A mid-July survey by U.S. News & World Report shows that more than three-quarters of Americans — about 77% — are moderately or very worried about being able to pay for back-to-school expenses. Add those who are at least a little worried, and the total who are concerned jumps to nearly an astounding 96%.
For the 12-month period ending in June, inflation rose 9.1%. This is the largest 12-month increase since the end of November 1981, and it has helped create a much more expensive school year. Given the high prices, it’s not surprising Americans are worried about affording school expenses.
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How Much Are Americans Spending to Send Kids to School?
The survey focused on back-to-school expenses for kids in kindergarten through high school. Survey respondents were asked how much they expect to spend on school expenses for each child. Only 15.7% expect to spend $100 or less per child. At the other end of the spectrum, more than one out of five say they’ll be spending more than $400 per child.
Here’s the breakdown by cost:
— $0-$100: 15.7%.
— $101-$200: 26.3%.
— $201-$300: 24%.
— $301-$400: 12.8%.
— $401-$500: 10.1%.
— More than $500: 11.1%.
Keep in mind that these amounts are per child. So, a family with three children who expects to be paying around $400 for the school year would total about $1,200. That’s a huge expense for most American families.
How Americans Plan to Save on Expenses
Due to inflation, nearly two-thirds plan to spend less this year on supplies. The survey asked respondents what strategies they plan to use to cut costs. Most intend to use a combination of approaches, which is a good way to find the best deals.
Here are the findings:
— Looking for sales: 82.3%.
— Shopping at different stores: 56.2%.
— Buying secondhand products: 31.9%.
— Waiting for a sales tax holiday: 29.9%.
— Using a store credit card for exclusive sales: 23.1%.
— Using a credit card and carrying a balance: 20.4%.
— Applying credit card rewards: 17.4%.
— Something else: 6.7%.
Almost 42% of survey respondents say they’ll shop at brick-and-mortar stores compared with just under 21% who say they’ll shop exclusively online. Almost 38% say they’ll shop both in person and online.
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Two Risky Strategies Respondents Are Considering
The survey asked respondents if they were planning to use one of these methods to pay for expenses: Buy now, pay later payment plans or retail credit cards that offer deferred interest payment plans.
Buy Now, Pay Later Plans
BNPL payment plans are a type of short-term financing that allows consumers to pay the bill later in installment payments. Some of these plans are advertised as interest-free and with zero fees. If you see a chance to postpone the full payment and pay zero interest, you might think it’s a great opportunity.
Nearly 48% of respondents say they might or definitely will use a BNPL plan as a payment option. If you pay as agreed, you should be fine. But if you miss a payment, your interest-free deal might turn into a worse situation than if you’d just used your credit card to begin with.
The opportunity to get into debt increases if you’re juggling multiple BNPL plans at the same time. This strategy makes it difficult to keep track of what you owe, whom you owe and when you owe it.
Retail Credit Cards Offering a Deferred Interest Payment Plan
Almost 51% say they might or would use a retail or store credit card with a deferred interest plan. Stores with costly products, such as furniture or appliances, sometimes offer deferred-interest financing via the store’s credit card. Often, this isn’t a good strategy.
Here’s why: Let’s say you need to spend $2,000 on high-tech equipment for your child. The store is offering you a 12-month deferred-interest plan on your store credit card. This means you won’t have to pay interest on the $2,000 until the 12-month period ends.
The tricky part? If you don’t pay the balance in full before the 12-month period ends, depending on the plan, you could be required to pay all of the deferred interest on the initial purchase amount. So, if you have a $1,000 balance after the 12 months and the new interest rate is 20%, you’d pay 20% interest on the original $2,000 amount. The start date for the interest clock goes back to the purchase date 12 months ago.
Also, if you’re very late with a payment, that could end your 0% interest rate early. A deferred-interest option is only a good idea if you’re sure you can pay it off before the 0% interest period ends and if you make timely payments. But trust me, there are much better credit card strategies for cutting costs.
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3 Ways to Use Credit Cards to Decrease School Expenses
Although I don’t recommend delving into deferred-interest plans with credit cards, there are other ways to use credit cards to fight inflation.
Use a Credit Card With a 0% Purchase APR
Credit cards have annual percentage rates for different types of transactions. A 0% introductory APR on purchases means that, for a period of time, you don’t have to pay interest if you carry a balance.
This is one of those credit card strategies that allows you to get an interest-free loan if you pay as agreed. Right now, these 0% purchase APR offers range from 12 to 20 months. If you need to buy a pricey item like a personal computer, you can pay it off over a year or more and pay zero interest.
You do, however, have to pay monthly, and you should strive to pay off the balance before the intro period ends. If you don’t, the 0% APR will shoot up to what will be your regular purchase APR. So don’t use this strategy unless you’re sure you can pay off the balance during the introductory period.
The survey shows that a majority, 52.3%, say they don’t plan to use a 0% intro APR credit card. This is a cost-cutting strategy you should put on your radar if your situation aligns with it.
Earn a Credit Card Sign-up Bonus
If you need a new credit card, look for one that has the rewards you need plus a welcome offer. These offers usually have a spending requirement and a deadline to meet the requirement. For example, you could earn $200 by spending $1,000 within three months of opening your account. Note that the amount you can earn and the requirement to earn it vary a lot by issuer.
Many credit cards allow you to redeem the bonus as a statement credit. So all those school expenses you paid for two months ago? You can wipe out some of that debt with your sign-up bonus money. If you want to kick this strategy up a notch, use the new card for school expenses. You’ll earn the sign-up bonus plus rewards that you can also redeem as a statement credit. Double win!
Cellphone Insurance and Other Valuable Credit Card Benefits
Read the fine print on your credit card, and you may be surprised by the benefits you’ll uncover. Older kids need cellphones. Some credit cards offer cellphone insurance or savings on repairs. Others offer price protection, which gives cardholders a refund if they find an item they bought at a lower price.
If your credit card issuer offers an online shopping mall, you can also uncover discounts there. You can save on back-to-school clothes, tech items and more. It takes a little time, but the possibility of saving a bunch should be a good motivator.
What to Do If You Can’t Afford School Expenses
The survey shows that almost 37% will have to cut costs somewhere in their budgets to cover school expenses. And 19.3% say they don’t know how they can possibly afford back-to-school expenses this year.
If you can’t afford to pay retail prices, it doesn’t mean you have to send your kid to school without a backpack. Check out Need Help Paying Bills to see if you qualify for free supplies. Even if you don’t, this website is a great resource for finding less expensive school supplies. You’ll also find resources to help you pay for clothes your kid will need for the coming school year.
And don’t forget to look for help from local religious organizations, charities, and state and federal programs, such as the free or reduced-rate school lunches.
If you’d like to help less fortunate families get school supplies, you can support a school supply drive. Get details from the Kids In Need Foundation.
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Survey: Nearly 77% Are Significantly Concerned About Back-to-School Expenses originally appeared on usnews.com