Credit cards aren’t the only way to pay for back-to-school expenses, but they can be a good choice if you use them responsibly. Credit cards can offer advantages over cash, debit cards and other methods of payment, including rewards and consumer protections.
“If you have the financial discipline and means to pay off your credit card in full all of the time, then I think it makes sense to put everything on a credit card, back-to-school expenses included,” says Dan Miller, father of six and founder of Points With a Crew, a site that helps families – especially large families – travel cheaply or for free.
But if you’re hoping to use a credit card to stretch your budget and spend more than you really can, a credit card won’t solve your problems.
How Can a Credit Card Help With Back-to-School Expenses?
Shopping for back-to-school season with a credit card has its perks. You can take advantage of features that could add up to major savings with consumer protections and rewards, including sign-up bonuses.
Cards with these features could be helpful when making back-to-school purchases:
Rewards. If you’re spending money on back-to-school expenses anyway, it’s helpful to get something in return for it. With credit card rewards, you can get cash back, points or miles. You could redeem cash back to reduce your expenses, or save your rewards to redeem them for travel or other redemption options.
Sign-up bonus. A credit card with a sign-up bonus can offset your back-to-school spending, particularly if you’re getting a cash back bonus. When you use a sign-up bonus, you receive points, miles or cash back when you meet a spending threshold, usually within the first three months.
Miller says the real value of credit card rewards is often in the sign-up bonus, as the everyday rewards earnings available with credit cards may pale in comparison. “Any time you have a large expense, or a series of smaller expenses that turn into a large expense in total, consider opening up a new card to take advantage of the sign-up bonuses that banks offer,” he says.
Price protection. Back-to-school shopping can feel like chasing the best price for a flight in the sense that you might agonize over the ideal shopping time to find the lowest prices. Credit cards with price protection can help if you’re worried about back-to-school price inflation, or nabbing what you thought was the best price, only to find out an item went on sale a week later. This feature will reimburse you if the same item you bought is offered for a lower price somewhere, usually within 60 to 90 days.
Purchase protection. If your back-to-school shopping list includes big-ticket items that would be difficult to replace after theft or major damage, you could be covered with a credit card that offers purchase protection. Purchase protection can, within limits, reimburse you for the cost of your item if it’s lost, stolen or damaged within the coverage period. For example, if you buy a new laptop, and it’s stolen from a locker in the first week of school, you can file a claim for reimbursement so you can buy a replacement.
Extended warranty. Another good feature for big-ticket items, extended warranty coverage lengthens your original manufacturer’s warranty. Usually, you’ll get an extra year or two past the original manufacturer’s warranty. If you use a credit card that offers this coverage for free, you can save money by declining to purchase the retailer’s extended warranty coverage.
Introductory APR. You might need a little more time to pay off exceptional back-to-school expenses, like electronics or outfitting a dorm room. A credit card with a 0% introductory annual percentage rate can give you time to pay off your credit card bill without interest, provided you can clear the balance before the introductory rate expires.
But be careful. “If you’re thinking about what the APR is, you’re thinking about credit cards the wrong way,” says Grant Sabatier, creator of personal finance website Millennial Money. “The APR is the percentage over the price of anything you’re going to buy.” If you don’t pay off the purchase before the introductory APR expires, using a credit card with a 15% APR is like paying a 15% premium.
What Kind of Credit Card Is Good for Back-to-School?
Generally, a flat-rate cash back card will be the most flexible for back-to-school shopping, allowing you to earn rewards with multiple retailers and potentially a sign-up bonus that could offset expenses. However, a different card might be a better choice depending on your plans for shopping or rewards redemption.
A cash back card can give you a nice kickback if your expenses are spread across big-box retailers, online shopping and grocery stores. Using a single cash back card with a good earning rate can keep back-to-school rewards simple.
A travel credit card might be a better choice if you want to use back-to-school shopping to stash away rewards for an upcoming trip. “Rewards come in all flavors,” Sabatier says. He says it depends on whether you’d rather have the cash back or travel rewards. “Oftentimes, you can get more redemption value for travel than cash back.”
Travel credit cards sometimes earn their highest rewards on travel purchases, which means you might not earn much on back-to-school shopping. But you can look for a card that offers a good flat earning rate for all spending categories.
Store credit cards generally don’t offer the best value compared with cash back cards or other options, but they do sometimes offer a good fit. It could be worthwhile to compare a store card with a cash back card to see which offers the best bottom-line value for the purchases you’re planning. For example, a store card might offer a one-time savings pass that could rival a cash back card’s sign-up bonus.
However, Miller says you’re likely to find better options for cards than store credit cards. Sabatier echoes this sentiment, noting that store cards are almost always a terrible idea, although there are outliers. If you’re considering a store credit card, look at all of the fine print, especially fees and APR, before you get dazzled by an offer at the register.
Don’t overlook grocery credit cards, which could offer up to 6% cash back on purchases such as backpacks, school supplies, lunchboxes and food for school lunches.
Some credit cards offer bonus rewards categories that can span multiple back-to-school shopping needs. For example, Amazon Prime members with the Amazon Rewards Visa Signature Card can earn 5% cash back on school supplies purchased on Amazon.com, and 5% on food at Whole Foods Market.
Use these tips to manage back-to-school expenses and make your credit cards a helpful tool for saving money.
Stick to your budget. Even if you have a seemingly endless credit limit, that doesn’t mean you should use it. Make a budget for back-to-school expenses you know you can pay off before interest applies, and stick to it. Don’t be tempted to exceed your budget just because you know the purchase will be approved.
Set price alerts. Staying on top of prices for major expenses such as electronics can offer savings. You can time your purchase wisely, and if you’re using a credit card that offers price protection, you can make a claim if you get an alert a retailer has lowered the price after your purchase.
Use your rewards. If you already have credit card rewards, consider cashing them in for back-to-school shopping. Some credit card issuers offer gift card rewards redemptions at a discount, so you might get a good value for your rewards and save on back-to-school shopping at the same time.