{"id":2407,"date":"2025-08-21T15:55:36","date_gmt":"2025-08-21T15:55:36","guid":{"rendered":"http:\/\/ft365.org\/index.php\/2025\/08\/21\/how-personal-loans-help-with-back-to-school-budgets-bankrate\/"},"modified":"2025-08-21T15:55:36","modified_gmt":"2025-08-21T15:55:36","slug":"how-personal-loans-help-with-back-to-school-budgets-bankrate","status":"publish","type":"post","link":"http:\/\/ft365.org\/index.php\/2025\/08\/21\/how-personal-loans-help-with-back-to-school-budgets-bankrate\/","title":{"rendered":"How Personal Loans Help With Back-To-School Budgets | Bankrate"},"content":{"rendered":"
\n
\n

Key takeaways<\/span> <\/span> <\/h2>\n
    \n
  • Personal loans give you a predictable payment and can be funded quickly. <\/li>\n
  • They can help your credit score if used instead of credit cards. <\/li>\n
  • May keep you from depleting savings accounts or altering long-term savings goals. <\/li>\n
  • Average personal loan rates are more than 7 percentage points lower than average credit card rates. <\/li>\n<\/ul><\/div>\n

    Although Bankrate editor Katie Lowery used credit cards and some savings for back-to-school expenses, she may need to take out a personal loan to purchase a big-ticket band instrument for her son.<\/p>\n

    \u201cI didn\u2019t consider a personal loan this year because many of the costs are ongoing, and the total didn\u2019t justify a lump-sum loan,\u201d she said. \u201cBut if I have to buy my son\u2019s full-size marimba ($6,000), a low-interest personal loan with a short repayment term will be my first financing choice.\u201d<\/p>\n

    Back-to-school time can put a dent in the budgets of families already struggling with record-high credit card debt<\/u>, leaving very little (if any) funds on hand for emergencies<\/u>. Opting for a personal loan<\/u> may help ease the back-to-school-budget pain better by spreading out payments.<\/p>\n

    A personal loan may help you manage your budget before the first day of school arrives. Because you receive the funds all at once, you\u2019ll need to fine-tune the dollar amount ahead of time, but it will help you avoid the swipe-and-go-forget-about-it credit card alternative<\/u> that comes with more interest charges and the ding to your credit score.<\/p>\n

    It could also spark a money conversation with your kids, if you can handle the inevitable rolling of the eyes.<\/p>\n

    Estimation of back-to-school costs<\/h2>\n

    Every year, the National Retail Federation puts out a report about how much consumers are budgeting per child for back-to-school (BTS) expenses. Here\u2019s how the averages roll out for 2025:<\/p>\n

    \n\n\n\n\n\n\n\n\n\n
    Type of expense<\/th>\nPer child expense (K-12)<\/th>\n<\/tr>\n<\/thead>\n
    Electronics<\/td>\n$295.81<\/td>\n<\/tr>\n
    Clothing and accessories<\/td>\n$249.36<\/td>\n<\/tr>\n
    Shoes<\/td>\n$169.13<\/td>\n<\/tr>\n
    School supplies<\/td>\n$143.77<\/td>\n<\/tr>\n
    Total per child 2025 BTS expense<\/strong><\/td>\n$858.07<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>
    Source:<\/strong> National Retail Federation<\/u><\/figcaption>

    For the average two-child family, you\u2019ll spend about $1,700 on back-to-school shopping, but as many parents know, back-to-school can also mean going back to sports, dance recitals or any other interests your kids might have.<\/p>\n

    These extracurricular activities would mean you need to budget extra money:<\/p>\n

      \n
    • $1,016 average per child for sports<\/u> <\/li>\n
    • $251 average cost per student for music program<\/u> <\/li>\n
    • $400 average fee for one competitive dance event<\/u> <\/li>\n<\/ul>\n

      Bottom line: If you have two kids, your back-to-school kick-off bill could quickly top $3,000. How can personal loans help?<\/p>\n

      4 ways personal loans can help you during the back-to-school season <\/h2>\n

      1. Make a budget \u2013 and stick to it<\/h3>\n

      The best way to avoid the emotional pull of an impulse purchase during the school shopping season is to have all of your funds allocated ahead of time. With a personal loan, you receive all your funds in one lump sum. You don\u2019t get to reuse the credit as it\u2019s paid down because it\u2019s an installment loan<\/u>. You\u2019re probably not going to be motivated to spend more because there\u2019s no card to swipe with an installment loan.<\/p>\n

      Deloitte\u2019s back-to-school spending survey<\/u> found that nearly two-thirds of parents say their kids often influence them to spend more, but Bankrate senior industry analyst Ted Rossman says this can be the perfect time to teach age-appropriate financial lessons to your kids, \u201cmaybe as little as preschool, but certainly by elementary, and definitely middle and high school.\u201d <\/p>\n

      Rossman says that could help approach spending decisions differently. For instance, if you want to set a back-to-school budget at $200, but your kids also want fancy backpacks or shoes, let them know the purchase is possible only if you \u201ctrim back somewhere else.\u201d<\/p>\n

      2. Avoid the credit card merry-go-round<\/h3>\n

      The best way to stay off the credit card spinning ride is to use a personal loan. With average personal loan rates<\/u> more than seven percentage points lower than credit card interest rates<\/u>, your monthly payment might not be that much higher than what you\u2019re paying on your credit cards.<\/p>\n

      According to a recent Bankrate credit utilization survey<\/u>, 45 percent of cardholders maxing out their credit cards are parents with children younger than 18. To make matters worse, 46 percent of Americans with under-aged kids missed at least one payment due to rocky financial times.<\/p>\n

