Frequent Miler on the Air - Earn miles while saving and paying for college | Coffee Break Ep31 | 10-28-24

Episode Date: October 29, 2024

In today's coffee break, we'll talk about how to earn miles while saving for, and paying for college. There are mileage earning strategies for contributing to college savings, paying for college, or paying towards student loans. (01:23) - Use rewards credit cards to buy "gift of college" gift cards Read more about earning miles for college here: https://frequentmiler.com/miles-for-college/ (02:26) - Best options for buying Gift of College gift cards (06:06) - Best online option for buying Gift of College gift cards Visit GiftCards.com here (07:56) - Use either of above to earn welcome bonuses with ANY card (08:37) - The Great Double Dip for earning while saving for college, and then again while spending for college Visit https://frequentmiler.com/subscribe to get updated on in-depth points and miles content like this, and don’t forget to like and follow us on social media. Music Credit – Beach Walk by Unicorn Heads

Here we go. This is not your typical Frequent Miler on the Air episode. This is a standalone segment we're calling Coffee Break. Each Coffee Break segment will cover a single topic related to miles and points. And each Coffee Break is limited to 20 minutes or your money back. Enjoy. Today for coffee break, we're going to talk about how to earn miles while saving and or paying for college. You could do it either way. You could earn miles and points and cash back while saving for college. And this could include

both yourself, you know, saving for yourself to go to college, but it also, of course, if you have kids that you think will be going to college someday, you can definitely be using it for that. Or maybe you're a grandparent or relative that wants to contribute to a child's, you know, college savings account. You can earn points, miles or cash back while doing that. So all that's really cool. And you could use those funds. You can do it while you're in college. You can use these tricks to pay for college. And after college, you can use it to pay student loans. So you could earn more points and miles while paying off student loans. So the big picture here is that what you do is you use rewards credit cards to buy gift

of college gift cards. Now, what gift of college gift cards do is they allow you to basically move whatever funds are in them to a 529 college savings plan, which are available all across the United States and or to pay student loans. So you could use it for both of those things. So again, the big picture is you use a credit card to buy these gift cards, you redeem them for 529 savings or to pay student loans. That's pretty cool because you can earn potentially a nice haul of miles. We'll talk about ways to do that in a few minutes just by paying for college, an expense that you would

have to pay for anyway. So this is something that both Greg and I have done before. So we have some experience with it and some kind of exciting recent developments as we record this. All right, let's talk about the best options for buying gift to college cards. So you got a few different places you can buy them. The most attractive are the ones that allow a $500 load. Some stores will sell physical cards that you can load with up to $500 at a time with a fee of about $6, which is just a little bit over 1% of the cost. So if you were earning more than the 1.19% of the cost that you're paying in a fee, then you're coming out ahead of the fee. And so obviously with some types of stores, you could do pretty well buying $500

gift to college gift cards. For instance, grocery stores, there are some grocery stores that sell $500 gift to college savings cards, again, with a 1.19% or so activation fee. So if you're using a card that earns three or four points per dollar at grocery stores, then you could be coming out well ahead of the fee. Keep in mind that not all grocery stores are going to accept a credit card for Gift of College savings cards. This is really going to vary by region and store, even the individual store within a chain. But some stores that do carry these, according to the Gifted College website, are Brookshire Brothers in Texas, Brookshire Brothers. So if you live near one of those, you might be able to do this. HEB, which is also a Texas-based grocery chain. FoodMax,

which is in California, I believe. Lucky, also, I think, in California. And SaveMart, mostly California. So basically, if you live in California and Save Mart, mostly California. So basically, if you live in California or Texas, you may have some opportunities to buy gift to college cards at your grocery store. And so, for instance, if you had the MX Gold card, that card offers four points per dollar at U.S. supermarkets on up to $25,000 in spend per year. So if you put $25,000 away for college, you could earn 100,000 points. And again, at about a 1% fee, that's a really good deal. So that's one option if you happen to live in one of those places and you have a store that offers these gifted college cards,

