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 out of your credit cards this month.
Every month, the Nerds round up a new set of tips to help you maximize rewards and minimize costs with each use of your credit card. Here are our tips for August 2016.
Find back-to-school shopping bargains
Back-to-school shopping is “the second-largest retail event of the year, behind only the winter holiday shopping season,” according to Mintel, a market research company. Obviously, people are buying a lot more than pencils and erasers. If your kids — or you — are heading back to school, your shopping list may include school supplies, books, computers and clothing. For college-bound teenagers, outfitting a dorm room or off-campus apartment can put a dent in the budget.
Save some money or earn cash-back rewards by choosing the right credit card when you shop. A flat-rate card gives you rewards on everything you buy. If you have a cash-back card with rotating bonus categories, know where to go to get maximum value this quarter — 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’t charge sales tax on back-to-school items. Read our guide to choosing the right credit card for back-to-school shopping, which also includes a list of sales tax holidays.
Teach students about credit
People go to college to prepare themselves for the work world — but few students learn the financial information they need to know for living in the real world. That’s where moms and dads have to be teachers. 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’s card or get a secured card.
Most of the major credit card issuers offer student credit cards, which are designed for college students with limited credit. They can be difficult to qualify for, however. If your student doesn’t 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 can hurt your credit, too.
Another option is to make your child an authorized user of your card. You’re 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 — usually around $300 — 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’t pay the bill; when the account is closed or converted to a regular card, the issuer refunds the money. Before applying, be sure that the card reports to one of the credit bureaus so that you achieve your goal: to build your child’s 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 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 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 AnnualCreditReport.com. Once you’ve scrutinized 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 free FICO scores these days; take advantage of them.
If you want to give your children a credit head start, begin teaching them about credit in high school. A 2016 survey by the Council for Economic Education found that only 17 states require high school students to take a personal finance course. If you don’t live in one of those states, it’s up to you to be the personal finance guru. People under 18 can’t 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 transactions and balance throughout the month, and pay your bill on time. By the time they head to college, they’ll be credit scholars.
Consider applying for a hotel card
Vacation season is winding down, but if you want to eke out one more trip before summer ends (or get started with planning for your next one), think about applying for a hotel credit card. August is the best time to apply for a hotel card, according to a NerdWallet study, because that’s the month when hotel credit cards make the most special offers. What’s a good offer? A sign-up bonus that runs from 25,000 to 80,000 points after you spend a certain amount within a specific time period. Hotel cards usually offer bonus rewards for money spent at their properties, and many offer perks like a free night’s stay each year. Check out NerdWallet’s comparison of hotel rewards programs to help you make a good choice.
This article first appeared at NerdWallet.