One in three parents who need child care this summer will accumulate credit card debt to pay for it, according to a new study from Bankrate.com, a website that provides online financial advice and tools.
And parents in the Northeast are more likely to spend money on summer child care (51 percent) compared with those in the Midwest (30 percent), the study says. One in five parents will spend more than $2,000 per child, with 12 percent of those parents expecting to pay $3,000 or more per child.
“I myself have kids in day care, and it’s ridiculously expensive. I’m in the thick of it,” says financial planner Shawn Gallagher with the Frisch Financial Group in Melville. His kids are 3 and 1. “The thing about this is parents may have no choice but to take on debt. The alternative is not going to work. That’s not really an option for many people.”
Gallagher recommends that parents who need to put summer child care on a credit card and pay it off over time look for a card that offers a 6- to 12-month introductory period with low or no interest charge. “That way it gives them some time to pay that down,” Gallagher says. He also suggests they be sure to take advantage of the Child and Dependent Care Credit, which does include summer camp, when filing their 2019 taxes.
Going forward, Gallagher suggests families check with their employer to see if they offer a tax-advantaged Dependent Care Flexible Spending Account in which they can save weekly for future day care expenses.