A Sacramento, Calif.-based marketing firm is developing a credit card that it says would reduce consumers' college costs.
CollegeFund Partners-in-Education Inc. has not yet chosen a bank for the card, but said the program is scheduled for rollout next quarter.
The program will contribute up to 5% of purchases made at "partner" retailers into individual annuities that can be used as college funds for the cardholder's child or children.
CollegeFund says its cardholders could avoid the usual $2,500 minimum investment for annuity funds, as well as management fees that can run into hundreds of dollars. Cardholders would pay no more than $40 in fees per year, said Lanny Tobe, the company's project manager for annuity underwriting.
Robert K. Hammer, a consultant involved in putting the card program together, said it will address real concerns that parents have.
"Whether you're rich or poor, you worry about saving for your children's education," he said. "Here is a product that is designed to supplement or augment money needed when college costs come in."
CollegeFund said it has been negotiating with nearly 400 partner corporations - one of which will be chosen as the "anchor" retailer.
The average cost of sending a child to a four-year college has been estimated at $80,000.
Others have designed programs to help parents save for college. In May 1994, Advanta Corp. introduced the Edvance MasterCard, which rewards cardholders with U.S. savings bonds. Although savings bonds can be redeemed and used for any purpose, Advanta is marketing them to parents of young children, saying they supplement the cost of college.