An early July survey by U.S. News & World Report shows that almost three-quarters of Americans expect the costs of sending kids back to school this year to be a challenge. And 11.9% say they have no idea how they’ll pay for school expenses.
What Americans Plan to Spend on School Expenses
U.S. News asked parents of children aged kindergarten through high school to estimate how much they expect to pay for each child to go back to school this fall.
A minority, 16%, think they’ll spend $100 or less on back-to-school costs. At the other end of the spectrum, 15.5% expect to spend more than $400.
Here’s the breakdown by cost:
— $0 to $100: 16%.
— $101 to $200: 30.6%.
— $201 to $300: 23.5%.
— $301 to $400: 14.5%.
— $401 to $500: 8.5%.
— More than $500: 7%.
And this doesn’t include extracurricular activities. More than 15% expect to pay over $400 per child on extracurricular activities.
For extracurricular activities, here’s the breakdown by cost:
— $0 to $100: 29.6%.
— $101 to $200: 23.6%.
— $201 to $300: 19.5%.
— $301 to $400: 12%.
— $401 to $500: 7.3%.
— More than $500: 8.1%.
[Read: Best 0% APR Credit Cards.]
How They Plan to Pay for Expenses
We asked respondents how they intended to pay for school expenses, and here are the findings:
— Use a debit card or cash: 69.2%.
— Choose a buy now, pay later plan: 16.1%.
— Use a credit card but won’t carry a balance: 25.5%.
— Use a credit card and carry a balance: 17.3%.
— Open a retail credit card to get a discount: 12.8%.
— Use a retail store credit card with deferred interest: 12.7%.
— Apply for a credit card with a 0% purchase APR: 11.8%.
It’s good news that more than 69% plan to use a debit card or cash as part of their payment plan, but it’s concerning that so many also say they plan to use a form of credit that could lead to debt if not managed carefully.
Almost 13% say they may get a retail card that offers a deferred payment plan. Stores with costly products, including electronics, sometimes offer deferred-interest financing if you open the store’s credit card.
For example, if your teenager needs $1,500 in high-tech equipment or other products, the store might offer you a 12-month deferred-interest plan on a store credit card. This financing option means you won’t have to pay interest on the $1,500 until the 12-month period ends.
It’s a good deal if you pay the balance in full before the 12-month period ends. But what if you still have a balance when the deferred-interest period ends? Most of these plans require you to pay deferred interest on the initial purchase amount. So, if you have a $500 balance and the new interest rate is 25.9%, you’d pay interest on the $1,500 going back for the full 12 months.
Fortunately, there are ways to cut school costs and still avoid risky debt.
[Read: Best Cash Back Credit Cards.]
4 Ways to Save on School Expenses
We all want to give our kids what they need for a successful school year. Inflation may be starting to dip a little, but prices are still high. Here are four ways to make sure you cover the costs without taking on burdensome debt.
1. Apply for a 0% Purchase APR Credit Card
There’s a way you can get an interest-free loan as long as you pay as agreed. And it’s not deferred interest! Right now, credit cards with 0% purchase annual percentage rate offers range from 12 to 21 months.
If you’re faced with purchasing high-cost electronics, you can make monthly payments for a year or more and pay zero interest. If you do have a balance at the end of the introductory period, you pay the rest off at your regular purchase APR. Credit card rates are fairly high right now, but at least you don’t pay deferred interest on these deals.
2. Use Credit Card Rewards
While many rewards programs have higher value if you use them on travel, if you have a balance on a credit card, it could be worth using your points or cash back as a statement credit.
Use your rewards cards to make purchases, and you’ll earn rewards you can use later when the bill is due. If you don’t have enough rewards this year to help pay for school costs, make a pledge to use your credit cards strategically during the next year.
By strategically, I mean use the right credit card at the right time to maximize rewards. By next summer, you’ll be ready to decrease your balance quite a bit.
3. Search for Sales and Deals
When survey respondents were asked what cost-saving strategies they’d use, 82% say they’ll look for sales and deals on items they need.
Do check with the usual suspects, like office supply and big discount stores, but don’t forget to look at dollar stores and even places like Sam’s Club or Costco, which sometimes offer good deals on calculators and other costly supplies.
You can also save time and money by searching for items online and comparing prices. You can make comparing prices easier by using an app like ShopSavvy. Another option if you’re looking for the best prices on technology and more is BuyVia. With BuyVia, you can scan barcodes and set alerts for price drops.
And don’t forget to find out if you’re in a state with a sales tax holiday. Almost 32% of respondents say they plan to take advantage of sales tax holidays. Here’s an official list from the Federation of Tax Administrators. Some states have already had a sales tax holiday, but keep this list handy for next year.
4. Earn a Credit Card Sign-Up Bonus
Most rewards credit cards that have sign-up bonuses, also known as welcome offers, require you to spend a certain amount of money within a specific time frame, usually three months or so.
Use this credit card for purchasing school supplies and to pay for everyday expenses to meet the spending requirement. If you need help paying off your credit card balance, you can use the earned bonus as a statement credit.
Using this card to pay for school expenses also helps you earn rewards, which you can use to get savings on future purchases. That’s a double win for you!
[Read: Best Credit Cards with High Credit Limits.]
Where to Turn if You Need Help
It’s stressful to wonder how you’ll be able to pay for school expenses. Nearly 12% in the survey are in this category. Life is unpredictable, and it’s OK if you need a helping hand.
So don’t hesitate to reach out to Need Help Paying Bills for help. Whether you need clothes or supplies for your child, this organization is dedicated to helping you get what you need.
More from U.S. News
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Carry a Credit Card Balance vs. Pay in Full: What’s Better for Your Credit?
How to Pay Off Credit Card Debt
Survey: Nearly 71% Say Back-to-School Expenses Are a Challenge originally appeared on usnews.com
