Best credit card tips for August
August is a bittersweet month. Summer is winding down, and the days are getting shorter. At the end, kids go back to school, and adults have to turn their full attention to work. But first, everyone tries to squeeze in as much summer as they can. We think you should also squeeze as many benefits as you can聽out of聽your credit cards this month.
Every month, the Nerds round up a new set of tips聽to help you maximize rewards and minimize costs with each use of your credit card. Here are our tips for August聽2016.
Find back-to-school shopping bargains
Back-to-school shopping is 鈥渢he second-largest retail event of the year, behind only the winter holiday shopping season,鈥� according to Mintel, a market research company. Obviously, people聽are聽buying a lot more than聽pencils and erasers. If your kids 鈥� or you 鈥� are heading back to school, your聽shopping list may include school supplies, books, computers and clothing. For college-bound teenagers, outfitting a dorm room or off-campus apartment聽can聽put a dent in the budget.
Save some money or earn cash-back rewards by choosing the right credit card聽when you shop. A flat-rate card gives you rewards on everything you buy. If you have a cash-back card with聽rotating bonus categories, know where to go to get maximum value this quarter 鈥� it might be wholesale clubs, for example, or Amazon.com, depending on your card. You can also save a little by taking advantage of a sales tax holiday. This is a period during which some states don鈥檛 charge聽sales tax on back-to-school items. Read our guide to聽,聽which also includes a list of sales tax holidays.
Teach students聽about credit
People go to college to prepare themselves for the work world 鈥� but few students聽learn the financial information聽they need to know for living in the real world. That鈥檚 where moms and dads have to be teachers.聽Students in college should learn the basics of building credit and using credit cards before they graduate. There are three ways to go with credit cards: get a student credit card, become an authorized user of a parent鈥檚 card or get a secured card.
Most of the major credit card issuers offer聽, which are聽designed for college students with limited credit. They can be聽, however. If your student doesn鈥檛 qualify, you may need to co-sign for the credit card. This means you agree to pay the balance if your student does not, so any misstep聽can hurt your credit, too.
Another聽option is to make your child an authorized user of your card. You鈥檙e still liable for any charges made by the authorized user, but your child will be building credit. Make sure your card issuer reports authorized user activity to the credit bureaus.
If neither of those options seems like a good fit, consider a secured credit card. Your student puts up an amount of money 鈥� usually around $300 鈥� and this becomes the credit limit. (A low credit limit also limits the potential for getting into trouble with debt.) The card issuer holds the money as collateral in case the student doesn鈥檛 pay the bill; when the account is closed or聽converted to a regular card, the issuer refunds the money.聽Before applying, be sure that the card reports to one of the credit bureaus so that聽you achieve your goal: to build your child鈥檚 credit file. Managing a secured card responsibly for several years will make it easier for your child to get an unsecured card after college. Be aware that just like any credit card, a secured card requires the student to have a source of income.
Whichever route you go, be sure your child聽learns the right way to manage credit. Explain the importance of looking at the monthly statement, paying the bill on time and not maxing out the credit line.
Another good teaching opportunity聽is to get your credit report and go over it with your child. Every consumer is entitled to a free credit report from each of the credit bureaus once a year. You can download yours at聽. Once you鈥檝e scrutinized聽the credit report, get your credit score and show your child how to get his or her own. There are many places for consumers to get聽these days; take advantage of them.
If you want to give your children a credit head start, begin聽teaching them聽about credit聽in聽聽A 2016聽聽by the聽Council for Economic Education聽found that only 17 states require high school students to take a personal finance course. If you don鈥檛 live in one of those states, it鈥檚 up to you to be the personal finance guru. People under 18聽can鈥檛 apply for student credit cards, but they can be authorized users on your card, or you can co-sign for a card. In addition to reviewing credit reports and scores, you can show them how you check your聽transactions and balance throughout the month, and pay your聽bill on time. By the time they head to college, they鈥檒l be credit scholars.
Consider applying for聽a hotel card
Vacation season is winding down, but if you want to eke out one more trip聽before summer ends (or get started with planning for your next one), think about applying for a聽. August is the best time to聽, according to a NerdWallet study, because that鈥檚 the month when hotel credit cards make the most special聽offers.聽What鈥檚 a good offer? A聽聽that runs from 25,000 to 80,000 points聽after聽you spend a certain amount within a specific time period. Hotel cards usually offer bonus rewards for money spent at their properties,聽and many offer perks like a free night鈥檚 stay each year. Check out NerdWallet鈥檚 comparison of聽聽to help you make a good choice.
Ellen Cannon is a staff writer at NerdWallet, a personal finance website. Email:聽ecannon@nerdwallet.com. Twitter:聽.
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