Note: This card is no longer open to new applications. Information listed here may no longer be accurate.
Your kids are going to need to know much more than how to count to five in order to get into college, but that’s all it will take for you to pay tuition. At least that’s what Upromise and Barclaycard US say in regards to the new-and-improved Upromise Credit Card, which offers 1-5% cash back, depending on the purchase, and is being billed as a unique way to fund your college savings account.
The card, which does not charge an annual fee, offers 5% cash back on retail purchases made through Upromise.com, 4% cash back at participating restaurants (which you can find by entering your zip code on Upromise.com), up to 3% cash back on gas (a 1% base rate, plus a 2% bonus when you purchase more than 20 gallons at Exxon or Mobil stations), 2% cash back at movie theaters, and 1% cash back on everything else.
Hold on, where does the whole college savings thing come in?
“Money earned from everyday spending is accumulated in a Upromise account and can be invested in a tax-deferred 529 college savings plan, deposited into a Sallie Mae High-Yield Savings Account, used to help pay down an eligible Sallie Mae student loan, or sent to the member in the form of a check,” wrote Debby Hohler, a Sallie Mae spokeswoman, in an e-mail. “We think the rewards categories are also tailor made for those saving for college – as an example, a family night this summer out can bring big rewards when you consider that the dinner, movie, gas and anything else will all go towards helping send the kids to college.”
Interesting. While the rewards categories certainly do complement family-oriented activities, the rewards you earn are not automatically invested in a 529 college savings plan, deposited into a Sallie Mae High-Yield Savings Account, or used to pay down an existing Sallie Mae student loan. They “can be,” according to Hohler, which means you will have to transfer them from your credit card account – something you could do with any cash back credit card, though perhaps not at the click of a button.
The college savings aspect of the Upromise Credit Card therefore appears to be largely a branding mechanism, and that necessitates judging the card strictly on its terms.
While Upromise says that many retailers offer discounts of up to 5% on Upromise.com in addition to the 5% cash back that you earn on any such purchases, credit card shopping malls tied to generic cash back credit cards are known to offer similar discounts. Therefore, I would largely disregard the 5% cash back rate. The 4% cash back at restaurants and the 3% cash back at gas stations are great, no question about it, but how useful they will ultimately be depends on if your favorite restaurants are eligible and whether or not you can get gas primarily at Exxon or Mobil stations. The 2% cash back at movie theaters is also great for cinema enthusiasts, and the 1% cash back on everything else is standard for a rewards credit card.
If you aren’t an Exxon or Mobil customer, or restaurants and trips to the movies aren’t some of your biggest expenses, the Upromise Card might not be the best choice for you.
If a tiebreaker is needed, consider the fact that World MasterCard credit cards have the No Preset Spending Limit (NPSL) feature. This does not mean that the card allows unlimited spending, but rather that you can exceed your spending limit by an unspecified amount that is determined on a monthly basis. This prevents credit card companies from providing accurate credit limit data to the credit bureaus, which could result in you having artificially high credit utilization and incurring unwarranted credit score damage.
You might be wondering why we didn’t mention the relationship Upromise has with grocery stores like Safeway. Well, it’s because you don't need the Upromise Credit Card to save. You just need to link a Upromise account, which you can sign up for free of charge, to your grocery store club card , and the savings that you earn while shopping will then automatically be donated into the account.
All in all, we like what the new Upromise Card has to offer, but it’s not for everyone given that other cash back credit cards may offer more savings, depending on your biggest expenses, which you can then use to fund your child’s college savings account. At the end of the day, all we can say is that the Upromise Credit Card has, well, promise.
WalletHub experts are widely quoted. Contact our media team to schedule an interview.