Update: Just as this post published, we received word from Gift of College that they have changed their approach and have lifted the daily limits for redemptions. I believe that Gift of College will maintain a $2K/day purchase limit (though perhaps YMMV in terms of local store policy), but redemption limits are being lifted. The original post follows.
Gift of College provides a way to fund college savings with a credit card indirectly by purchasing Gift of College gift cards and then using them to fund a 529 plan. Greg has written extensively about this in the past — see Miles for College for more. Gift of College gift cards are not as widely available as they once were, but I thought it was worth a post for those planning to fund a 529 that Gift of College
now only allows $2,000 to be loaded per day. (See the update above)
When my son was born last year, I wrote a post about how I was already
using him taking advantage of opportunities to let him help us earn points (See: Bundle of points with our bundle of joy: Nearly 200K points earned in the first month of life). One of the ways I picked up points was buying Gift of College Gift Cards at a regional gas station chain during a time when Chase was offering 10x points on Marriott and Ritz credit cards for gas station purchases. I loaded a quantity of those cards last year, but left a few thousand to contribute this year. When my wife went to load them to Gift of College the other day, she got the following error after having loaded $2,000 and trying to add an additional $500.
I contacted Gift of College about that error as both Greg and I have loaded more than $2,000 at one time in the past. Gift of College confirmed this $2,000 limit per day when loading an account as per the following statement:
We’ve implemented this daily limit for gift card redemptions. It follows the regulatory daily purchase dollar limit of gift cards.
That’s an odd take on gift card limits in my opinion. While they wouldn’t be the only company to limit institute a purchase limit of $2,000 in gift cards per day, but limiting the redemption of gift cards already purchased is new to me. It seems a bit nonsensical to me to prevent a gift recipient from redeeming their gifts. In this case, we have two sons. We loaded $2,000 to one son’s account and tried to load $500 to our other son’s college savings (which is under the same Gift of College account) and received that error, so the limit seems to apply to anyone under a single Gift of College login. Again, that seems strange to me. I’m not sure what would have happened if, for example, some other family member had tried to give a Gift of College contribution on the same day, but I think they would have received the same error.
Update: As noted above, Gift of College has walked back this policy and is no longer limiting redemptions.
This isn’t a major issue as it is easy enough to spread out contributions. I imagine that most readers don’t have an option to buy Gift of College gift cards locally and even those who do might be making smaller contributions anyway. On the other hand, some states offer a tax deduction for 529 contributions and so there are situations where you may want to load more than $2,000 to an account. Be aware that if you want to do that, you’ll need to split it up over a few days to load them to your account.