then you could look for a card with a good grocery bonus. We have a page of the best category bonuses where you can compare that versus the City Strata Premier that earns three points per dollar at supermarkets also, and then a whole bunch of other cards with grocery bonuses and figure out which one is the best for you. However, if you don't live in Texas or California or your local stores, don't accept a credit card for your gift to college cards. Another option might be gas stations, although this will probably be specific to those of you living in the Northeast for the most part. Cumberland Farms is a gas station chain that exists in kind of much of New England, Northeast, and then also in Florida. And so those stores also sometimes sell the $500 gift to college savings cards. Not all locations do. So you do sometimes have to hunt

around a little bit in order to find one that's got them. But if you do, then you could use a card that earns a great category bonus at gas stations. For instance, the Wyndham earner business card offers eight points per dollar at gas stations. That means for $6, the activation fee on a $500 card, you could be walking out of there with what eight times five, 4000 Wyndham points. So that's not a bad haul, stopping in to grab a gift college savings card for six bucks. So that's a good haul for six bucks. Of course, there are some other cards that offer bonuses at gas stations. For instance, the Amex business gold card has the four x categories, you're in four points per dollar on the two categories in

which you spend the most in each billing cycle and gas stations could be one of those there are a number of other cards too the strata premier could come in handy here etc so again those are good options for buying gift to college gift cards in person those specific grocery store chains and gas station chains that we mentioned are options for buying in person but if you don't live in one of the states with those stores then you might want stores, then you may wonder whether you can buy them online. And you can. You can buy gift cards online for gift of college savings. And in the past, we've said that hasn't been a particularly good deal. But right now, anyway, giftcards.com is offering gift of college cards that you can load with up to $200 per card. And

at the time of recording, there's no fee. Now, long term, I would expect there probably will be a fee. The terms and conditions of the card still mention the $5.95 fee. And if they were charging a $5.95 fee, it would become less attractive, maybe not unattractive entirely, but less attractive than it is without a fee. So at the time of recording, there's no fee. And also there's the ability to stack 2% back in giftcards.com rewards because they're offering rewards on these cards. So again, you can load up to $200 per card, no activation fee right now at the time of recording and 2% back. So right off the top, you're coming out 2% ahead, even before considering your credit card earnings or shopping portals. You can click through a shopping portal, earn maybe as much as 4% back or two miles per dollar. Sometimes you can even get better targeted offers. We've

seen some incredible Capital One Shopping targeted offers. Just recently, we've seen people report anywhere from 12% to 20% back at giftcards.com via Capital One Shopping. And so obviously, that could be a huge win if you're buying gift to college cards. And sometimes we see things like there's a city merchant offer at the time we're recording this for 4% back an extra 4% back at giftcards.com. But that's limited to $32 back. So you can't earn for that extra 4% on a wild number of cards. But if you're looking to buy a few $200 cards, you could earn a few extra bucks back. Whatever card you're using is your best everywhere else card would be a reasonable option to use to buy gift to college savings cards from giftcards.com.

Of course, better yet would be to use a card that you're working on a welcome bonus for. And that could be the case no matter where you're buying these cards, right? If you're spending towards a welcome bonus, you're probably earning upwards of 10% back or more, either in cash back or the form of rewards. And so if you're going to put away a large amount of money for somebody's college savings, then this could be a great way to earn a new card welcome bonus. When my kids were born, this is exactly what we did. We bought a bunch of gift to college cards to earn a few welcome bonuses. So that could be another great strategy and technique.

It sure can. And I did a lot of that when my son was before he went to college and also during college. And I'm going to talk now about the great, I'm calling it the great double dip for college. And this is what I did with my son too. And so I know it works. You may be able to pay for college. So once you or your kids or whoever you want to pay for are in college, you may be able to pay for college expenses and tuition and everything else with a credit card. Now, some colleges let you pay directly with a credit card and some of them even with no fee at all. And that's a great deal if you

could get that. If you don't have that, you might be able to use a service like Plastic, P-L-A-S-T-I-Q to pay college tuition bills with a credit card for a fee, which can make sense. It doesn't make sense all the time, but if you're doing it to hit a big welcome bonus, then it can make a lot of sense, especially when you look at some gigantic welcome bonus offers we've seen that sometimes to get hundreds of thousands of points from a giant welcome offer, you have to spend like $20,000 or even $30,000. And so, you know, paying college tuition, most colleges these days, you'll hit that minimum spend in like zero time. So anyway, so if you're in that situation where you could pay with a credit card, here's what you do. You buy a gift of college gift cards with a credit card the way we just explained earlier in the show, deposit

