Charging child care expenses and other related fees to the right card can potentially be a smart strategy. Depending on the card you use, you may be able to earn hundreds of dollars a year in cash back, travel or other perks, helping shave the cost of care.
According to Childcare Aware, the average annual cost of child care can run as high as $10,000 to $16,000 or more, depending on where you live. Meanwhile, parents of school-aged kids are often asked to pay for field trips, school supplies and other costs. In addition, some parents have to budget for after-school care, sports and other pricey extracurriculars.
If you, too, are budgeting hundreds of dollars a month for child care or other fees, you may be tempted to charge some of those expenses to your cards whenever possible – especially if you need to spread out your payments over time or want to maximize your rewards earnings.
Assuming you aren’t being charged a convenience fee in exchange for using a credit card, charging child care expenses and other related fees to the right card can potentially be a smart strategy. Depending on the card you use, you may be able to earn hundreds of dollars a year in cash back, travel or other perks, helping shave the cost of care.
But be careful: Credit card APRs are so high these days, you could accidentally inflate your expenses, too, if you carry a balance or only pay the minimum amount due. Rewards cards tend to be especially risky: The average rewards card APR currently runs as high as 17.58 percent, according to the CreditCards.com Weekly Credit Card Rate Report.
Meanwhile, many rewards cards charge maximum APRs near 25 percent. If you overestimate your ability to pay off your expenses, you could come to regret using a rewards card with such a high APR.
Here are some of the best credit cards for charging child care expenses, depending on the rewards you’re seeking and how you plan to use your credit card.
Best cards for child care and school expenses
Best cash back card: Chase Freedom Unlimited
With this unusually generous, no-annual-fee cash back card, you’ll get an automatic 3 percent cash back for the first $20,000 that you spend in your first year – no matter what you purchase. As a result, you could potentially earn up to $600 or more in your first year just by charging child care and other everyday expenses.
You don’t necessarily need to spend a ton of money either to get a substantial amount of cash back. If you only charge $500 a month for childcare, for example, you’ll earn $180 back. If you charge $1,500, you’ll earn $540.
Once you’ve met the $20,000 threshold or have passed your card’s first year anniversary, you’ll earn a solid 1.5 percent cash back on all your other purchases. That’s enough to net you at least $180 a year if you typically spend around $1,000 a month on childcare or at least $360 a year if you have multiple kids and spend more than $2,000 a month.
The Chase Freedom Unlimited card also offers a 0 percent APR on new purchases for up to 15 months (with a variable APR of 16.49 percent to 25.24 percent), giving you the opportunity to temporarily spread out your payments without incurring any interest.
Runner up: Citi Double Cash Card
The Citi Double Cash card is also a good pick for miscellaneous expenses and is a particularly good long-term credit card. If you can afford to pay off your purchases in full, you’ll get up to 2 percent cash back on everything you charge (1 percent when you spend and 1 percent when you pay), including daycare expenses and school fees.
That’s an unusually high rewards rate for a no-annual-fee card, and it can add up quickly. The Citi Double Cash card doesn’t offer a promotional APR on new purchases, though, nor does it offer a sign-up bonus.
See related: Choosing the right credit cards as your family grows
Best travel card: Discover it Miles
If your child care provider accepts Discover, then this no-annual-fee travel miles card could potentially net you even more value in the first year than the Chase Freedom Unlimited card – especially if you use it for all or most of your purchases.
Similar to what you get with the Chase Freedom Unlimited card, you’ll essentially earn 3 miles for every dollar you spend in your first year. But unlike the Freedom Unlimited card, the Discover it Miles card doesn’t cap your first-year earnings.
Instead, Discover offers an unlimited 1.5 miles on every dollar that you spend and then matches 100 percent of what you’ve earned in your first year. As a result, you could potentially collect up to $1,000 or more in free travel, depending on how much you spend.
For example, if you spend $1,500 a month on childcare expenses, $800 a month on groceries, $200 a month on restaurants and $300 a month on gas, you’ll earn $1,008 in travel miles by the end of your first year. If you charge just $2,000 a month, you’ll net $720 in free travel.
Runner up: Chase Sapphire Preferred Card
This premium rewards card – which costs $95 a year to own – will only give you 1 point for every dollar that you spend on child care. However, Chase Ultimate Rewards points are unusually valuable – in part because there are so many good ways to use them.
For example, you could redeem them for travel using Chase’s Ultimate Rewards portal and receive a 25 percent points bonus. Or, you could transfer them on a one-to-one basis to a wide variety of partner airlines and potentially get even more value out of your rewards points.
In addition, the Chase Sapphire Preferred card offers an awesome sign-up bonus that’s potentially worth up to $750 or more in free travel. All you have to do is spend $4,000 in your card’s first three months in order to get the 60,000-point sign-up bonus – which shouldn’t be too hard to do if you’re already spending more than a $1,000 a month on childcare.
Best card for carrying a balance: Discover it® Balance Transfer
If your kids’ expenses are stretching your budget and you need help financing their care, then you may want to use a card with a longer promotional APR than you can typically get on a rewards card. That way, you can put off paying interest – or potentially avoid it altogether.
However, you’ll also want to choose a card with a lower standard APR, if possible, so that you aren’t stuck paying a huge amount if you still have some debt left over at the end of the promotion.
The Discover it Balance Transfer card gives you up to 18 months to carry a balance interest-free (APR of 13.49 percent to 24.49 percent variable thereafter). It also offers one of the lowest standard APRs you can get on a card from a major issuer.
For example, if you have excellent credit, you may only be charged 13.49 percent (variable), which is below average for a credit card. The Discover it Balance Transfer also charges a relatively low introductory balance transfer fee of 3 percent.
Runner up: HSBC Gold Mastercard
The HSBC Gold Mastercard offers an introductory 0 percent APR for up to 18 months on purchases and balance transfers, giving you quite a long time to stretch out your child care payments without spending any money on interest. In addition, it offers an especially low minimum interest rate of 12.99 percent variable (with a maximum rate of 20.99 percent variable). However, it’s not the best card for transferring a balance: It charges 4 percent to transfer a balance (or $10 minimum), which is fairly high.
Child care is expensive. If you’re already planning to spend hundreds of dollars a month on care, then you might as well get some value from those charges if you can. Just be sure to draft a reliable budget so you aren’t surprised by debt you can’t afford.
Also, think twice if your child care provider charges a fee in exchange for accepting cards. If a day care charges a big convenience fee, then the rewards you earn may not be worth the extra cost.