2008-04-04

Was That $1,000 Really Free? What We Are Doing With Upromise.

A couple of days ago, I looked at what our contributions from our participation in Upromise totaled: $1,053. Is that any good? Does that mean we have any worthwhile tips in using Upromise?

We’ve been using Upromise for 3 years and maybe 8 months—so our annual pace translates to about $287. If we were to keep up that pace over 18 years, and assumed compound annual appreciation of 8%, that could feasibly translate to an additional $11,608 in college savings. Nothing earth-shattering, especially with the rising costs of college. But not bad, especially if it really is free, right?

If you’re not familiar with Upromise, it’s a service that’s supposed to boost your college savings. Generally, you sign up; register your credit cards; and register your grocery-store cards. Then you get kickbacks toward your college savings, which can be set up to feed directly into a 529 account for automatic investment.

As examples: when you buy a box of cereal in the store from a participating Upromise partner, that partner kicks in a percentage of the purchase price; when you eat at a participating Upromise partner restaurant, that partner kicks in a percentage of your bill; and when you shop online and go through the Upromise website to a participating Upromise partner retailer, that partner kicks in a percentage of your purchases. There’s also a Upromise credit card, for which a percentages of your purchases made with the card get kicked in. The Upromise website talks about percentage ranges of 1-25% for these various vehicles (I don’t think 25% is too common), and there are probably other kickbacks I have not mentioned.

Upromise has been around for a while, and I believe it’s been discussed and blogged at some length already—so I won’t dive deeper into how it works. (Here are several posts just from the past few months: What is Upromise at No Debt Plan; Upromise Rewards Free Money at My Dollar Plan; Signed up for Upromise at Single Guy Money; and How We Save for Our Children’s College Passively Through Upromise at Suburban Dad’s Personal Finance Blog.) I’ve seen some mentions of being able to just take the savings out in cash or use it to pay off your own student loans, but I don’t know anything about those. But I get the impression it’s not only for parents saving for their kids.

From my highly scientific study of what people seem to be saving through Upromise—looking at a few blogs and review websites that talked about Upromise and seeing what comments had been left—I think our realized savings/contributions through Upromise is above average. I only saw one person who seemed to have a higher annual pace than $287. Maybe that just means we’re spending too much.

Here’s what we’re doing and not doing with Upromise:

  • We proactively look for opportunities to buy through Upromise to get the partner contributions toward our college savings—but only when we were already going to buy something.
  • We’ve found that some types of purchases seem to often be running specials with higher-percentage contributions. Off the top of my head—flowers. Also, we’ve found we could combine other coupon codes or discounts. So I recall getting 10-15% Upromise contributions through a florist special and another 10% off a coupon code, for a total of 20-25% “off” the listed price. Flower delivery is kinda crazy expensive, and we’ve cut back on it—but if you’re gonna do it, I’d suggest using UPromise.
  • When we find an opportunity to buy through a Upromise partner, we try to finish the comparison shopping at retailers not affiliated with Upromise. If the Upromise partner is giving a 1% contribution toward our college savings—but its price is 5% more than the next one—we pass. Where needed, we try to figure any shipping and handling into this comparison.
  • We especially check whether any big-ticket purchases can be made through Upromise. As examples, when we had to replace our washer and dryer, we bought them through Upromise at Sears and Best Buy, respectively. They both allow delivery through their websites—and Best Buy also allows in-store pick-up. So when our desktop computer hit its last legs, I bought the new one through Upromise through Best Buy—and then drove over to the store to get it.
  • If we’re out at a mall or food court, and I can remember that one of the eating options is a Upromise contributor, I might favor that one. But overall, we’re barely using the Upromise dining program. There just aren’t many participating restaurants that are convenient to us or that we would normally visit.
  • We invited a few family members to join in contributing toward our kids’ college savings through Upromise—but not very broadly, and we haven’t pushed it much. It felt sort of invasive or personal to get someone else to register all their credit cards and such.

Are there any downsides to Upromise? Upromise bills itself with statements like: “Upromise college savings build up just by doing what you normally do.” If you can stay disciplined, that seems more or less accurate in our experience. If seeing the Upromise contributions ends up like sales or coupons that nudge you toward buying something you wouldn’t have otherwise bought, or spending more overall that you intended or should have, you might be better off without Upromise. There could also be privacy concerns, as the company really is gathering a lot of data about your spending (and precisely what you’re buying). According to Upromise’s privacy policy as of today, you can restrict whether that information can be shared with Upromise’s affiliate companies and the information mostly is not shared with unaffiliated companies.

There are competing services, by the way. The one I recall off the top of my head is BabyMint. We signed up for that one too, but at the time we started with it, it didn't integrate as seamlessly with our 529 plan, so we sort of just fell off of using it.

We’re continuing on with Upromise. It’s not going to make a very big dent, I expect, but it seems relatively free. What have other folks’ Upromise experiences been?

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