Update: Wait till November 7th to fund college savings with a credit card

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UPDATE: Please find updated information here: Pay student loans or 529 plans with a credit card!


That didn’t last long.  Yesterday I posted “How to fund college savings with a credit card.”  In that post I detailed how to use a rewards credit card to fund a child’s college savings plan (and possibly student loans as well) online with a very low fee.  One option was to buy $500 gift cards online each with a 1.19% fee.  Unfortunately, Gift of College has now capped online gift card purchases at $100 each.  With a $5.95 fee for each gift card, that amounts to an outrageous 6% fee!  Another option was to fund $1000 directly with a credit card for $15 (a 1.5% fee).  But, Gift of College has now capped direct credit card contributions to $500.  That $15 equals a 3% fee on each $500 contribution.

fund college savings

What’s left?  Apparently Gift of College gift cards will soon be widely available.  Gift cards should already be available in some stores in California.  And, on November 7th, Gift of College gift cards are expected to be available nationwide at Toys R Us and Babies R Us stores.  Most of these stores should allow you to pay with a credit card.  The expectation is that the fees will be $5.95 for gift cards loadable up to $500.  If you purchase a $500 gift card, the fee as a percent of total will be only 1.19%.

Before buying these gift cards I recommend signing up for a Gift of College account online to see if you can add your beneficiary’s college savings plan or student loan.  If so, you should be able to deposit the value of the gift card to their account.  In my tests it took about 10 days for deposited gift cards to appear in my son’s savings plan account, but it may have taken longer than usual for the first deposit.


UPDATE: Please find updated information here: Pay student loans or 529 plans with a credit card!

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