Several credit cards offer cash back to help families save for college. These credit cards automatically contribute the cash rewards to linked 529 college savings plans. Each 529 credit card has a different percentage cash back and a different set of linked 529 plans.
The 529 credit cards are listed in this table. The 529 credit cards include ones offered by Upromise Mastercard, Fidelity Rewards Visa and the 529 Rewards Visa in Alabama (CollegeCounts 529 Rewards Visa) and Illinois (BrightStart 529 Rewards Visa).
|
Upromise |
Fidelity Rewards |
529 Rewards |
Cash back |
1.44% (1.25% plus 15% bonus for linking a 529 plan) |
2% |
1.529% |
Bonus rewards |
Rebates of up to 5% for dining from participating restaurants made with the card. Rebates of up to 40% (1% to 5% is typical) for purchases made through a shopping portal. Round-up program. |
None |
None |
Linked state 529 Plans |
All |
AZ, DE, MA, NH |
AL, IL |
Annual fee |
None |
None |
$15.00 |
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These cards are convenient, in that they make it easy to save for college. Even if you don’t change your spending patterns, you will earn cash back to help you pay for your children’s college education.
When using a rewards credit card, it is best if you pay the balance on time and in full each month, to avoid having interest charged on your purchases. Otherwise, the interest will probably exceed the rebates you earn.
These 529 credit cards are each linked to specific 529 plans. However, if you want to contribute the rewards to a different 529 plan, you can ask for a check and manually contribute the money to your children’s 529 plans.
No-fee credit cards that provide cash back are better than other types of reward cards because they provide cash that can help you pay for ordinary expenses, instead of buying stuff you don’t really need. Many of the cash rewards cards provide a better financial benefit than travel cards that provide frequent flyer miles or hotel frequent stay points or gift cards.
Note that since the 529 Rewards Visa charges a $15 annual fee, you will have to spend about $1,000 before the reward exceeds the cost of the card. You may be better off focusing on a no-fee college savings rewards card, such as the Upromise or Fidelity cards.
Several other no-annual-fee rewards cards provide cash back, but don’t link the rewards to a 529 plan account. These include Citi Double Cash Card (2%), American Express Cash Magnet Card (1.5%), Capitol One Quicksilver Card (1.5%), Chase Freedom Unlimited (1.5%), HSBC Cash Rewards Mastercard (1.5%), USAA Preferred Cash Rewards Visa Signature Card (1.5%), Wells Fargo Cash Wise Visa (1.5%) and Discover Card (1%).
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