The cost of back-to-school shopping can accumulate rapidly. At first glance, you may think you are only spending money on items like pens, notebooks, and pencils, but the total sum often adds up to more. The price of clothing, even with sales and discounts, can also be steep, especially when updating an entire autumn wardrobe. For parents who spend hundreds annually during the back-to-school season, utilizing a credit card for these purchases could be a sensible decision.
It’s worth considering the advantages and drawbacks before choosing to use a credit card, though.
PROS
1. REWARD POINTS
One of the main benefits of using a credit card is that you can earn rewards. However, first make sure to check your eligibility before applying for a credit card. The more you spend on your card, the more cash back or reward points you can accumulate. These can be an effective means of earning benefits like statement credit, travel points, dining offers or other expenditures.
Premium credit cards often entice customers with a competitive sign-on bonus. One example would be getting 60,000 bonus points by spending $500 in the initial three months. In reference, the Capital One Quicksilver card offers a 1.5% cash back alongside a sign-on bonus of $150 post spending $500 in the first three months.
Furthermore, shopping for school supplies or clothing using your credit card can help you achieve these sign-on bonuses, provided you pay off your balance each month. Combining this approach with in-store rebates or digital coupons can help maximize your rewards.
2. 0% APR OFFERS
While a 0% APR offer initially sounds appealing, it’s crucial to remember that it could potentially lead to unhealthy debt habits. Still, some essential back-to-school items might have a hefty price tag attached.
A 0% APR credit card could be a helpful way to buffer the cost of substantial purchases over a specific period ranging from six to 24 months, which would typically incur interest. However, be cautious about excessively using it to evade financial stress and don’t forget to have it paid off before the promotional rate finishes and the interest rate rises.
3. PROTECTION FOR PURCHASES AND PRICING
Credit cards can offer a safer purchasing method than using cash as they provide various protective measures. If you lose your credit card, you can freeze your account immediately, but if you lose cash, it’s probably gone for good.
Additionally, cards often offer purchase protection, with options to replace damaged or stolen items or refund unsatisfactory goods or services. Some cards even provide extended warranty protection for free.
Price protection is also an option on some cards. If an item you’ve bought gets discounted after your purchase, some cards offer the difference back.
While all these pros sound appealing, you should always consider both sides of the coin before using a credit card for back-to-school shopping.
CONS
1. INCREASED SPENDING TEMPTATION
With a credit card in hand, you might feel an urge to spend more. Stick to your budget to avoid overspending, especially when shopping for back-to-school items.
2. HIGHER DEBT RISK
When you overspend, you may be unable to pay off the full balance, resulting in carrying a debt that includes interest on past purchases. Over time, debt becomes harder to manage as credit card interest rates can be high. It’s not worth the risk of going into debt for back-to-school shopping when there are ways to find free or cheap school supplies.
IN CONCLUSION
While using a credit card for back-to-school expenditures offers perks like rewards and purchase or price protection, it is crucial to bear in mind the potential downsides and be honest about your spending habits. If you foresee the risk of debt or lack necessary cash, then it might not be worth the rewards or discounts. After all, there are many cost-effective ways to get school supplies.
Have you used a credit card for your back-to-school shopping? Why or why not?
