Money Fix: Brokerage firm credit cards

Brokerage firms, like other financial companies, look for ways to bind you to them. Offering more products under their brand name means you may use their services more. It's not surprising then, that brokerage firms continue to roll out credit cards.

Brokerage credit cards work like other rewards cards, except the rewards can convert to cash and go into your brokerage account.

Cash-back is the lure. With a typical offer of a cash-back rate as high as 2 percent on purchases, the cards are tempting. "It's a smart form of forced savings that grows your portfolio," says Ken Lin, chief executive of CreditKarma.com, a credit management website.

But read the fine print. Customers must look at annual fees, the rules that state how much you'll earn on different purchases, and the interest rate, cautions Linda Sherry, director of national priorities for Consumer Action. Also be aware that these cards are not ideal for balance transfers. "You may end up paying a balance transfer fee upwards of 4 percent of the total transferred balance, which can add up to a significant cost," Lin says.

Is it right for you? "If you carry a balance and pay interest, then the small rewards are essentially worthless," says Ed Mierzwinski, consumer program director for the advocacy group, U.S. PIRG. In that case, "look for the lowest-interest card, not the one with the best rewards. Otherwise, you lose. If you don't carry a balance, you may find the rewards worthwhile."