- The Washington Times - Monday, August 2, 2004

Need to start saving money for your children’s college education? You can open a savings account at a local bank. You can urge friends and family to give your children the gift of bonds.

You can even buy yourself a new pair of khakis at Eddie Bauer.

Upromise and Vesdia Corp. — two companies that help consumers bank cash when they shop for groceries, gasoline and other products — have stepped up their efforts to market their services to parents saving for college.

Both programs, which were introduced in spring 2001, give their “members” cash rebates when they shop for certain products or at certain businesses.

For example, Upromise members receive rebates of 1 cent a gallon when they buy gasoline at Exxon Mobil stations, 4 percent of their TruGreen ChemLawn bill and 5 percent of their Sharper Image purchases.

Members of Vesdia’s BabyMint program save 3 percent of their Sam Goody purchases, 5 percent of their Hickory Farms purchases and 4 percent when they book a cruise through Carnival Corp.

Upromise and BabyMint members can have the money set aside in a savings account, or they can have it deposited into one of the 529 college savings plans operated by states.

“It is simply taking money that would be spent in some other way and redirecting that money in a way that helps the family,” said David Rochon, a Upromise senior vice president.

Upromise and BabyMint have joined the 529 plans as vehicles to save for college, a source of anxiety for many parents as tuition continues to soar.

Some retailers have bypassed the companies, though.

Last week, BabyCenter, a chain that sells baby products, announced the introduction of a credit card that gives users 1 percent rebates that can be earmarked for college.

Upromise and BabyMint have added merchants, products and services in recent months.

Upromise, based in Needham, Mass., offers rebates from more than 100 national companies and 9,000 restaurants, its Web site says.

Atlanta-based BabyMint offers rebates from more than 200 companies, primarily online merchants.

The companies share a few merchants, such as Eddie Bauer Inc.

The casual clothing and sporting goods retailer gives BabyMint members a 4 percent rebate, while Upromise members get a 3 percent rebate when they shop for Eddie Bauer products online.

There is no fee to join Upromise or BabyMint. The companies earn money from the participating merchants, who pay them to foster customer loyalty.

Both companies are private and do not disclose financial information.

The companies work with credit-card companies and other businesses to help their members maximize the rebates.

MBNA America Bank issues a BabyMint credit card that gives members a 1 percent credit on every purchase they make, whether it is from an approved BabyMint merchant or not.

When members shop at BabyMint merchants, they receive as much as 30 percent in additional rebates.

CitiBank offers a Upromise credit card that doubles rebates from participating merchants.

In addition, America Online members who use Upromise receive double rebates when they shop at participating merchants.

The money Upromise and BabyMint members receive from the rebates could be used for any purpose, but spokesmen for the companies said they present themselves as college savings programs because many consumers are concerned about financing their children’s education.

If consumers do use the programs to save for college, the spokesmen said, they must understand one thing upfront: No one can pay for school by buying khaki pants alone.

Herndon defense contractor David Horvath has saved about $600 for his three children — ages 7, 4 and 2 — since he joined BabyMint in 2002. His rebates are transferred automatically into a 529 savings plan.

“It’s better than blowing it on a TV or a stereo,” he said.

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