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When you become a parent, suddenly, you're entirely responsible for a whole new life. Not just physically and emotionally, but financially as well. In simplest terms, your life is about to get much more expensive. Between diapers, daycare, a crib, a car seat, clothes and a lot more, you must seriously adjust your budget before bringing a new baby home.
Considering the cost of raising a baby from birth to college is over $200,000, it's not entirely surprising that many parents turn to credit cards to help pay for necessities. When done correctly, credit card rewards can go a long way toward offering some financial support. It takes a lot of discipline to make credit cards work for you, so keep that in mind before rushing out to apply for a new card.
Credit Card Strategies for Parents
According to a USDA report, the cost of raising a child until they're 18 is $233,610. And that's per child. So, if you have a family of four, that cost suddenly jumps to $934,440. That's on top of the additional cost for you and your partner if it's a two-parent household.
Credit cards, when used responsibly, can help lessen the blow of these costs. You can earn rewards that turn into cash or travel rebates.
Here are some types of credit cards:
A versatile option for most credit card users. These cards may focus on grocery rewards, gas rewards, general cash back and more. Depending on where you spend most, you can prioritize cash back credit cards that offer higher rewards in those areas.
If you're a family that goes on vacation yearly, these can help you pay for a good chunk of the cost. Booking a trip, especially for a bigger family once a year, can help you rack up enough points for your next trip. Plus, travel rewards credit cards also often offer travel insurance protections.
It can help families facing a mountain of debt. Using a balance transfer credit card allows you to combine your debts (typically other credit card debts) into one monthly payment. You'll also typically secure a 0% interest rate anywhere from six to 18 months.
If you're still working on building credit, a secured credit card can help prepare you for a higher-tier rewards card. You'll pay a down payment when you get the card, which often equals your credit limit. Most secured cards approve low credit borrowers because of the down payment.
Benefits to Using Credit Cards
Using them and paying them off regularly each month can help you cover household expenses with the cash back you earn. With cards for nearly every purpose, you can likely find one that works for you.
Here are a few benefits you and your family should consider when thinking about using credit cards:
Help pay for items you spend on most
Everyday shopping categories like groceries and gas can add up quickly. If you're earning 5% every time you swipe your card, that's cash back straight into your pocket. To maximize your rewards, pick a card with the highest percentage possible (often 5%) in the category you spend on most.
Lower the price tag of family travel
While family vacations aren't exactly a necessity, many families save every year to give their children an experience of a lifetime. Travel rewards cards give you points when you spend on travel and other specific spend categories, which you can then redeem for travel purchases.
Offer certain protections
Credit cards come with all kinds of protections that many cardholders forget. For example, travel rewards often have travel protections and insurance, whereas cash back cards often have purchase protection and/or cell phone protection.
Help you improve your credit score
A good credit score can get you the best interest rates on loans and mortgages. It also helps you open credit cards that offer the best rewards. Secured cards can help you build your credit to qualify for loans when needed.
Best Credit Cards for Parents’ Needs
Parents might use credit cards to pay for school supplies, groceries, travel, gas and debt. Certain cards will work better depending on your specific needs as a parent. Whether that's a rewards credit card that offers cash back, credit cards that help build credit, or travel cards that can help you pay for your family to travel, there's an option for you.
We've narrowed it down to a few choices to give you an idea of some of your options.
Best Credit Cards for Earning Rewards
Rewards credit cards will reward those who spend on everyday categories most often. They often offer upwards of 5% on these categories. Here are two examples of strong rewards cards.
Blue Cash Preferred® Card
When speaking with experts, one of the most recommended cards for parents was the Blue Cash Preferred® Card. If you're willing to pay a $95 annual fee, the rewards are perfect for parents who spend a lot at the grocery store and those who supply their families with many streaming services.
Here are the rewards you'll earn with Blue Cash Preferred® Card:
- 6% back at supermarkets. You'll have a cap of $6,000 per year in purchases, but if you hit that cap, you'll earn $360 in rewards for the year.
- 6% back on subscription services. Only select streaming services apply, but many of the major ones apply.
