As back-to-school season approaches, your kids may have outgrown their clothes — but they don’t have to outgrow your budget.
Families with children in elementary through high school plan to spend an average of $874.68 on clothing, shoes, school supplies and electronics, according to data from the National Retail Federation. For college students and their families, the expected amount on items for the coming year is an average of $1,364.75.
Here’s how credit cards can cut some of those costs.
1. Rewards
Reward rates vary by type of card, but a decent return for cash-back credit cards might range from 2% back per dollar spent to 5% back on rotating bonus categories. Those rewards can be redeemed for cash or a statement credit to offset school purchases, for example, or applied to future travel.
A credit card that earns cash back generally requires good credit (typically, FICO scores of 690 or higher). A rewards credit card is ideal only if you pay your balance off in full every month to avoid interest charges. Otherwise, the steep interest rates on these cards will cancel out the value of rewards.
You can leverage these kinds of credit cards with purchases already allocated in your budget like gas, certain utilities or groceries, said Barbara Quan, accredited financial counselor and manager of financial education at Golden 1 Credit Union, in an email.
2. Sign-up bonuses
A credit card sign-up bonus can be worth hundreds of dollars if you meet the minimum spending requirement with planned expenses. If you’re seeking a new credit card, it’s one way to potentially defray the costs of back-to-school spending or lessen the costs of other expenses.
“Many cards offer hundreds of dollars in cash back or rewards points after meeting a minimum spending requirement within the first few months,” Quan said. “By strategically timing your back-to-school shopping to coincide with this period, you can earn the bonus while purchasing necessary items like clothes, supplies and electronics.”
Quan suggested doing research to select a card that aligns with your spending patterns and overall financial goals. A budget that outlines projected expenses during the bonus period can also help you track your progress and prevent overspending, she added.
3. Interest-free windows for purchases
Certain gadgets and supplies carry hefty price tags. A rewards credit card with an introductory 0% annual percentage rate can offer breathing room for large purchases. You still have to pay monthly, but you won’t be charged interest during the promotional period.
A word of caution, though: A store credit card may also offer an interest-free promotion that might sound like a true 0% introductory APR, but is actually a deferred interest offer. Typically advertised as “special financing” or “no interest if paid in full,” a deferred interest offer means that interest is postponed but continues accruing in the background, to be applied at a later date if you don’t finish paying off the balance by the deadline.
A deferred interest offer can still be a useful way to finance a purchase, but you’ll need to make absolutely sure you can pay it off on time to avoid owing interest charges retroactive to the time of the original purchase. The ongoing interest rates on these store credit cards can run high, so these charges could be a pricey surprise that derails your finances if you’re not prepared to cover them.
4. Online shopping portals
Multiply your credit card rewards by shopping through the card’s bonus mall or linked offers. For example, a credit card issuer might offer a discount or additional rewards if you use that card to shop with select merchants.
Before you hit the stores in person or online, browse your credit card offers by logging into your account. If you find some money-saving opportunities, map out a plan that maximizes the value of your purchases.
5. Credits
A few credit cards may offer credits for streaming services, meal plan subscriptions, grocery or restaurant delivery services, or other useful options that could save money or simplify the transition back to school. As you adjust to a new schedule, such a credit could potentially save you money on a music subscription for the car ride to school, or a meal prep service that gives you some time back.
Look up your credit card online or log into your account to see whether it provides any helpful credits.
