Some colleges let you pay tuition with a credit card - here's how to determine if it's worth it, and what card to use if it is

Laura Grace Tarpley

Oct 10, 2019, 00:56 IST

Some colleges let you pay tuition with a credit card - here's how to determine if it's worth it, and what card to use if it is

Paying college tuition with a rewards credit card can help you reach financial goals or earn points, but you need to be aware of the potential drawbacks, like high interest rates if you can't utilize a 0% intro APR offer.
It's less common for private schools to accept credit cards than public colleges, but there are 13 noteworthy private institutions that will let people pay with a card   .
Credit cards that offer high welcome bonuses, rewards for meeting spending thresholds, or introductory 0% APR periods can be great options for paying tuition. Some such cards include the Hilton Honors American Express Surpass® Card, Delta Reserve® Credit Card from American Express, and the Discover it® Cash Back.
Also consider credit cards that offer a strong return on your spending, such as the Capital One® Venture® Rewards Credit Card with 2x miles on every purchase and the Chase Freedom Unlimited with 1.5% back.
Read more personal finance coverage.

When paying online for college tuition, you'll see a list of payment method options: financial aid, 529 plan, wire transfer, e-check, debit card, and credit card.

You may be wondering, "Why would someone pay college tuition with a credit card?" Initially, it seems like a financial taboo. But as is the case with many financial decisions, there are times when putting tuition on a credit card is the right move, and times when it isn't. You decision will depend on a variety of factors, including interest rates, convenience fees, the college in question, and, of course, which card you use.

Keep in mind that we're focusing on the rewards and perks that make these credit cards great options, not things like interest rates and late fees, which can far outweigh the value of any rewards.

When you're working to earn credit card rewards, it's important to practice financial discipline, like paying your balances off in full each month and not spending more than you can afford to pay back. Basically, treat your credit card like a debit card.

The pros of paying college tuition with a credit card

You could earn big rewards

Many people swipe their credit cards to earn rewards, such as travel points or cash back. If you pay thousands of dollars of tuition with your card, you have the potential to earn huge rewards. If you earn even just 1 travel point per dollar spent, paying tuition could score you a ton of points.

You could earn a sign-up bonus

It's common for credit card companies to offer a sign-up bonus to new customers. To qualify for this bonus, you typically have to spend and pay off a certain amount of money with your card in a designated amount of time. For example, the Capital One Venture Rewards card currently awards new members 50,000 miles if they spend $3,000 in the first three months. Putting tuition on the card could help you spend enough money to receive that bonus.

This strategy is ideal if you already have the liquidity to pay tuition. You could potentially pay tuition with the card, pay off the full amount the next day, and never have to pay one cent of interest. You'll have scored thousands of bonus points or earned hundreds of dollars for spending money you would have spent on tuition anyway.

A big purchase can help you meet an annual spending threshold

Certain credit cards reward you for meeting an annual spending threshold. For instance, if you're working toward Delta Medallion elite status an you spend and pay off $30,000 in one calendar year with your Delta Reserve card, you'll receive 15,000 Medallion Qualification Miles (MQMs), which are an important element of securing elite status. As with sign-up bonuses, this strategy is great if you can pay off the balance before any interest accrues.

You might pay 0% APR

You may be able to find a credit card that offers a 0% annual percentage rate (APR) for a limited amount of time. If you're trying to decide between taking out a student loan and paying with a credit card, the card could be the right choice, because it's tricky to find a student loan with no interest rate.

Credit cards only offer 0% APR for a limited amount of time, typically around one year. If you think you can pay off most or all of the loan before the time limit runs out, you could end up saving a lot of money on interest.

The cons of paying college tuition with a credit card

Credit card APR is most likely higher than student loan APR

Credit card interest rates are notoriously high. In the second quarter of 2019, the average credit card interest rate was 19.29%.

For the 2019-2020 school year, federal rates are 4.53% for undergraduate loans, 6.08% for graduate and professional loans, and 7.08% for Direct PLUS loans. Beginning private loan rates vary depending on your financial profile and the lender you go through.

As you can see, credit card APRs tend to be higher than student loan APRs. However, rates will vary from person to person. If you decide to pay tuition with a credit card rather than take out a student loan, but you can't pay off the card relatively quickly, you could accrue more interest and pay more in the long run.

You'll probably pay fees

Most colleges that accept credit card payments will charge you a convenience fee. In most cases, you'll pay tuition online through a provider that has a partnership with the school. The provider charges a fee when you pay with a card, and rather than covering the fee out of their own pockets, schools require students to pay.

Typically, these fees range from about 2.5% to 3% of your total charge. Many schools set a minimum fee, like $3. Before paying tuition with a credit card, you'll want to calculate how much you'll earn in rewards versus how much you'll pay in fees. If you'll earn $750 in cash back but pay $1,425 in convenience fees, you may realize it's not worth using the card.

Your credit card spending limit might be too low

What's your credit card spending limit? If it's lower than the cost of tuition, you'll have trouble paying with a card. Some colleges do allow families to set up tuition payment plans, so you could pay for a semester's tuition in installments if your limit is low. However, each school's payment plan system is different, so you might have to choose between paying part of the tuition with a card and finding another payment method.

