Is it ever a good idea to charge college tuition on a credit card?
Perhaps, in very limited circumstances, experts say.
As cards try to outdo each other with rewards points, it can seem attractive. If you’re one of the lucky few who could charge a whopping tuition bill and then pay off your credit card immediately and pocket the points, it’s something to consider.
But a CreditCards.com survey found that students who pay their tuition bills with a credit card pay an average “convenience fee” of 2.62 percent. This can amount to $262 for every $10,000 of tuition.
That fee could more than eat up your points benefit.
So first, ask your school about fees. The survey found that community colleges are the most fee-friendly. Out of the 100 largest community colleges surveyed, 97 percent accept credit cards for tuition payments and only 8 percent charge convenience fees. By contrast, 93 percent of public universities and 77 percent of private institutions that accept credit cards charge convenience fees.
Even if your school doesn’t charge a fee, proceed with caution, says Karen Marshall, a CPA with WeiserMazars LLP in Woodbury. It may sound great to get points, airline miles or cash back rewards, but “those benefits may not outweigh the costs.”
The big question, says Marshall: “Are you able to pay off the tuition . . . over a reasonable amount of time, or better yet, immediately?” If not, it can get very expensive very quickly. With typical rates between 13 and 16 percent, the interest can add up extremely fast versus applying for a federal student loan, with interest rates this year ranging from 3.76 percent to 6.31 percent.