Another way to save money for college is by using a cash back rewards credit card that puts the cash back reward directly into your Fidelity 529 college savings plan. I have been using a rewards credit card from Fidelity for years that has been steadily adding 2% cash back into my son's college savings account.
However, I only recommend this for people who are diligent at paying off their credit card balance IN FULL each and every month, so that you are not charged any interest or fees. Otherwise, the rewards are doing you no good, because you are just spending more money on interest from the charges.
Here's how we use ours. For our normal monthly budget items that can be paid for by credit card, like shopping for groceries at the store, or paying for gas for the cars, we use this 2% rewards credit card. We also use the card to pay for any recurring bills that allow us to pay with a credit card, like our cell phone bill and cable/internet bill. Then a few times a month I pay the charges off using money from our checking account....money that is specifically budgeted for these bills. So instead of paying for groceries and gas directly from our checking account, I pay for them with the rewards credit card, then pay off the rewards card with money from the checking account. This extra step results in us earning 2% cash back on all those purchases.
The 2% rewards is deposited directly into our Fidelity 529 college savings plan as soon as we have accumulated at least $50 in rewards. You simply link your Fidelity 529 college savings plan during the application process. You can also link to any other Fidelity investment like your retirement or other brokerage account, and even split your earnings between accounts.
Over the years, these rewards have resulted in us earning thousands of dollars in free money that's been deposited into our 529 account.
You can get one of these cards from Fidelity here.
Do you already have a college savings rewards credit card? If so, tell us about it!
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