Have you ever wondered why women’s and men’s razors cost different amounts for a nearly identical product, just in a different color? Or, if you’re a parent, why shopping for your daughter is more expensive than shopping for your son? The undue burden of paying extra for necessities — aka the “pink tax” — can cost women thousands of dollars over the course of their lifetime. However, by strategically utilizing credit card benefits, women can potentially mitigate the impact of the pink tax on their finances.

What is the pink tax?

The pink tax refers to the extra amount of money that women often end up paying for everyday goods and services, solely because they are marketed as being “for women.” It’s not an actual tax issued by the government, but rather a phrase used to describe the extra costs associated with these products and services.

According to a 2015 study by the New York City Department of Consumer Affairs, women’s personal care products, including shampoo, razors, lotion, and deodorant, cost an average of 13% more than similar products marketed toward men. The same study found that women’s clothing was priced, on average, 7% higher than men’s clothing for similar items, and girl’s toys like bikes, helmets, and scooters were up to 13% more expensive than boy’s items.

What Regina McCann Hess, a Certified Financial Planner, Certified Divorce Financial Analyst, and author of “Super Woman Wealth: How To Become Your Own Financial Hero” calls, “the most insulting pink tax” is the tax some states impose on feminine hygiene products. “Items that are taxed are usually considered not necessary or a luxury,” she explains. “How is it that we must pay taxes on products that we absolutely need during the years that we menstruate?” You may have also heard this referred to as the “tampon tax” or “period tax.”

Initiatives like the Pink Tax Repeal Act aim to address pricing disparities at the federal level, while states such as New York and California have implemented laws prohibiting gender-based pricing. In 2020, the state of California calculated that women were spending more than $2,300 on goods and services marketed to them at inflated prices compared to similar products marketed to men, translating to costs of about $188,000 over a woman’s lifetime.

To combat the impact of this extra expense, unfortunately, the burden falls back on women themselves to find creative ways to put pink tax dollars back in their pockets.

The pink tax can negatively impact a woman’s overall financial health

The pink tax adds to the existing financial inequalities women face. In addition to making less money, saving less for retirement, and paying higher long-term care insurance costs, than their male counterparts, discriminatory pricing can impact a woman’s purchasing power, ability to save money, and her stress level.

“Women are already paid significantly less than men for similar roles and, in general, throughout the workforce, and imposing additional taxes on items that are geared towards women or girls further widens the gap and hinders financial goal attainment,” says Annette Harris, a Human Resources professional with more than 15 years of experience educating employees on retirement benefit options and founder of Harris Financial Coaching.

This disparity extends beyond immediate income, affecting long-term financial security. Reduced earnings result in lower Social Security benefits and hinder the ability to save adequately for retirement. There’s also the financial impact of caregiving to consider. In addition to lost income and employer contributions to retirement savings during career gaps caused by caregiving responsibilities for women, the compounded effect of foregone investments can substantially impact long-term wealth accumulation.

“We start off behind since we only make $0.82 on every dollar that a man makes. Then, we are further burdened by higher costs for the products that we use,” says McCann Hess. We must find ways to make our dollars stretch to pay for our basic needs. This leaves less for rainy day and retirement savings.”

In the fight against the pink tax, leveraging credit card rewards programs and perks can provide consumers with valuable savings opportunities. Many credit cards offer cash back or rewards points on purchases, allowing you to offset the additional costs associated with gendered products. “It’s important to think strategically when faced with the disadvantages of the pink tax,” says Harris.

Part of thinking strategically includes taking a look at your overall finances to assess areas where you can make improvements and moves that will benefit your overall financial health. These moves can include creating a budget, planning for retirement, and paying off debt. To help chip away at any debt you do have, consider using our debt payoff calculator to see the best ways to save on interest and pay down your debt faster.

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How to navigate the pink tax with credit cards

Using credit cards to offset the costs of the pink tax works through strategic use of your credit cards to maximize your rewards benefits.

“Many of us have a credit card that provides us points or cash back for our purchases. Those points can be used for many things and that can include gift cards to major stores,” McCann Hess explains. “We can choose and use these gift cards strategically.”

You can do this by redeeming points for a gift card to a store where you need to buy women-marketed items or by applying cash back to your bill to fund the purchases you’ve already made. Additionally, some credit cards offer travel rewards in the form of flight miles or hotel points, which you can redeem to offset the cost of your next vacation. Whichever way you look at it, the money you’re spending on pink tax items will help fund something that prevents you from spending cash and boosts your budget.

Harris recommends picking the credit card that best fits your lifestyle to take full advantage of perks that can offset the pink tax. “For example, signing up for a travel rewards card won’t be advantageous if you don’t travel often. Signing up for a rewards card that provides gift cards to your local grocery store may be best”

Below are two cards that Harris recommends:

  • Amazon Signature Visa Card: Harris explains that this rewards program can help you reap benefits when purchasing products subject to the pink tax. “The cashback received can be used on future Amazon purchases or to reduce the payment on future credit card payments,” she says. “ Many individuals subscribe to save on many products, and the cashback rewards can continue to grow.”
  • American Airlines Citi: “Using the Citi card for purchases can increase your advantage level and enable you to get seat upgrades, flight discounts, access to the Admirals Club, and more,” says Harris.

Of course, there are always caveats when using any credit card, and responsible use is the only way this method actually works.

“When using a credit card to maximize savings and find benefits, paying your balance in full is important so you are not charged interest on the products you purchase,” Harris says. “Not paying your card in full monthly can cause you to pay more on interest and fees instead of benefiting from the rewards.”

Bottom line

Is it fair that women have to do extra work of strategizing to make their money work for them? No, it’s not. But, simply choosing the right credit card and swiping it responsibly to leverage rewards is one simple step you can take towards bridging the gap created by the pink tax.