Sending kids off

You can rack up points while teaching your Faculty student financial responsibility
By Dana Dratch  |   Released: August 25, 2017

Just think of the rewards, if that five-figure college bill is currently making you cry.  
Not the benefits of higher education for your child. The credit card rewards.
College is one of these life experiences card-reward experts refer to as “a spending event,” states Jon Hayes, founder and CEO of RewardStock, a website that helps consumers optimize rewards for traveling.
Meaning, if you’re already spending a large amount of money, you’re smart so that it is also possible to score a heap of rewards, miles or things from the deal to handle it.
Considering maximizing rewards by giving your student a card or charging college expenses? Here are 3 moves to make first (plus tips to add your faculty student as a licensed user to your card):
1. Take a look at everything you gain/lose by charging tuitionSalivating in the chance to put that four- or tuition invoice on your rewards card? Not so fast.
“If you’re doing it for the benefits, hopefully you’ve completed the analysis to make sure it’s worthwhile,” says Ira Rheingold, executive director of the National Association of Consumer Advocates (NACA).
Of the 300 biggest U.S. colleges and universities, 85 percent of colleges accept credit cards to pay tuition, based on a 2016 study by CreditCards.com.

MAKING YOUR COLLEGE STUDENT
AN AUTHORIZED USER

Adding your child to your card account will be able to help you help them learn smart credit customs and collect rewards. But have a game plan, advises Ira Rheingold.
You can track how much they spend and what they buy. The rewards are received by you, but are responsible for the bills.
A Couple of points to cover when you have “the talk:”
What’s the card’s purpose? Use it for everything, or just emergencies they can not cover? Spell out exactly what things and scenarios rate as a emergency.
Without asking, how much they can spend? What things are permitted, and which (like alcohol or cash advances) are prohibited.
Who’s paying the bills? And that gets to use the benefits generated by the pupil’s spending? Let them know when bills are due and devise a plan for reviewing them together.
Also, use spending limits and text alerts:
Some issuers, such as American Express, will allow you to set another limitation for an authorized user’s card.
You can set up a limit that matches the budget you agreed on with your own kid.
Alerts will notify you if the card’s been used, where and for how much.  
Talk to your student as well as what they can do to secure the card in a dorm environment.

MAKING YOUR COLLEGE STUDENT AN AUTHORIZED USER

Adding your child to your card account will be able to help you help them learn smart credit customs and collect rewards. However, have a game plan, advises Ira Rheingold.
You can track how much they spend and what they buy. The rewards are received by you, but also are responsible for the bills.
A Couple of points to cover when you have “the talk:”
What’s the card’s purpose?   Use it for everything, or just emergencies they can not cover? Spell out exactly what things and scenarios rate as a emergency.
Without asking, how much they can spend?   What things are permitted, and which (like alcohol or cash advances) are prohibited.
Who’s paying the bills?   And that gets to use the benefits generated by the pupil’s spending? Let them know when bills are due and devise a plan for reviewing them together.
Also, use spending limits and text alerts:
Some issuers, such as American Express, will allow you to set another limit  for an authorized user’s card.
You can set a limit that matches the budget you agreed on with your own kid up.
Alerts will notify you if the card’s been used, where and for how much.  
Talk to your student as well as  what they can do to secure the card in a dorm environment.

Of the colleges that take plastic, a convenience fee — charges. And those convenience fees average 2.75 percent. Rewards factors and Cash back, on the other hand equal 1 to 2 percent. However, know that community colleges don’t charge a fee.
So, you’re planning to charge tuition so as to meet a minimum spend on a juicy bonus, or unless you’re averaging at least 3 percent back, you’re losing money.
Ask upfront: Does a fee charge for paying with a credit card and, if so, how much?
And if you already have the money to pay the invoice in full and there is no fee for the privilege, or if the bonus you will earn will offset the fee, “it is a no-brainer,” states Joe Ridout, consumer services manager for Consumer Action.
2. Match the card and optimize rewardsNot all expenses are the same in regards to rewards. However, you can maximize your opportunities by choosing the card that is right for the job. For instance:
Tuition payments. If you’re fronting the card for rewards, and paying off the bill immediately, decide on a card with a enormous sign-up bonus. One example: Chase Sapphire Preferred* gives 50,000 bonus points if you invest $4,000 in the first few months. And you get 2 points for every dollar spent on traveling and restaurants and 1 point/dollar on everything else. This one gives a 5,000-point bonus if you name a licensed user who buys something with the card inside the first few months. Which means it could be used by that your scholar to get dorm supplies or a pizza run.
Pricey expenses. You need high-dollar incidentals to bill at irregular intervals, such as trips home, textbooks and extracurricular activity expenses and traveling. So, start looking for a card that returns rewards that are rich year-round and does not cost anything to carry. One to consider: The Cash Rewards* card doubles any money rewards you has no annual fee and get in the first year.
Regular bills. Want a card to set up auto-pay to your student’s regular bills? Look for a card that’s accepted everywhere, charges no fee, and gives a nice return even if you’re paying small sums. One example: Bank of America Travel Rewards Visa* has no annual fee and gives 1.5 points for every dollar you spend. You get a 20,000-point bonus if you invest $1,000 within the first 90 days.

Video: 4 ways students can build credit

3. Decide what you would like out of this dealAs a college kid’s parent, your aim is to rack up the rewards. However, you also need to consider what you intend to do with them.  
Do you want young Erasmus to score free airfare for trips home? Are you and your spouse looking forward to an empty-nester vacation? Or do you just need a little extra money to offset those expenses that are collegiate?
The key to making a deal that is smart is to decide exactly what you would like and work backward, says Hayes.
Which card rewards programs offer deals and the best service on which you want to go, if your objective is traveling? If, for instance, you or your college student will be traveling regularly on United, the United Mileage Plus card* offers 2 mph on United Airline purchases, a 40,000-mile sign-up bonus if you invest $2,000 in the first 3 months, and 5,000 miles more if you include an authorized user in exactly the same time period.
If you’re looking for extra money, which cards offer the most either in money or benefits where you shop? The American Express Blue Cash Preferred* card is a good example. It offers 6 percent cash back at no annual fee in the first year, 3 percent at department stores and gas stations, and supermarkets.
That way, you don’t pile the rewards up only to realize that they are not going to get you says Hayes from RewardStock.
In the end, it is important to keep the big picture in mind: Remember that sending that card with your college student “isn’t about getting rewards, it is about teaching financial responsibility,” NACA’s Rheingold states.
* The content on this page is accurate as of the date. Please visit the bank’s website for the most current version of card offers.
See related: 4 reasons why college kids need a credit card, 9 credit lessons for college students

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