Anyone here have experiences with U-Promise? I have a two year old. We have a college fund started, but we’re considering U Promise for a little extra. Need advice.
I joined when my niece was around three, 15 years ago. This fall she’ll be starting college with over $5000 in the account. I consider it free money, although I got into the habit of charging everything that’s chargeable.
The huge caveat is that you must pay the entire balance off every month. The interest rate is so high that failure to do this for a single month can pretty much wipe out what you saved for a whole year. Once I accidentally underpaid by two cents and got charged full interest for the month.
And once you get hit with interest, you need to stop using the card until the balance zeroes out for a month due to something they call residual interest, or you’ll be paying interest forever.
You will at some point have to set up a 529 account into which the money will automatically be channeled.
It takes only a phone call to get the money when needed. On request, they’ll send a check to you or to an educational institution. It’s all tax free, but the recipient will have to provide the IRS with documentation that it was spent on qualified expenses.