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Boost 2016 Back-to-School Savings With the Right Credit Cards

July 28, 2016
Cash Back Credit Cards, Credit Cards
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The shopping list for the new school year is long. It encompasses small items such as erasers and glue and big-ticket purchases like computers. And the kids need clothes and shoes, too. Parents will spend an average of $673.57 on back-to-school shopping in 2016, according to the National Retail Federation.

Smart shoppers can take some of the sting out of back-to-school season by taking advantage of cash-back credit cards — and, in some states, sales-tax holidays. Let’s start with the cards that offer the best returns.

5% cash-back cards

The Discover it® Cash Back offers 5% cash back in bonus categories that change every three months, on up to $1,500 in spending per quarter, and 1% back on all other spending. In July, August and September 2016, the bonus categories are home improvement and Amazon.com, where you can get just about anything you need for back-to-school. Amazon is also a bonus category in the fourth quarter of the year. New cardholders get a promotional deal that essentially boosts their cash-back rate to 10% in bonus categories and 2% everywhere else. Discover describes it this way: “Discover will match ALL the cash back you've earned at the end of your first year, automatically. There's no signing up. And no limit to how much is matched.” The card’s annual fee is $0.

The Chase Freedom® also offers 5% cash back in rotating bonus categories, which in July, August and September of 2016 are restaurants and wholesale clubs, including Costco and Sam’s Club. (Wholesale clubs are also a bonus category in the fourth quarter.) As with the Discover it® Cash Back, the bonus applies to up to $1,500 in spending per quarter; all other spending earns 1% cash back. Non-bonus categories earn 1% cash back all the time. If you put all your back-to-school shopping on a new Chase Freedom® card, the sign-up bonus isn’t hard to reach: Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening. The card’s annual fee is $0.

Flat-rate cash-back cards

The Chase Freedom Unlimited® offers an unlimited 1.5% cash back all the time, no matter the category. Like the original Chase Freedom®, it has a sign-up bonus that’s fairly easy to earn: Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening. It has an annual fee of $0.

The Capital One® Quicksilver® Card - 0% Intro APR for 15 Months also pays 1.5% cash back with no limit on how much you can earn and no category restrictions. It, too, has a $0 annual fee and is offering an easily attainable sign-up bonus: One-time $150 cash bonus after you spend $500 on purchases within 3 months from account opening.

The newest entrant in the 1.5% cash-back category is the Wells Fargo Cash Wise Visa® Card. This card bumps your rewards rate up to 1.8% on Apple Pay or Android Pay during your first 12 months with the card. Its annual fee is $0.

 

Looking to do better than 1.5%? The Citi® Double Cash Card – 18 month BT offer pays 1% cash back when you make purchases and another 1% back as you pay for them. Its annual fee is $0.

The AmEx duo

Shoppers looking to hit department stores for a back-to-school wardrobe or supermarkets for school supplies should take a peek at two offerings from American Express.

With a $95 annual fee, the Blue Cash Preferred® Card from American Express earns 6% cash back at U.S. supermarkets, on up to $6,000 in spending a year (then 1% back); 3% cash back at U.S. gas stations and select U.S. department stores; and 1% on all other spending.

A similar card, the Blue Cash Everyday® Card from American Express, has lower rewards rates, but an annual fee of $0. Still, the rewards aren’t bad: 3% at U.S. supermarkets, on up to $6,000 in spending a year (then 1% back); 2% at U.S. gas stations and select U.S. department stores, and 1% on all other purchases.

Department stores that earn the extra cash back for both cards include Belk, Bloomingdale’s, Boscov’s, Dillard’s, J.C. Penney, Kohl’s, Macy’s, Saks Fifth Avenue and Sears. Both American Express cards offer cardholders a complimentary membership at ShopRunner.com, where you can find deals for shopping at many online retailers.

Shop on tax-free days

To save even more money, consumers in 17 states can avoid sales tax on certain items when they shop during tax “holidays.” (Four states — Delaware, Montana, Oregon and New Hampshire — have no sales tax. Alaska doesn’t have a statewide sales tax, but local governments can levy one.) Here’s a look at when and where to shop for back-to-school gear:

2017 Sales Tax Holidays for Back-to-School Shopping

StateDatesEligible merchandise / Maximum cost per Item
Source: Federation of Tax Administrators
AlabamaJuly 21-23Clothing / $100
Computers / $750
School supplies / $50
Books / $30
ArkansasAug. 5-6Clothing / $100
School supplies / No maximum
ConnecticutAug. 20-26Clothing and footwear / $100
FloridaAug. 4-6Computers / $750
Clothing / $60
School supplies / $15
IowaAug. 4-5Clothing / $100
LouisianaAug. 4-52% reduction (from 5%) on all tangible personal property / $2,500
MarylandAug. 13-19Clothing and footwear / $100
MIssissippiJuly 28-29Clothing and footwear / $100
MissouriAug. 4-6Clothing / $100
Computers / $1,500
School supplies / $50
New MexicoAug. 4-6Clothing / $100
Computers / $1,000
Computer equipment / $500
School supplies / $30
OhioAug. 4-6Clothing / $75
School supplies / $20
OklahomaAug. 4-6Clothing / $100
South CarolinaAug. 4-6Computers, school supplies, clothing, shoes / No maximum
TennesseeJuly 28-30Clothing and school supplies / $100
Computers / $1,500
TexasAug. 11-13Clothing, backpacks, school supplies / $100
VirginiaAug. 4-6Clothing / $100
School supplies / $20

» MORE: Do’s and don’ts of back-to-school shopping

Ellen Cannon is a staff writer at NerdWallet, a personal finance website. Email: ecannon@nerdwallet.com. Twitter: @ellencannon.