Whether you’re attending an Ivy League school or a local community college, tuition is expensive. You may be tempted to use a credit card so you can pay your tuition gradually over time. Plus, some credit cards offer generous rewards in the form of cash back, airline miles, or other perks. But, is paying your tuition with a credit card really a good idea? Here are some reasons why you should think twice before breaking out the plastic.
Schools Charge a Convenience Fee
The convenience of paying your tuition with a credit card often comes with a school-imposed convenience fee. The fee varies by school, but it can be anywhere between 2-3 percent of the amount you put on the card. That percentage may not seem like a big deal, but it can amount to hundreds or even thousands of dollars throughout your college career if you frequently use a credit card to cover tuition.
One survey asked a range of public, private, and community colleges about their policy regarding credit card payments. Of the 92 public institutions in the survey, 83 charge a fee.
Credit Card Interest Rates Are High
You’ve probably heard it said time and time again that credit card interest rates are often sky high, but the sentiment bears repeating. Many college students don’t have spectacular credit simply because their credit history is so short; if that is the case for you, it will be especially difficult for you to find a card with both a high spending limit and a reasonable interest rate.
Scrutinize any credit cards you get approved for. Some may offer a low initial interest rate that will spike after the first six months. You don’t want most of your payments to end up going toward interest rather than the principle. If you make minimum payments, it could take you decades to pay off the card, and you would be paying thousands more than if you had used another method to pay your tuition.
There Are Better Alternatives
Because there are so many convenient and low-cost ways to pay for college, there’s no reason for you to resort to using a credit card. Some of the best ways to pay for school include:
- Federal student loans and grants. A grant is something you won’t have to pay back at all. You do have to make payments on federal student loans, but the interest rates are generally low. Some student loans are even eligible for loan forgiveness after a specified period of time.
- Scholarships. You can visit the counseling office at your school to find out if you qualify to apply for any scholarships.
- Federal Work-Study. This program provides part-time employment to help students in need pay for their tuition and related expenses.
- Help from family and friends. If you accept a loan from any family members or friends, be sure to put it in writing and make sure each person has a copy of it so you avoid misunderstandings that might pop up later.
Affording college is tough, and resorting to a credit card to cover tuition can make it even tougher. Put the plastic away and look for better ways to pay.