Credit Cards Can Help You Save for College
Some parents are using credit cards to help save for their kids' education. If you haven't explored this approach to planning for college, here are some tips.
Register at Shopping Web Sites
College planning sites that help you earn money toward education expenses require that you sign up and register your credit cards, debit cards, or store loyalty cards. Each time use your debit or credit card at registered stores, you earn cash back in the form of rebates that are credited to your account. You can also earn money just by purchasing groceries and other items. For example, Upromise and BabyMint are two sites that can help you save money for college.
Credit Card Purchases and 529 Plans
When you earn rebates at these sites, the money may be transferred to a 529 college savings plan, be used to pay off student loans, or be mailed to you in the form of a check that can be used for any purpose. Upromise has a limited list of 529 plans that can link to your account, while BabyMint allows rebates to be deposited into most 529 plans and Coverdell Education Savings Accounts.
Credit Card Use May Boost Savings
The more you shop, the more you may earn with these savings plans. You can also ask friends and relatives to link their store loyalty cards and credit cards to boost your savings. You also can shop at various retailers through the Upromise and BabyMint Web sites.
These sites offer discounts, coupons, and other special offers when shopping for everything from clothing to furniture to flowers. Upromise even offers a credit card through its site that allows you to earn larger rebate money. Before signing up, it's important to read through the credit card terms to become familiar with interest rates, fees, and other conditions.
Avoid Credit Card Debt
With these plans, frequent credit card use can help you save more over time--but it's not a good idea to make credit card purchases just to accumulate rebates through a college savings site. Overspending just to add to your savings account may lead to too much credit card debt. These shopping Web sites may be helpful for people who pay their card off at the end of each month.
Keep in mind that savings from a shopping Web site should only be used to supplement your college savings plan. Figure out how much you'd like to contribute to your child's education, and set up a regular savings plan to reach that goal.
Published 04/11/10 (Modified 11/20/13)