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MONEY SMART KIDS
Saving with Upromise
by Janet Bodnar

I enjoy reading your column every week. We have several nieces and nephews who are now having children of their own, and they are concerned about the children's college education. One of them recently sent us information on the Upromise plan for saving for college. It seems so simple, especially because we all shop. But I want to make sure that the plan is not just something that is here today and gone, with investors' money, tomorrow.

My understanding is that if we set up an account for four youngsters, the money can be kept in our (non-interest-bearing) account until we distribute it to 529 education accounts for the children. What is your opinion of this arrangement?

Upromise started in 2001 with a simple idea: Parents -- and anyone else who wants to contribute to a child's college fund (such as a generous aunt) -- shop as they normally would and accrue rebates of up to 10% on products and services from participating merchants. Money earned is automatically stashed in an account that you can monitor at Upromise.com.

When the program began, it had only a handful of big-name brands as partners, and it took more time and trouble to set up an account than it was worth in rebates. Since then, however, Upromise has ramped up its rebate offers and polished its image as an attractive way to accumulate money for college.

It has a growing list of partners in every major category of consumer goods, representing more than 7,000 grocery-store products, 9,000 restaurants and 200 online retailers. The latest Upromise partnership gives AOL subscribers double rebates on thousands of supermarket brands.

To participate, parents, family members and helpful friends register their supermarket loyalty cards and credit cards at the Upromise site. Be aware, however, that it can sometimes take months for rebates to be posted.

Once your account is set up, you definitely will want to sweep cash regularly into a 529 college-savings plan, which is being managed for Upromise members by Vanguard, the well-respected mutual fund company. Once in the 529 plan, money can be invested and grow tax-free for college.

With the Vanguard account, you can choose custom investment portfolios and age-based investment tracks for your nieces and nephews. Vanguard levies a $20 annual account fee for Upromise members.