As promised....UPromise...

I recently had a baby girl which prompted me to consider college and how to save money for it. I decided to give the UPromise plan a try. For those unfamiliar, Upromise is a program where you receive credit in a UPromise account for purchasing items from various merchants which can be used for education expenses. I juiced my account by signing up for the UPromise credit card which gives you 1% of all purchases back as a credit to your account.

After several months my account reached a balance of $200+. When I checked my balance, usually after my monthly update email, it would be suggested I open a 529 savings plan and deposit my money there so that it could grow. Otherwise it sits in a zero interest account with UPromise.

I read the first page of information and clicked more info. I read the second page of information and clicked more info. On the 3rd page of information I was finally informed that UPromise would charge an annual fee of $20 for my 529 account starting 12 months after it was opened.

Doing some quick math in my head I realized that I would need to earn around 10% annually on my $200 just to cover the $20 fee. Given my investing track record and my love of mutual funds I don't see this happening. If I opened this account, over time I would hand all of my UPromise money to UPromise. How will this help pay for college?

Now my trust in UPromise was starting to crack so I began considering the rest of the program. Most of my money has come from the Credit Card kickback. I have several credit cards including airline miles and points redeemable for overpriced merchandise or cash. Assuming I don't jump the gun, the cash rebate is 1%. So which is better, the UPromise card which puts money aside for future schooling needs or the straight cash back?

I can see some situations where people who find it hard to save money would like the UPromise program as they can't really touch the money so there will be something when the time comes for education. I personally don't have that problem so rationally I am better off getting 1% back in Cash which I can then choose to spend or save in any manner I desire - including putting into an account for education that doesn't charge me the $20 service fee. Despite the clear logic of this I still feel 'wrong' about it, the mind is a tricky thing.

Where does this leave me with UPromise? The rebates for purchasing specific items are miniscule but free if they are items that you would normally purchase so we refer to the old adage about beggers not being choosers. I will continue to make my purchases as I always have and will earn a few cents every month, perhaps even a whole dollar a year. In 18 years when I have to pay for college I will use the $217 but until then I won't be paying UPromise $20/year for a 529 account and my usage of the UPromise Credit Card will dry up. I better check on annual fees, if the card has one I will cancel it.

Sorry Upromise. You have a wonderful idea but you just aren't able to make it worth the effort of using your service.