Your school may accept credit cards — but watch out for extra fees.
It’s common to pay for college tuition with a check — but can you pay with a credit card?
The answer: It depends on your school. Here’s what to look out for when considering paying with plastic.
Can you pay tuition with a credit card?
Policies vary by school, but many colleges allow tuition payments via credit card. The best option is to contact the bursar’s or registrar’s office at your school and ask if credit card payments are allowed.
Consider two major factors before paying tuition with a credit card
It can be easy to pay tuition with a credit card, but what’s the catch? Well, there are two major factors to consider: fees and credit card interest.
Credit card fees
Unfortunately, many schools will add a 2% to 3% surcharge when you use a credit card for school tuition. While that doesn’t sound like much, it can hurt: On a $5,000 tuition bill, you could pay around $150 just in credit card fees.
If you’re lucky, your school may accept cards without a fee — but this is uncommon.
Why your college adds a credit card surcharge
It’s usually free for consumers to pay with a credit card. But anyone accepting a credit card payment must pay a fee of 2% to 3% of the purchase to their credit card processor.
This includes your school, which could rack up millions of dollars in credit card fees for high-cost tuition. Rather than eat these fees, your university may pass them on to you.
Credit card interest
The average credit card APR is around 17%, which works against you for a big-ticket purchase such as tuition. You don’t want thousands of dollars of tuition to rack up interest at this rate, as this could put you deep in debt.
In contrast, the typical APR for an undergraduate student loan is around 5%. That’s much more manageable for most students, which is why most of them opt for loans instead of using credit cards.
If you’re planning on paying tuition with a credit card, then, consider how quickly you can clear your debt. If you can’t do so within a few months, plastic might be a poor option.
Why you should — and shouldn’t — pay for college with a credit card
Using a credit card for school tuition could be a viable option. A key factor is whether your college adds a credit card surcharge. Also, consider how soon you’ll pay off your tuition debt.
Consider paying for college via credit card if:
Your college doesn’t charge extra fees.
Plastic is a convenient way to pay for many purchases, and it may be more attractive if your college doesn’t add a surcharge.
You’re trying to meet your credit card’s minimum spend for a signup bonus.
Many signup bonuses require a minimum spend of thousands of dollars. Because college tuition is a significant expense, using your card to pay for it could help get you closer to a bonus. Just make sure credit card fees don’t eat up what you’ll earn in cash back, points or miles.
You’ll pay off your tuition over a short time.
Consider using your credit card if you’re confident you can pay off your tuition within a few months. Put together a solid plan to pay off your debt.
Your credit card offers rewards.
If your college doesn’t add a convenience fee, you could scoop up big rewards from paying your tuition.
Avoid paying for college via credit card if:
Your college charges credit card fees.
These fees will be a big burden on top of your already costly tuition.
You want to pay off your tuition over a long time.
Credit card interest can get very expensive, especially when it accumulates over a long time. If you don’t have the money to pay tuition now, consider a student loan — it’s much cheaper in the long run.
You want flexibility with your payments.
With a credit card, payments are usually inflexible: You must make at least the minimum payment on time, or you’ll probably get a late fee and potentially a hit to your credit score.
With student loans, on the other hand, you may be able to select more flexible payment options. For example, your lender may let you defer payments due to financial hardship.
The math on rewards: Paying tuition with a credit card
If your school charges credit card processing fees, it can be difficult to come out ahead on rewards.
Let’s say you earn 1.5% cash back on all purchases:
- On $5,000 tuition, you’ll earn $5,000 x 1.5% — or $75 cash back.
- But if your school adds a 2.5% surcharge, you’ll pay $5,000 x 2.5% — $125 in fees.
The math’s pretty rough there. But what if your school doesn’t add a surcharge?
- On $5,000 tuition, you’ll earn $5,000 x 1.5% — again, $75 cash back.
- But you’ll pay $0 in credit card fees.
- Which means you’ve made out with $75 in rewards.
Here, the rewards are sweet — just watch out for credit card interest.
Alternatives to using a credit card to pay tuition
Instead of using a credit card, consider these methods for paying your tuition:
- Direct deposit.
- E-check.
- Personal check.
- Money order or cashier’s check.
A money order costs about a dollar, and you can get one at grocery stores or your post office. Visit your local bank for a cashier’s check, which can cost $10 or more.
Use your credit card through payment services
If your college doesn’t allow credit cards for tuition, you may have luck with a payment service. Plastiq, for example, collects your credit card payment and forwards a check on your behalf to your school.
Payment services generally charge a 2% to 3% fee for credit card transactions, and you’ll need to factor in up to seven business days for your school to receive your payment.
Compare Student credit cards
Bottom line
Using a credit card to pay for tuition can be convenient, and it can bring you a good chunk of rewards if your school doesn’t add a surcharge. If you use this payment method, pay off your tuition debt soon to avoid heavy interest. Alternatively, consider a student loan.