Shop More, Save More for College Gimmick or Reality?
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The man sat in a chair beside a dressing room at a Tampa, Fla. maternity store. "That one looks great," he says to his pregnant wife. "I really like that one."Just as his wife steps behind a curtain to slip on the next outfit, a voice bellows from behind the counter. It's directed toward him.
The man sat in a chair beside a dressing room at a Tampa, Fla. maternity store. "That one looks great," he says to his pregnant wife. "I really like that one."
Just as his wife steps behind a curtain to slip on the next outfit, a voice bellows from behind the counter. It's directed toward him. "May I tell you about Futuretrust MasterCard?" she inquires.
The employee offers information about a credit card.
He's told the store has struck a business relationship with a company named Futuretrust. With nowhere to go, he listens a little more.
The clerk explains that the program helps new parents save for their child's college education. She says it offers cardholders cash back on purchases that goes into a college savings plan. In short, she says, it's a program built on the premise the more you spend, the more you save.
WHAT'S THE DEAL?
Futuretrust is targeting perspective customers before they even become parents. That's why you'll find information about the company at Motherhood Maternity, Pea in the Pod and Mimi Maternity.
"We have a great number of men who apply to join," says Futuretrust's Managing Director Adam Bashe. "They'll be sitting in the store and read about the program."
Futuretrust is just one of three companies in the business of the trying to help you save for college. There's also Upromise and BabyMint, Inc.
All have the same goal. But they're different in services they offer; companies they're affiliated with; and how much you can get back. But should you bother with any of them? And if so, which one?
"Our goal is make you become a more disciplined investor," says Bill Koleszar, chief marketing officer for BabyMint, Inc., which, like Futuretrust, offers cash back on purchases good toward a college education. Every time you use the BabyMint credit card, you get at least 1% cash back. If you shop at businesses affiliated with BabyMint, you get even more back. How much depends on the business. Like Futuretrust, the credit card is free.
Koleszar says the average BabyMint credit card holder gets back $46 a month. Assuming an interest rate of nine percent, over 18 years, that's $20-thousand. But that would hardly pay for a college education in 2020, which will probably cost five-times that amount for a four-year state university. Koleszar says it's still a good deal.
"Even if you just earned enough for books and pizza," says Koleszar, "it's more than you would've earned otherwise? We never pretend we are the end all be all answer however we can provide a meaningful supplement to your (other) savings."
Upromise works differently. There's no mandatory credit card to mess with or apply for. You simply register credit cards you already have in your wallet "and you go shopping," says Upromise's Catherine O'Rourke. The company is affiliated with hundreds of company's and products and the cash back you get varies considerably. Upromise offers a credit card at no cost, and you get back even more if you use it.
O'Rourke says signing up should be a no-brainer for any father. "This is one of many things they should take advantage of to help save for a child's college education and I can't imagine any father who wouldn't take advantage of it." She recommends signing up grandparents and relatives-and getting them to link their accounts to your child's 529 plan. That way you save much quicker. The money you earn, she says, can be deposited into a 529 plan you create through Upromise, or one you create on your own.
WHAT'S THE DOWNSIDE?
"There's not a really a downside to them," says Daniel Vigne, a Certified Financial Planner for Wachovia Wealth Management in Sarasota, Fla., though he warns against depending solely on these programs for something as serious as a child's education. "As a father, I'm going to dedicate money to (my own) 529 plan-I'm not going to rely on this card system."
Vigne, a father of three, recommends a 529 plan you create though an investment firm or through your state-a 529 plan that be protected from creditors. He says not all of them are. That would be a costly mistake should you declare personal bankruptcy or lose a lawsuit.
So, which one is best. That really depends on what you want and which stores you frequent. Check the companies' websites and see for yourself. They're all free. All easy to join. And heck, if you can't decide, join all three-you really have nothing to lose.
Is there is a catch? Not one interactiveDAD.com could find. They are what they are: An easy way to sock away at least some money for a child's education. Just remember, whatever you save is just a start.
Glenn Lawrence is editor of Interactive DAD Magazine http://www.InteractiveDadMagazine.com, FREE online magazine for fathers focusing on family and finance. It's updated DAILY!