The best credit cards for paying tuition

When deciding whether paying tuition with a credit card will work for you, look for cards that offer big rewards, impressive bonuses for signing up and/or for meeting an annual threshold, and even possibly 0% APR for a solid chunk of time. Here are some of the best out there:  

Hilton Honors American Express Surpass card - This card offers a huge welcome bonus of 125,000 Hilton Honors points that you can use to book hotels around the world. There are a few competing cards that offer similar bonuses, but the Hilton Honors card only requires you to spend $2,000 in three months. If that's all you want to spend on tuition, you can easily rake in that bonus.   You'll also earn 3 Hilton Honors bonus points per dollar you spend, making a big purchase like tuition a great deal. If you meet the annual threshold of $15,000 in the first calendar year, you'll receive a free weekend in a Hilton hotel. That's incentive to continue using this card to pay tuition even after the first semester.    This card has a $95 annual fee.
Capital One Venture Rewards card - This is an example of a card that offers big rewards in general. The sign-up bonus of 50,000 miles is already impressive, but you earn 2x miles for everyday purchases, while many competing cards only provide 1x or 1.5x points. You can also earn 10x miles when you book paid hotels via hotels.com/venture, which may come in handy while touring colleges or when a parent wants to visit their college student after they've moved in. There's a $95 annual fee that's waived the first year. Read the Capital One Venture card review.
Chase Freedom Unlimited - This card offers 1.5% back on every purchase, which is decent for a no-annual-fee card. However, you can boost your rewards earnings if you also have a Chase card that earns Ultimate Rewards points, such as the Chase Sapphire Preferred Card. In that case, you can convert your cash-back rewards from the Freedom Unlimited to Chase points that are redeemable for travel. This boosts their value; The Points Guy values Chase points at 2 cents apiece, so you'd be getting a 3% return on every dollar you spent. Read the Chase Freedom Unlimited card review.
Delta Reserve credit card from American Express - This is an example of a card with tempting rewards for meeting an annual threshold. You'll earn 15,000 Medallion Qualification Miles for spending $30,000 in a year, then another 15,000 once you reach $60,000. (You'll also earn 15,000 redeemable miles for meeting each of those thresholds, but Delta is discontinuing that benefit in 2020.) If you can't spend and pay off $30,000 or $60,000 by paying tuition alone, the cost of tuition will certainly help you reach that goal. Is your card spending limit too low to reach this threshold by paying tuition? Ask if the school offers a payment plan so you can split up your payments.   
Discover it® Cash Back - This card provides a 0% APR for an impressive 14 months. After those first 14 months end, the regular APR ranges from 13.74% to 24.74%, which is lower than competing cards offering 0% APR.   The card offers 1% cash back on most purchases, but the convenience fee could overshadow any reward. However, Discover matches all the cash back you earn after the first year. After doing the math, you may realize this works out in your favor.

Colleges that let you pay with a credit card

It's becoming more common for public colleges to accept credit card payments. However, it isn't the norm yet for private schools to accept cards. Students attending Ivy League schools or colleges like Notre Dame or Duke won't be able to pay tuition with a credit card. For this reason, it can be helpful to know which private schools accept credit cards, and how much they charge in convenience fees.

Here are some private colleges that will let you pay with a credit card:

Amherst College - Amherst, Massachusetts

Annual undergraduate tuition: $57,640
Credit card convenience fee: 2.99%
Networks accepted: Visa, MasterCard, Discover, American Express

Carnegie Mellon University - Pittsburgh, Pennsylvania

Annual undergraduate tuition: $55,816
Credit card convenience fee: 2.52%
Networks accepted: Visa, MasterCard, Discover, American Express

Johns Hopkins University - Baltimore, Maryland

Annual undergraduate tuition: $51,077-$55,350
Credit card convenience fee: Not specified
Networks accepted: Visa, MasterCard, Discover, American Express
Note: Johns Hopkins only accepts credit cards in certain departments, and the ability to pay with a card may depend on which term you are enrolling for.

Middlebury College - Middlebury, Vermont

Annual undergraduate tuition: $55,790
Credit card convenience fee: 2.75%
Networks accepted: Not specified

Northeastern University - Boston, Massachusetts

Annual undergraduate tuition: $52,420
Credit card convenience fee: Not specified
Networks accepted: Visa, MasterCard, Discover, American Express

Read more: The best American Express cards

Northwestern University - Evanston, Illinois

Annual undergraduate tuition: $56,232
Credit card convenience fee: 2.5%
Networks accepted: Visa, MasterCard, Discover, American Express

Rice University - Houston, Texas

Annual undergraduate tuition: $48,330
Credit card convenience fee: 2.85%
Networks accepted: Visa, MasterCard, Discover, American Express

Swarthmore College - Swarthmore, Pennsylvania

Annual undergraduate tuition: $54,256
Credit card convenience fee: 2.6%
Networks accepted: Visa, MasterCard, Discover, American Express

Vanderbilt University - Nashville, Tennessee

Annual undergraduate tuition: $50,800
Credit card convenience fee: 2.65%
Networks accepted: Visa, MasterCard, Discover, American Express

Washington University - St. Louis, Missouri

Annual undergraduate tuition: $54,250
Credit card convenience fee: 2.75%
Networks accepted: Visa, MasterCard, Discover, American Express

Washington & Lee University - Lexington, Virginia

Annual undergraduate tuition: $53,730
Credit card convenience fee: 2.75%
Networks accepted: Visa, MasterCard, Discover, American Express

Wellesley College - Wellesley, Massachusetts

Annual undergraduate tuition: $55,728
Credit card convenience fee: 2.99%
Networks accepted: Not specified

Williams College - Williamstown, Massachusetts

Annual undergraduate tuition: $56,970
Credit card convenience fee: 2.99%
Networks accepted: Visa, MasterCard, Discover, American Express

Paying college tuition with a credit card certainly isn't for everyone. But if you use the card strategically, you might be happy with the results.

Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.

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Please note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed, or may no longer be available.

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