those funds to a 529 account. That's a college savings account. And then when it comes time to pay for college, you pay with your credit card, your rewards earning credit card, whichever one's offering the best deal at the time, whatever signup bonus you're working on. And then you go to your 529 account, you withdraw the funds to pay your credit card bill. And when I say you are, I mean, it depends whether you're doing this for yourself or for your child, but it, cause it might be your child's 529 account that you're withdrawing the funds from whatever. That's a qualified withdrawal, meaning that there's no penalty on the withdrawal as long as you are paying the equal amount to the college. And it doesn't matter that you're not withdrawing it directly to the college. You don't have to do that to make it a

qualified withdrawal. So you get to, again, earn rewards twice, both when saving and then when paying for college. Yeah, that's brilliant. And I want to hammer that point home because if you're not following closely, maybe you missed this. What Greg's saying you could do is, let's say you have a child and you're paying $20,000 in tuition, right? There are a number of credit card bonuses that require $20,000 in spend. So you could at least theoretically go out and buy, you know, get that card that has a $20,000 spending requirement, go out and buy $20,000 worth of gift to college cards and earn a big welcome bonus. And then when it's time to pay the tuition bill, get another card that requires a

$20,000 spend and use that to pay the college either via their their system or perhaps a service like plastic. Earn a welcome bonus again, like potentially another huge welcome bonus and then pay yourself back with the 529 fund. So essentially, you're getting $40,000 in spend and the rewards on $40,000 in spend for a $20,000 college bill. I mean, that's a pretty nice haul if you can get it. Now, of course, I mean, keep in mind that I'm talking big numbers there and giftcards.com is only selling these in denominations up to $200. And most portals will exclude orders over $2,000 or maybe over $2,000 in orders per month. So there's some limitations. If you walk into the grocery store, you're probably not going to be able to walk out with $20,000 and gift a college cards all at once. And your credit card may not approve $20,000 worth of purchases all at once on gift cards either. So there's some caveats there. You may have to go slow, take your time and do this over a period of time over a couple of months or something, depending on your situation. But it can be a great play to earn a whole bunch of miles for paying for an

expense that you're already incurring or intending to incur. I've certainly done this myself. We put money into a 529 plan for our kids. We've kind of split our strategy. We put some into a regular investment account and some into a 529 to serve as much flexibility with that money as possible in the future. But certainly, there are a lot of reasons to consider the 529. And keep in mind, if you're not familiar with the 529, I'm not an expert on them. But you can invest in the 529 from I think any state you want, whether or not you end up with tax benefits, I think is going to vary based on which state and your state rules in terms of how that works. Like I know in my state, I have to invest in my state's plan in

order to get an income tax benefit. My state taxes, if I choose a different state, I wouldn't get that benefit. So you have to do some research into 529s to figure that stuff out. But certainly this can be a great way to earn a whole bunch of rewards. Yeah. And I believe it's universal, though, that if you invest in a 529 in your own state, that does not limit your child or whoever you're investing for to go to college in that state. The funds can be used for college anywhere. So just keep that in mind that it's not limiting. And you may be able to, as Nick mentioned, do really well with tax benefits, but you need to check what they are in your state to see whether you'd qualify. And it's also worth shopping around a little bit because different states offer different

types of investments that may appeal to you more or less, depending on the types of investments and the limitations. It varies from state to state plan as to how you can invest that money for the future. But at any rate, certainly the ability to buy these with a credit card is a great deal. And then we mentioned you can pay student loans. And in some cases, I think you may even be able to pay the student loans directly with a gift of college card without even entering the 529 into the mix, though you may still want to enter the 529 in the mix if you've got an ability to somehow pay that student

loan with a credit card for the same type of double dip that Greg described before when paying tuition. Exactly. Don't forget, if you've enjoyed this and you'd like to get on our email list, you want to go to frequentmiler.com slash subscribe to join our email list. Follow us on all the various social media and check out our Frequent Miler on the Air episodes dropping every Friday.