Using credit cards to pay for college
Editor’s Note: Credit cards are not considered the best option to pay for college tuition. The debt you take on by doing this can often be very high, and the interest rates on credit cards will only serve to increase the cost of tuition in a riskier manner than simply taking out a student loan. However, if you do choose to use credit cards to pay for college, you should not use them for a large amount of money. For those who may choose to do it, here is some advice on the matter.
An option now offered by many universities is the chance to pay your bill by credit card. This payment option provides you with two great advantages. First, you have the convenience of speed–paying online is quicker than writing a check, mailing it and waiting for it to be posted to your child's account. You will wind up with two separate paper trails you can use in filing your taxes– your online receipt and the bill from your credit card company.
Gone are the days when only ONE card is acceptable for paying the tuition bill. If your card provides you with premiums, discounts, cash back or, my favorite, Frequent Flyer miles, then this may be the best option for you and your student. Before relying on this option carefully check to see if the university will accept one of the cards that you carry in your wallet. My son's university now accepts three cards; however, they don't accept the one that I use most often. Knowing this ahead of time allows me the freedom to apply for one of the cards they do accept or to re-adjust my budget to place the tuition payment on one of my other credit cards.
In spite of their advantages in speed and efficiency there are still some drawbacks to using credit cards to pay for tuition and housing bills. Service fees can be substantial and are often a percentage of your bill rather than a set fee. If my bill amounts to $6,000 per semester, I may spend 1% (approximately $60) as a service fee. In this instance the fee is in line with the multi-payment option fees. However, if my cost is $10,000 for that semester then my 1% service fee grows to a charge of $100. Finally, if I cannot pay off the entire amount 25 days later, when the bill comes due, then I will be spending additional money on finance charges. These finance charges represent a much higher fee than the amount that would be charged on a student loan.
BUYER BEWARE: Don't wait until the last minute to check the list of acceptable credit cards! You don't want to postpone the payment only to discover that the card isn't accepted and that your hastily written check will incur a late fee. At some colleges, the university outsources the credit card procedure to another vendor. Unfortunately, with some of these companies you cannot determine the amount of the service fee until you process the application.
So run the numbers carefully for each option. If this seems like a workable plan for your family, contact either the university's Parent Office or the Bursar's office.
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