Oct 11, 2022
You may be wondering whether you may use a credit card to cover the high cost of tuition and other college expenditures. You could even be considering the possibility of earning bonus points by charging such a significant amount on your credit card. A credit card may be used for many college expenses, including textbooks, housing, and sometimes even tuition. Is it wise, nevertheless, to put tuition payments on a credit card? And how exactly would you go about doing that?
It's vital to do your homework before delving into the pros and cons of using a credit card to pay for your child's college expenses. Have we considered this possibility? Is that the case? How much do you charge? Simply calling the school's registrar or financial aid office should do the work, but many schools now provide this information on their websites. Searching Google (or your preferred search engine) for "(Insert institution name below) tuition credit card" should provide relevant results.
Find out first whether your school accepts credit card payments. In 2016, researchers at the University of California, Davis, found that 85 percent of the 300 universities they surveyed accepted credit cards for student payments. Check with the school's website or the bursar's office to see whether this is a possibility. If you're able to pay tuition with a credit card, beware of these hazards.
Colleges that accept credit card payments may levy an extra convenience fee—57 percent do. According to the data gathered, the typical charge is 2.72 percent. It may not seem like much, but keep in mind that costs may quickly mount up. In addition to the tuition payment of $10,000, you will be required to contribute an extra $262, which is the cost of one or two textbooks. Want to spend extra for college? And if you want to accumulate credit card rewards, bear in mind that 2.72 percent is more than you will receive on the majority of credit cards.
The accumulated interest on your overdue tuition bill might rapidly become overwhelming if you are unable to pay the full amount due right away. You should avoid putting yourself in a position where you have to cope with significant revolving amounts on your credit cards since the average annual percentage rate (APR) for credit cards was 16.24% as of June 2021. That's a fast way to a debt trap from which it'll be difficult to extricate yourself.
Credit usage ratio, or the percentage of total credit that you are actually utilizing, is a major component of your credit score. The general consensus is that any utilization rate below 30 percent is preferable. If your credit line has a $10,000 maximum and your tuition payment is $8,600, you have already spent 85% of it.
The process of applying for financial assistance might be overwhelming, but if you collaborate with your institution to explore student loan choices, you can likely receive a rate that is much more manageable than what you would get with a credit card.
Now that you know the drawbacks of paying for college using a credit card, consider the potential benefits:
Credit cards might be helpful if you just have enough money to cover a part of your tuition. A card may be used for additional out-of-pocket college expenditures, such as the cost of a laptop, textbooks, and your food plan in the dorm. End-of-month payments are good. Nonetheless, if you're tight on funds, getting a credit card with an initial 0% APR period and sticking to a payment plan that lets you escape interest might be a good option.
If your institution does not impose a cost for using a credit card to pay for tuition, you might use the rewards you earn to pay for a flight back home over winter break. But once again, you should have enough cash on hand to cover the whole cost of the bill right immediately. Credit card interest payments will reduce your take-home wages.
Although some schools may accept credit card payments for tuition, doing so is probably not a good idea. The only exception to this rule is if you have sufficient cash on hand to settle the card amount in full & can collect sufficient rewards on your spending to cover any possible convenience fees. Credit cards add too much danger and cost to an already pricey college education.