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Do Investment Cards Really Add Up For College?

Another good feature of rewards credit cards and 529 savings plans: You can get family and friends to help.

Everyone with a Fidelity Investment 529 AE credit card can deposit his rewards in the same 529 account. Relatives who sign up with Upromise can make purchases that earn rewards for a select 529 account. "If you have aunts, uncles or grandparents willing to do that, it's something to check into," Harzog says. "You can accumulate more money faster with everyone contributing."

Watch for catches

But there are some caveats and a little buyer beware to using rewards points for college bills.

First, for the rewards credit cards to work, you have to be disciplined. You don't want to carry a balance on these cards. "If you're paying 12 percent to 20 percent interest on your purchases, you're more than wiping out your rewards," Harzog says. "It's not free money when you're paying interest."

Second, if you want your money to go to your child's 529 account, you have to establish one - and not just any 529 account. Fidelity requires that your 529 account be established with Fidelity Investments. Upromise earnings must be swept into a Upromise Investments-administered 529 plan.

"If you don't already have a 529 account with the favored provider, you'll have to decide if it's worth the hassle to sign up with another plan," Weston says.

Your home state might offer a 529 plan that provides you with more favorable state tax or other benefits than the ones tied to the credit cards. Remember, too, money from a 529 account can only be used for qualified expenses. Qualified expenses include tuition, certain room and board costs, and required fees, books and supplies.

Any rewards program can work

You can use credit card rewards to fund your child's education even if you're not interested in opening a 529 savings account, Harzog says. "It doesn't have to be a card tied to a specific brokerage account."

One of Harzog's favorite rewards credit cards is the Chase Freedom, where you can earn 5 percent cash back in different categories. Some months it's grocery stores and department stores. Some months it's gasoline and restaurants. She also likes Discover's cashback rewards card.

You could take the cash back you earn on your rewards credit card and deposit it into a savings account that you have earmarked for all college expenses. Then, Harzog says, when your daughter's car breaks down on her way back to campus, you have the funds to pay for the repairs.

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