DIGITAL DOUG: Online Investing

Shop, Spend...and Save for College


The costs of a college education just keep getting higher and higher. But now there's a new company that aims to make it easier for parents to save for their children's college educations. UPromise combines a credit card rewards program with a college savings plan, offering cash rebates of 1% to 12% on purchases made from any of 70 participating online companies.

Instead of sending you the cash directly, though, your rebates are deposited into a Section 529 college savings plan managed by a firm such as Salomon Smith Barney or Fidelity Investments, earmarked for the education expenses of a child or grandchild. These plans were created by Congress in 1998, and are similar to 401(k) retirement plans. The income and gains in the account are taxed down the road only when the money is withdrawn to pay for qualifying education expenses, making it possible for your savings to grow even faster. And in many states, you can get a tax deduction on your state income tax bill when you contribute to a 529 plan.

The program has signed up a handful of major participants who will pay automatic contributions on every purchase you make, including AT&T;, Citibank credit cards, CVS Pharmacy, and General Motors. If you register your credit card numbers with UPromise, you can receive automatic rebates from Borders, Waldenbooks, and 7,000 restaurants across the country. Otherwise, you need to use the links on the UPromise site to shop at 70 online merchants in order to receive the rebate.

There are other loyalty programs that are designed to help you save and invest, notably Stockback. Once you register with Stockback, you earn stockback rewards each time you buy the products and use the services of partner companies. Those rewards are automatically invested in the Stockback Fund -- a fund that invests in the stocks of participating companies. also allows members to invest their rebates in a mutual fund offered through the service.

Section 529 College Savings Plans are a great way to save for a college education; UPromise makes it easy to add a few extra dollars to accelerate your savings program just by shopping and spending as you usually do. To me, that's better than frequent flyer miles or the points offered by any other rewards programs. In fact, I think it's such a great idea that I signed up this week.

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