In a competitive credit card market, credit card companies are fighting tooth and nail for new customers with strong incentives like zero-interest credit cards. Meanwhile, students are borrowing more and more from traditional lenders for a college education.
Should you consider paying your college tuition with student loans? Here are a few things to think about:
Convenience fees
Before you rush out to pay your tuition bill with a credit card, think carefully about convenience fees – charges universities apply to payments made by credit card. These fees can range from 2-4% of the balance, and may make it uneconomic to pay a tuition bill with a credit card.
Income
Can you afford to pay off your credit card before the interest rate charges higher? If you can, then paying for college tuition with a zero interest credit card may make sense. Otherwise, student loan lenders generally have loans with lower rates than a credit card company, making it a poor decision to use a credit card. Always consider your income and current debt loads first before using a short-term financing source like a credit card.
Rewards
Even if you can pay cash for a tuition bill, or if you have loans to make the payment, consider paying it first with a credit card, then paying off the credit card with other money. If the university does not charge a convenience fee, you may be able to rack up massive free rewards just for paying with a credit card. Consider this: a 2% cash back card would give you $100 in cash for paying a $5,000 tuition bill.
Most universities accept credit cards as a form of payment. All students can pay their bills with a credit card. Whether or not you want to, however, comes down to the rewards, your income level, and any possible fees you might pay to use a credit card to pay for college tuition.
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