- 3% back on transit. Transit includes taxis, rideshare services, parking fees, tolls, trains, buses, and more.
You’ll get $400 back as a statement credit when you spend $3,000 within the first six months of having the card.
Discover it® Cash Back
At no annual fee, Discover it® Cash Back offers a lot to cardholders. Discover doesn't just focus on cash back. It offers other perks like the ability to freeze your card at any time, social security alerts if your number is found on the dark web and more.
- 5% back on rotating categories like Amazon.com, grocery stores, gas stations, and restaurants. You'll also earn an unlimited 1% back on the rest of your purchases.
- Cashback Match allows you to double the cash back you earn in your first year. At the end of the year, Discover will match anything you've earned.
- 0% introductory APR for 15 months on both new purchases and balance transfers. There is a 3% fee for balance transfers, but that's common.
New cardholders will get a Cashback Match at the end of their first year. So, all the cash back earned throughout the year is doubled.
Best Credit Cards for Paying-off Debt
When you need to pay off debt, your choices will depend on how long you need to pay off the debt and the card's value once you do. Here are our top picks:
BankAmericard® Credit Card
The BankAmericard® Credit Card has long been a popular choice for balance transfers. It offers one of the higher 0% intro APR terms and now provides a small bonus that can help cardholders potentially pay off debt faster. Here are a few details worth pointing out:
- 0% APR for 18 months on both purchases and balance transfers.
- $100 online bonus offer in the form of a statement credit if you spend $1,000 within the first 90 days of opening your account.
- No annual fee. Any good balance transfer card won't make you pay an annual fee; that way, you can focus on your debt paydown.
0% Intro APR for your first 18 billing cycles for purchases and balance transfers made within the first 60 days.
Chase Slate Edge℠℠
The Chase Slate Edge℠℠ offers an appealing introductory offer and continued perks, so you'll want to continue using it even after the intro APR has ended. Plus, you'll pay no annual fee to access the benefits offered by Chase Slate Edge℠℠. Here are a few benefits to consider:
- 0% APR on purchases and balance transfers for 18 months. You'll face an APR of 16.49% to 25.24% after this period.
- Raise your credit limit after a few months. If you make on-time payments for the first six months that you have the card, you could qualify for a higher credit limit.
- Lower your interest rate each year. You'll automatically be considered for a 2% reduction in your APR when you pay on time and spend at least $1,000 within the first year.
0% intro APR for 18 months from account opening on purchases and balance transfers.
Best Credit Cards for Building Debt
Opening a credit card may sound counterintuitive if you need help building your credit score. But there are options for you, many of which come with no fees and are actually meant to help you improve your credit score.
Discover it® Secured Credit Card
With the Discover it® Secured Credit Card, you need to pay a deposit of at least $200, which then becomes your credit line. With no annual fee and cash back (rarely offered by secured cards), you may find a lot to like.
- 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. You'll also earn 1% cash back on all other purchases.
- Discover's Cashback Match offers secured cardholders a match to their cash back at the end of the first year.
- You can upgrade to an unsecured card after seven months if you've paid your bill on time each month.
New cardholders will get a Cashback Match at the end of their first year. So, all the cash back earned throughout the year is doubled.
Capital One Quicksilver Secured Cash Rewards Credit Card
The Capital One Quicksilver Secured Cash Rewards Credit Card is another secured card that prioritizes rewards while still offering a low minimum deposit. This card also charges no annual fee.
- 1.5% on all purchases, making for a straightforward rewards structure. Additionally, there are no limitations to how much you can earn.
- A $200 minimum deposit is required, but you can offer more (up to $3,000) to increase your credit limit. The deposit is refundable if you close your card or upgrade, assuming you make all your payments on time.
- Get pre-approved easily. Plus, you'll see no effect on your credit score until you officially apply for the card.
None offered, but you will earn 1.5% on all your purchases.
How to Use Credit Cards Responsibly as a Parent
While you should always be using your credit card responsibly, it's really time to do so if you're about to become a parent. Having a child comes with a high price tag — and credit cards can help you earn rewards to pay for some things — but taking on the potential for debt isn't always the best choice for everyone.