      \n

      Lightbulb Icon<\/title> <\/svg> <\/p>\n
      \n

      Credit score <\/p>\n

      \n

      You won\u2019t damage the credit utilization ratio<\/u> portion of your credit score by getting personal loans because they are installment products.<\/p>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n

      3. Consolidate the credit cards you used for back-to-school bills. <\/h3>\n

      If you already cranked up your cards, take heart: you can consolidate them with a personal loan<\/u>. In fact, debt consolidation<\/u> is one of the most common reasons to take out a personal loan. If you take one out and use the funds to pay those balances in full soon after your back-to-school credit charging extravaganza, you might minimize the damage to your credit score<\/u>.<\/p>\n

      Your scores may improve enough that you can shop for a lower personal loan rate<\/u> in the future, or you may find other money-saving opportunities, such as a lower home or auto insurance premium, or refinancing high-interest student loans you took out when your credit scores were in the dumps.<\/p>\n

      4. Stop the high-frequency buy now, pay later bill-paying insanity<\/h3>\n

      Those buy now, pay later<\/u> (BNPL) plans may seem like a great idea to avoid using credit cards until you realize having two kids and all the scheduling challenges of back-to-school may make it tough to keep track of those biweekly payments.<\/p>\n

      If you took out multiple plans to pay for shoes, clothes, supplies and sports fees, you\u2019re tracking payments on each<\/i> plan every two weeks, rather than monthly. If tracking the payment plan is like trying to find that missing sock in the dryer, use a personal loan to pay them all off. You\u2019ll simplify your life with one monthly payment, and you can always make extra payments to clear the balance faster if you want to.<\/p>\n

      \n

      \"A<\/p>\n

      \n

      Personal loan calculator <\/h3>\n

      Wondering if a personal loan is the best fit for you? Try out some calculations to see if personal loans would be the right choice for you.<\/p>\n

      Check lenders and rates now <\/p>\n<\/div><\/div>\n

      Breaking down the personal loan financial math<\/h2>\n

      If you\u2019re confused about back-to-school budget planning, it may be tough to sit down and crunch the numbers. To get an idea of how a personal loan could help, let\u2019s say you need $3,000 for two kids\u2019 worth of back-to- and after-school expenses.<\/p>\n

      The table below compares three types of credit:<\/p>\n

        \n
      • BNPL plan with four biweekly payments<\/li>\n
      • Credit card with 20 percent interest <\/li>\n
      • Personal loan with 12.5 percent interest and a two-year term <\/li>\n<\/ul>\n
        \n\n\n\n\n\n\n\n
        Type of credit<\/th>\nMonthly payment<\/th>\nTotal interest<\/th>\nPaid in full timeline<\/th>\n<\/tr>\n<\/thead>\n
        Personal loan<\/td>\n$142<\/td>\n$406.13<\/td>\n24 months<\/td>\n<\/tr>\n
        BNPL<\/td>\n$1,500 ($750 bi-weekly)<\/td>\n$0<\/td>\n8 weeks<\/td>\n<\/tr>\n
        Credit card<\/td>\n$80<\/td>\n$4,390.04<\/td>\n226 months<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n
        \n

        Back-to-school math results <\/h3>\n
        \n
          \n
        • The personal loan monthly payment is $62 more than a credit card but saves you nearly $4,000 in interest versus a minimum credit card payment.<\/li>\n
        • BNPL doesn\u2019t cost you any interest, but will set you back $750 every two weeks. <\/li>\n
        • Higher revolving credit balances could sink your score, resulting in higher rates on future credit (think mortgages, auto loans, private student loans, etc).<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n

          How Bankrate experts are handling their back-to-school budgets<\/h2>\n

          Katie Lowery<\/h3>\n

          Planning for school-year spending doesn\u2019t have to fall squarely on the backs of parents. For Lowery, it\u2019s become an annual family financial learning event.<\/p>\n

          \n

          One of my favorite traditions for back-to-school season is to involve my kids in the budgeting and shopping side of things.<\/q> \u2014 Katie Lowery, Bankrate editor, Loans <\/cite> <\/p><\/blockquote><\/div>\n

          The lesson usually begins in the school supply aisle at Target. \u201cBefore we leave the house, we make a shopping list, discuss additional items that would be nice and set a budget,\u201d Lowery says. \u201cIn the store, we talk about comparing prices between brands, keep a running total of our costs and discuss the added expense of sales tax.\u201d<\/p>\n

          Ted Rossman<\/h3>\n

          Despite Rossman\u2019s 10-year-old daughter teasing him about being so cost-conscious, comparison shopping is starting to sink in with her. \u201cI tend to be pretty frugal, and she\u2019s not shy about reminding me that. Like, \u2018Dad, you\u2019re so cheap. It\u2019s only a dollar.’\u201d he says.<\/p>\n

          Rossman answers by doing some grocery cart Dad math.<\/p>\n

          \n

          There might be 100 things in our grocery cart, and if we save [a] dollar on every one of them, that’s $100 per week, and if we do that every week of the year, that’s over $5,000.<\/q> \u2014 Ted Rossman, Bankrate senior industry analyst <\/cite> <\/p><\/blockquote><\/div>\n

          How could you add personal loans to the budgeting conversation?<\/h2>\n

          Kids are likely to know more about credit cards than personal loans because they are so heavily marketed to people of all ages. Here are a few quick personal loan lessons you can teach them:<\/p>\n