How to use card rewards, perks to boost back-to-school savings
Travel, small business and consumer credit expert
Saving money on back-to-school purchases means comparison shopping and – if you’re lucky enough to live in the right state – shopping during a sales tax holiday. But the smartest shoppers add one more trick to their back-to-school search for savings: They use their credit cards strategically.
Here are six ways to use credit cards to cut your school shopping bill:
1. Use revolving category cash back cards.
It’s hard to beat the 5 percent cash back of a revolving-category card, but some third-quarter offerings are better suited for school-related purchases than others.
For example, from July through September, Chase Freedom’s* 5 percent cash back is on restaurants and movie theaters and Citi Dividend’s 5 percent cash back is on airfare and Hilton hotels. Neither will help much when you are filling your shoping cart with school clothes, backpacks, shoes and computers, but may come in handy if you’re setting up a new college student in another city.
The Discover it Cash Back card’s 5 percent cash back bonus category also is restaurants through September, but with Discover’s CashMatch program, that 5 percent turns into 10 percent at the end of the year for first-year cardholders.
“CashBack Match is a great opportunity for customers to try Discover,” says Maureen Powers, vice president of rewards at Discover. “Once they try it and take advantage of all the ways to earn rewards, I think they’ll see how valuable the card can be.”
One card, though, lets you select the categories in which you'll earn 5 percent every quarter.
“With the U.S. Bank Cash+ Visa, you choose where you can earn 5 percent cash back in two categories and 2 percent cash back in some everyday-spend categories each quarter,” said Bob Daly, senior vice president of rewards for U.S. Bank.
How it works: If you know you’re going to be shopping for clothes, electronics and furnishing a new college student’s dorm room, select the department store and electronics store 5-percent back categories on the U.S. Bank card to get the most cash back on your back-to-school purchases.ck-to-school shopping.
2. Take a holiday from sales tax.
If you live in a state offering back-to-school “sales tax holidays,” you may be able to shave even more off your purchases. Your state will have its own variation on product categories and price limits, so check the guidelines before you shop.
“Each state gets really specific about dollar amounts,” says Leah Ingram, blogger and author of “Suddenly Frugal: How to Live Happier and Healthier for Less.” “In Missouri, for example, backpacks that cost $50 or less qualify for a tax refund. So if you buy a backpack for $51, you’re out of luck.”
In some states, you can save serious money on big purchases.
“Where you’re really going to find savings are in the states that cover computers,” Ingram says. New Mexico, for example, waives sales tax on any computer costing $1,000 or less August 4-6. Sales tax in that state varies by county, but can go as high as 8 percent, meaning you can potentially shave $80 off that PC purchase.
The sales tax holiday applies to online purchases, too. The purchases must be made within the tax-free holiday and shipped to an address within that state – but it’s best to stick with major sellers likely to have automated sales tax, warns Jennifer Dunn, editor of TaxJar.
“Small e-commerce sellers like those with Etsy shops may not have the bandwidth to comply with the sales tax holiday, but you're safe if you buy from a site like Amazon,” says Dunn. “Amazon has a very robust system for collecting sales tax.”
Information about 2017 sales tax holidays can be found on the map below. However, before you head out the door, double-check your state’s tax and revenue webpage for the most current information.
“Sales tax holidays can change at the last minute,” says Dunn. “For example, a couple of years ago one state signed a sales tax holiday into law just a week before the holiday happened. So that was a mess for retailers! States have also been known to cancel sales tax holidays.”
3. Shop via your card issuer’s reward portal.
Get in the habit of starting your online shopping at your card issuer’s website. Most major retailers partner with rewards cards, and less-known merchants often have bigger discounts. Why order directly from a merchant if you can earn more points via a rewards portal?
Order your daughter a $100 leather book bag directly from macys.com using a Chase Freedom or Sapphire card, for example, and you earn the standard 1 point per dollar. Click over to Macy’s via the Chase Ultimate Rewards portal, however, and you earn 3 points per dollar. That $100 purchase just netted you an extra 200 points.
Buy that Macy’s bag – or iPad on Apple – via Discover’s shopping portal and you can earn 5 percent cash back. On top of that, Discover also is offering 25 percent off select computers at Lenovo.
If you shop on Amazon, you can use reward points in place of cash with both Discover and Chase. For Chase cardholders, that requires signing into your Chase account online, linking your card to your Amazon.com account, then using your points to pay for all or part of your orders at checkout, including tax and shipping.
Of course, if you’re doing the bulk of your shopping on Amazon, the simplest reward option may be the Amazon Prime Rewards Visa card, which gives cardholders 5 percent back on all Amazon purchases. Cardholders also get 2 percent back on restaurant, gas and drugstore purchases, and 1 percent on everything else.
4. Take advantage of gift cards.
This is also a great time of year to cash in points for gift cards. If you have more rewards than cash, you can get that same Macy’s bag for 10,000 points by purchasing a Macy’s gift card with your Chase Ultimate Rewards points. (Your 10,000 points gets you a $100 gift card.)
Discover usually has the best deals on gift cards, since a $20 Cashback Bonus can get you a $25 gift card.
“When I need to do the bulk of my shopping for back-to-school or holidays, I cash in my rewards for gift cards, so it’s like I’m shopping for free,” says Ingram. “I buy all my shoes on Zappos using $100 Discover gift cards I get for $90. Cards like Discover also offer promotions, where certain stores offer more than the normal 5 percent cash back for a period of time.”
5. Look for flexible ways to spend rewards.
If you’re signing up for a new card, Daly, of U.S. Bank, advises considering not just how many points you’ll earn, but how easy those points will be to redeem.
For example, the U.S. Bank FlexPerks Visa Signature card, gives cardholders 2 points per $1 on most cellphone expenses and either gas, grocery or airline purchases – whichever category you spend the most in each billing cycle. If you have kids in college and at home, you may be spending in all those areas.
FlexPerks Visa offers U.S. Bank’s Real-Time Mobile Rewards Redemption. Entroll in the program, then “any time you make a purchase, we ping your rewards balance to see if you have enough points to redeem for the items you just bought,” Daly says. “You then get a text message: ‘You have 118,000 FlexPoints. Want to use 4,000 of them?’ You simply text back the word ‘redeem’ and, poof, we instantly credit the purchase to your card account and debit your point balance.”
6. Utilize credit card purchase protections.
No matter how great a deal you get, you’ll want your money back if the item you purchase doesn’t live up to expectations – or you find a better deal elsewhere. Your card may have you covered there, too.
Both Discover and Chase Freedom (and Sapphire), for example, insure you for up to $500 for theft or damage of items purchased with their cards. They also offer price protection for up to $500 per claim.
As of May 2017, Citi Price Rewind will match that within 60 days of purchase. Citi’s extended warranty program also adds an additional 24-month warranty on top of the manufacturer’s coverage.
So, if you buy your student a laptop, then find it at a lower price within 90 days from purchase, these card issuers will refund you the difference (not including taxes and shipping). These “soft perks” of a rewards card are often buried in the fine print, but don’t overlook them. They can come in mighty handy when you do serious shopping.
*The content on this page is accurate as of the posting date. Please see the bank’s website for the most current version of card offers.
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