WalletHub reports that most colleges charge fees for credit card payments. Notable exceptions are part-time students at Boston University who accept them without charge and schools using third-party payment systems such as Plastiq that assess an additional percentage fee on payment amounts.
Credit cards provide rewards, but paying tuition with plastic may not be your smartest financial move. Credit card transactions tend to be more costly than personal loans and could damage your credit.
Fees
Many colleges assess fees when accepting credit card payments; these costs can quickly add up and often outweigh any rewards points earned on your card. Therefore, it’s crucial that you are fully informed of these costs prior to using credit cards as tuition payment method.
Colleges typically charge a convenience fee of 2%-3% when paying with credit cards, which can quickly add up if paying thousands per semester in tuition fees. Unfortunately, these fees often make it impossible to earn enough rewards to offset interest costs; which is one reason why paying tuition with credit rarely makes financial sense.
If you can’t pay your balance off in full by the end of each month (or before its 0% APR period ends), interest will begin accruing on it – sometimes at rates higher than what would be charged on student loans, making using credit cards even more expensive for tuition payments.
College tuition can be an enormous financial drain, making it essential that you plan ahead and clear any debt before graduating. Failure to do so could lead to serious repercussions such as late fees, transcript holds or withdrawal from school and fees charged by collections agencies.
One reason that it may not make sense to pay tuition with credit cards is its potential negative effect on your credit score. When using all available credit for tuition payment, credit utilization increases dramatically and causes your score to plummet – this may make mortgage and auto loans difficult or impossible in the future and limit repayment options that fit better with income or help avoid interest altogether.
At the end of the day, it’s always best to find alternative means of paying for college than using credit cards. Consider exploring scholarships, types of financial aid without steep interest rates and personal loans that require immediate payment off any debt incurred.
Rewards
Credit cards may offer rewards, but that doesn’t always make them an optimal way to pay college tuition. Without access to cards with no interest fees or long-term 0% APR offers that apply, it is usually more costly to charge tuition with credit than to use cash payments alone.
Colleges often charge fees to accept credit card payments, which outweigh any rewards you might reap from making such a purchase. Furthermore, carrying a balance could make paying with cash or another method without fees more cost effective.
Spending on tuition with credit cards could not only increase costs, but it could also damage your credit. Credit card usage counts for 30% of your score; carrying an outstanding balance or not paying the full balance on time could hurt it severely.
However, if you can pay your tuition bill before its monthly billing cycle ends or any 0% APR period ends, your credit won’t be negatively impacted. Just be sure to contact your college’s bursar’s office for details regarding any specific charges or fees that might apply when accepting credit card payments for tuition payments.
Some may charge tuition on a credit card while waiting for family to send money or between paychecks, which can be understandable; however, doing so could be costly as credit card interest rates tend to be much higher than student loan interest rates; it is therefore crucial that people carefully weigh all aspects of paying with a credit card before making their decision.
Interest
Use of credit cards may seem appealing when paying tuition, especially since some colleges permit this and students can earn rewards points through this practice. But according to credit counseling experts and a CNBC Select video, doing so usually does not make financial sense as credit cards charge transaction fees of 2-3% on tuition payments, negating any potential rewards points you would receive as a result.
Credit cards often carry high interest rates that far outstrip those associated with student loans, eroding rewards you might gain and even hurting your credit score if not paid off promptly.
If you decide to pay tuition with a credit card, make sure that the balance can be fully repaid by the end of your billing cycle or the end of any 0% APR offers to avoid interest costs altogether.
Credit cards may still be worth using to pay tuition if all other options have been exhausted, for instance when waiting for financial aid or family to send funds; having access to one can ensure classes don’t start too long after each semester ends.
However, if you already have the cash available to cover all your tuition in full, it may be more prudent to save or borrow from a student loan provider rather than use credit cards – as student loans typically offer lower interest rates and can be paid back over an extended period. If needed for financial reasons however, personal loans often have much better terms than credit card offers and may even allow grants that might help offset your tuition expenses.
Convenience
Credit cards can be an efficient and convenient way to pay college tuition; however, several considerations must be taken before using your plastic. First and foremost is whether or not your school charges a convenience fee when accepting credit card payments; many colleges do impose such charges, which could quickly eat into any rewards or cash back you might earn in return.
Consider also what interest could be charged if you charge tuition to your credit card without fully repaying it by the end of each billing cycle – it may be significantly higher than APR on traditional student loans and compounding interest will only compound further as time goes on.
Due to these considerations, paying tuition with a credit card usually does not make financial sense; especially if you lack enough money in your checking account to cover it. Credit cards may be useful for smaller expenses like food or transportation costs and building credit (when used responsibly); but should never be used for large college purchases such as tuition.
Some colleges do not charge a fee to accept credit card payments, giving those looking for alternatives the ability to avoid such fees. New York Tech allows its students to make tuition payments with either their credit card or through electronic bank transfer (eCheck). If either option doesn’t suit you, contact them to see what may work.
Other schools do charge convenience fees when processing credit card payments; Central Michigan University charges 2.9% when paying online tuition with a credit card. While that fee might be worth it for some, only if your plan to make your monthly payments in full and trust that any rewards from using your card outweigh its additional cost; otherwise it would be wiser to utilize more traditional payment methods, like an electronic bank transfer or paper check.