Here are a few tips so you can ensure you maintain responsible credit card habits:
Credit cards work best when you pay the balance regularly.
If you're constantly racking up big balances you can't pay for, having a credit card simply isn't worth it. There's no need to go into debt just to earn rewards. Make sure to pay the balance off entirely each month. That way, you won't have to worry about interest.
You should find the right cards and stick with them.
Not saying you can't open a new card every once in a while, but constantly opening credit cards just for bonuses or ultra-specific rewards will seriously affect your credit score.
Annual fees should be avoided, if possible.
Annual fees are fine if it's a card you think you'll constantly use in the long run. It's the only way to earn enough rewards to cover the annual fee and still make some extra on the side. Tread carefully with certain issuers that charge hundreds for their annual fee.
Consider making your teen an authorized user on your card.
When your kids reach teenagehood, it's the perfect time to start teaching them about responsible spending. Consider adding them as an authorized user, ONLY if you know they won't spend recklessly. As authorized users, they'll be able to make purchases just like you can.
As a parent, your money is no longer just meant for you. You'll need to set aside a good portion to support and care for your new child. Here are a few misconceptions about money that new parents need to think through:
- Thinking of credit cards as "free" money: Credit cards can feel like "free" money. You just swipe and don't have to think about the money leaving your account right away as you do with a debit card. Of course, it's not just money you can use whenever you want. Eventually, the bill will come due, and if you can't pay it off, you could wind up in a serious debt cycle.
- Underestimating the costs of raising a child: Having a baby comes with many unexpected expenses. Will your kid need braces? Glasses? Will they want to play an expensive sport? Will a private school be the best choice? You get the gist. If you're planning to have a child, ensure you consider all the costs.
- Not having a long-term plan and budget: The cost of raising a child doesn't necessarily stop at 18. When you become a parent, you need to consider significant milestones such as college or a wedding. Those have high costs associated with them. Having a long-term plan and a budget that helps you stick to it is the only way to ensure you'll meet your savings goals.
- Thinking about your credit score too late: When you're about to take out a loan, it is not the time to start improving your credit. A few months to a year beforehand is best since the steps you'll need to take are simply going to take time.
Important Factors to Consider When Choosing a Card
There are hundreds of cards to choose from in the credit card world. Some will be better for certain credit scores and uses, but even if you're just looking for cash back or travel rewards cards, there are still dozens of choices within those categories.
Before making a financial decision, narrow down your choices by asking yourself the following questions:
Can you responsibly use a credit card?
The first question to ask yourself is if you can handle the power that comes with a credit card. If you're susceptible to overspending, having a credit card might not be the right financial move. It's better to stay out of debt than get rewards that will be eaten by interest payments anyway.
Where do you spend most?
When choosing the right card, you'll want to prioritize cards that reward you in your common spending categories. Using this strategy, you can earn the most points possible.
Do you want an annual fee?
Some annual fee credit cards might be worth it if you can earn enough in rewards to pay it off and have some left over. Some people just don't want to pay an annual fee, period. Rightfully so, in the event that you don't end up using the card for a while, your annual fee is just costing you money.
How do you want to redeem your rewards?
If you wish to get your rewards in cash back, you'll need to find a card that allows you to do so. The same goes for travel rewards.
Credit Card Terms to Know
When looking at various credit cards, you may not know a lot of jargon. That's completely understandable, considering some words sound like a whole other language.
Here are some common terms to be aware of when comparing cards:
Annual Percentage Rate (APR)
The annual percentage rate is the interest rate you'll be charged on any balance you leave on your card. So, if you have a balance of $1,000 and an interest rate of 16.75%, you'd pay $167.50 in interest charges.
Some cards, namely balance transfer cards, offer an introductory APR typically of 0% when you first open the card. This intro period often lasts over a year, and the regular APR will apply after that period. You'll also find 0% intro APRs for purchases on some cards.
