College is an investment of time, energy, and money that can help get ahead in the future. After getting a college degree in a field of high demand, it is easier to build a profitable career.
Unfortunately, college education requires a financial investment as well. The average tuition students paid for 2017-2018 school years was $9,970 nationwide for public universities. If we add extra costs, like room, books, and board, the yearly costs increase to $20,770 a year.
There is the good news: if you have enough cash to pay outright, you can benefit from the sudden surge in your yearly expenses. With a travel, rewards or cashback credit card, you can turn the tuition costs into money. So, why should we pay for tuition with a credit card? Installment Credits specialists have outlined 5 reasons to pay college tuition with your card.
#1: Your college doesn’t charge a fee when you use credit to pay tuition
One of the top considerations before paying with a credit card is whether or not your school lets you charge tuition without a fee. In 2016, the research of CreditCards.com showed that hundreds of colleges charge students for paying with a credit card (2.5% – 2.75%). Yet, some schools, like Hampton University or Liberty University didn’t charge their students for paying by card. So your first step is to check if your school accepts credit card payment. If yes, ask whether they charge a fee for this.
#2: The fee you will pay is less than the rewards you’ll get
Imagine that your college charges a relatively small fee. In this case, a cash-back card will give you a higher rate of return and will leave you ahead.
If you prefer travel rewards, consider the card Discover it®Miles. Such card proposes 1.5 miles per each dollar you spend. However, it will double what you collect in a year. During your first year, you are earning 3% back without the annual fee. It is possible to redeem these miles to cover any travel purchase. If your school charges a fairly low fee, search for rewards cards whose rate of return is high enough to be worth it.
#3: You are going after a big signup bonus
It also makes sense to pay for tuition with a credit card if you are buying a huge signup bonus. The majority of top rewards and travel cards propose hundreds of dollars as bonuses in case you spend a couple of hundred dollars within several months. That is why it can be worth it to make payment by a credit card.
There are a lot of different cash-back and travel cards that propose big bonuses. Ensure that you explored the options and strategized your signups to maximally benefit from your tuition bills.
#4: You need to meet an annual spending threshold
Many cards offer not only the signup bonuses but also other extra perks if you meet an annual spending threshold. After you meet an annual spending threshold, it will make sense to pay tuition for college with credit to ensure you get there. Just make sure that the fee you are paying is worth less than the benefit pursued.
#5 You need a short-term loan at 0% APR
This situation will be a tricky one while it works only if you have to repay your tuition bill in a short period of time. Yet, this option can save you some money if you pursue it in a responsible way.
Some of the cards propose 0% APR on purchases for a year or more. They can work as a short-term loan free of interest rates. The best thing is that you will not pay any fees when using a balance transfer card to score 0% APR on purchases.
Also, read how Student Loan Forgiveness Program can help you pay for the study and forget about the debt.
Cons of Using Credit Card to Pay for Tuition at College
However, it is not always a good decision to use a credit card to pay for tuition at college.
Most of the universities charge the “convenience fee” when you use a credit card to pay the tuition bill. They range from 2 to 4%. In case your college charges this fee, it can wipe out the rewards benefit you wanted to get from using a credit card. Note that community colleges mostly don’t charge the convenience fee.
The interest rate charged by the bank
Many banks charge the interest rate for using it. The interest charged by most of the banks ranges between 15 and 29%.
It can be a good idea to pay for college tuition by card if you have enough money to pay your bills in full when your statement closes. Credit cards can have higher interest rates than other variants. However, this is not the best choice for people who want to repay loans slowly over time.
Do not forget to check our latest article with the budgeting tips for the first time parents!