Save for college with credit cards, and you can painlessly add to your child’s college fund. You may not be aware that credit cards can help you save for college expenses. There are 2 ways you can build college savings with credit cards: a loyalty program with tuition benefits, and a college savings rewards credit card.
Save for College with a Loyalty Program
Loyalty programs offer some form of reward for buying a retailer’s services or products. A loyalty program with tuition benefits uses the same principal with some changes.
The loyalty program isn’t just for a single retailer, but many participate in the program. You register one or more credit cards with the loyalty program. Then every time you buy from a participating merchant, you earn rewards for tuition expenses, often in the form of a deposit to a 529 plan for your children. A 529 plan is a savings plan with tax advantages created to encourage you to save for future college costs. A 529 plan can be state-specific, so be sure you understand all aspects before opening one.
Two loyalty programs with an emphasis on college saving are SAGE Scholars Tuition Rewards and Upromise. Upromise has a larger network of participating companies. To get the most out of these programs, don’t make purchases just to contribute to a loyalty program. Look for the loyalty program that has participating retailers you already do business with.
Save for College with Credit Cards that Offer College Saving Rewards
Just as credit cards offer rewards for airline miles or cash back, some credit cards offer college savings rewards. Similar to cash back rewards, the credit card company deposits the cash back rewards directly into a 529 plan. A card with college savings rewards may be offered by a company with 529 plans. Here are 2 of the best cards that help you save for college.
- Fidelity Investment Rewards American Express Card: 2% rewards deposited into a 529 plan, no limit on rewards, no annual fee, 13.99% APR.
- Union Bank & Trust Company offer Bright Directions 529 Rewards Visa and the 529 CollegeCounts Rewards Visa: 1.529% rewards automatically invested quarterly, after accumulating $50 in rewards.
Offers are subject to credit approval and may change without notice. Remember, running up credit card debt just to save 1-2% for college isn’t a good strategy.
You should be able to enroll your college savings reward card in a loyalty program tied to a 529 plan, to double your savings. Don’t confuse college savings rewards cards with student rewards cards. Student rewards cards are cards specifically targeted to college students.