This is how much you'll have to pay each month to meet your required credit card payment. If you don't keep a balance on your cards, this minimum payment will be $0, but for those who carry a balance, this will be determined by how high your balance is.
Some credit cards (mostly rewards cards) will charge an annual fee to use their cards. How high the fee usually depends on the type of rewards offered. Some cards charge just $95, but premium cards with high-end rewards can charge upwards of $500!
Your credit limit is the maximum amount you can spend on your credit card before you have to start paying down the balance. Your credit score and history with credit cards will largely determine the amount.
It involves transferring other debt balances to a single credit card with a 0% intro APR. The idea is to pay off the balance before the 0% APR runs out.
Credit Card Tips for New Parents
There are many tricks you could use to get the most from your credit cards. They mainly involve paying attention to the cards you're using and how much you're putting on them.
Only use credit cards for your needs
Using your credit cards only for necessities like groceries and gas can help you keep your credit card spending to a minimum. Try your best not to put every want you have on a card. That way, you don't find yourself unable to pay your bill at the end of the month.
You can use credit cards to budget
If you have multiple cards that reward you in different areas, you can use these cards to stick to a budget. If you have a grocery rewards card, only buy your groceries on it. If you have a card that rewards dining out, put that spending only on that card. Keep an eye on the balances, and you'll stick within the parameters of your budget.
Set up alerts
You can set up alerts on your cards to send you a text or email when you're near your balance or when your payment is due. This can help ensure you're not overspending or missing any payments.
Set up autopay on all your cards
To keep up with payments, consider setting up autopay so that your balance is paid off each month. At the very least, set up autopay for the minimum payment on your card, so you don't miss payments.
Expert Insight on Credit Cards
We wanted to give you the best advice for using your credit card as a parent, so we spoke with industry experts to get you the inside scoop.
- What's the best credit card company that has rewards that will benefit parents most?
- Do you have any words of wisdom for parents looking to get a credit card to help out with expenses?
Retired Financial Planner & Financial Coach
Money-Saving and Finance Expert, Writer and TV Contributor
Certified Financial Planner and CFO of FindThisBest
Resources for Credit Cards
So many guides and resources exist to help the average consumer better use their credit card. After all, using your card responsibly is the only way to truly get the benefits that make credit cards worthwhile. Here are a few resources to help you get the most from your cards:
- American Bankers Association Credit Card Facts and Tips: Your most common credit card questions are answered in this guide.
- Cash Back Calculator: This calculator can help you understand how much you'll realistically earn with a cash back card. Just enter how much you think you'll spend and your cash back percentage. The calculator will tell you how much you'll earn.
- Consumer Action Families and Credit Cards Guide: This guide helps parents understand whether or not they should give their kids and teens a credit card.
- Consumer Financial Protection Bureau's Credit Cards Guide: The CFPB offers this resource for those shopping for a new card or getting their very first one. They offer resources so you can understand all the complex credit card terms and the pros and cons of each credit card company.
- Consumer Reports Tips to Increase Rewards: This guide offers tips and tricks so you can earn the highest rate possible with your grocery rewards credit card.
- LendingTree State-by-State Breakdown of Childcare Costs: Find out exactly how much it would cost to raise a child in your state by looking at LendingTree's graphic.
- Huntington Banks' Childcare Calculator: You can get a realistic estimate of major costs associated with raising a child using Huntington's calculator.
About Christopher Murray
- Dawn Papandrea. "46% of Parents Say Their Child Used Their Credit or Debit Card Without Permission, Racking Up $500+." Accessed August 2, 2022.
- Katia Dmitrieva. "Americans Are Spending Less on Their Credit Cards, Lenders Say." Accessed August 3, 2022.
- Statista. "Which Form of Payment Do You Use Most Often When at the Supermarket?." Accessed August 2, 2022.
- T. Rowe Price. "2019 Parents, Kids & Money Survey Results." Accessed August 3, 2022.
- U.S. Department of Agriculture. "The Cost of Raising a Child." Accessed August 2, 2022.
- U.S. Department of Agriculture. "Expenditures on Children By Families Reports - All Years." Accessed August 3, 2022.
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