Should You Ever Pay Your Tuition With a Credit Card?

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This just in: College is expensive! CollegeBoard’s Trends in College Pricing and Student Aid 2021 report has the average tuition and fees for full-time undergraduate students at $10,740 for a public four-year in-state college; $27,560 for a public four-year out-of-state college; $3,800 for a public two-year in-district school; and $38,070 for a private nonprofit four-year school for 2021-2022. With the majority of U.S. colleges accepting tuition payments with credit cards now, the question shouldn’t be whether you can — it should be whether you should.

Most schools charge a transaction fee, and there are many low-rate student loan financing options already available to students. So, when would it ever make sense to pay your tuition with a credit card?

Obviously, the first thing you should think about when deciding whether to use a credit card to pay for your tuition is what the college is going to charge you. Most schools charge a 2% to 3% convenience fee, according to CNBC. So that alone will probably offset any reward benefits you may receive by using your credit card.

There are other concerns, too. Credit cards have strict rules for payment. Your credit score might take a hit if you miss payments. Also, it’s almost a given that credit card interest rates will be higher than student loan interest rates, and you might lose out on some features particular to student loans, like multiple options for repayment or the possibility of deferral.

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It will take either the unique financial circumstance of being able to pay tuition off right away or a perfect mix of some of the reasons below to get any real benefits out of paying tuition with a credit card.

Here are five potential reasons to use your credit card to pay your tuition.

1. You’ve found a college that doesn’t have a credit card surcharge.

Most colleges charge convenience fees in the area of 2% to 3%. To find one that doesn’t charge would be a long shot, but you might get lucky.

2. The bonuses you earn outweigh any transaction fees.

Again, it’s highly unlikely, but if the fee your college charges you to pay tuition via credit card turns out to be lower than the cash back/points/miles you’ll earn by using a credit card, it might be worth looking into.

3. Your credit card comes with valuable sign-up rewards.

Credit cards, like colleges, love making money. So incentives to enroll in them are sometimes too good to pass up. Some rewards cards offer big enough bonuses to justify using your card for tuition. In this case, paying with your card just might be a smart payment choice.

4. You earn extra incentives for charging a certain amount to your card.

Some cards reward users for spending a certain amount using their card over the course of a month or year. Make sure the bonus or perk you are chasing is worth more than any fees you’ll pay.

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5. You can save on interest by paying off your tuition with a 0% APR.

If you get the chance to sign up for a card with an introductory 0% annual percentage rate, you’ll essentially have an interest-free loan. However, if you can’t pay off the balance during the introductory period, you could get stuck paying 20% to 25% interest when the intro period is done. Remember, too, that you could lose your introductory rate if you miss a payment.

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