending a 12-year partnership that has generated billions of dollars in fees.
Boston-based Fidelity, which has 24 million customers, said its new partners will be U.S. Bancorp and Visa Inc , effective Monday. The exclusive alliance will provide Visa branded credit-card products to U.S. consumers, including Fidelity customers.
The switch is another setback for American Express, which already is reeling from its lost deal with warehouse club retailer Costco Wholesale Corp. AmEx said earlier this year the loss of the Costco (COST) contract would hurt profit for two years. AmEx shares are off 25% over the past year.
Ram Subramaniam, president of Fidelity’s retail brokerage business, did not give any specific reason for ending the partnership with American Express and Bank of America.
“It’s been a long, good partnership,” he said.
Since 2003, Fidelity has offered 2% cash back credit cards with American Express and Bank of America’s FIA Card Services. During that time Fidelity customers have earned $1.1 billion cash rewards.
The new alliance will feature cards with chip security technology, with access to digital wallets that include Apple Pay, Samsung Pay and Android pay.
The new card program will issue the Fidelity Rewards Visa Signature Card and the Fidelity Investments 529 College Rewards Visa Signature Card, where card members can earn unlimited 2 percent cash back with no annual fees, caps or categories when directing rewards into eligible Fidelity accounts.
U.S. Bank also has agreed to acquire Fidelity’s existing co-brand credit card portfolio with about $1.7 billion in associated balances.