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Can you charge tuition on a credit card?

Charging tuition on a credit card and earning rewards back may seem a convenient way to pay for college — but you should think twice. Bruce McClary of the National Foundation for Credit Counseling tells us why.

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It may come as a surprise, but you can charge tuition on a credit card. About 85% of public and private colleges in the U.S. accept credit cards for tuition. But should you use your credit card to cover the hefty cost?

According to Bruce McClary, a spokesman for the National Foundation for Credit Counseling (NFCC), credit card payments are not your best option for paying for higher education. Colleges and universities often charge a transaction fee between 2% to 3% — offsetting any of the reward benefits you may receive by using your credit card.

Below, CNBC Select takes a look at the drawbacks of charging tuition on a credit card and the only scenario where you really should.

Can you charge tuition on a credit card?

  1. Why you shouldn't pay for college on a credit card
  2. The only time using a credit card to pay for tuition makes sense
  3. Other financing options to pay for college
  4. Deciding how to pay for college

1. Why you shouldn't pay for college on a credit card

There is one main reason why you shouldn't use a credit card to pay for tuition — the fees.

The math says it all: If your college or university charges a convenience fee of 2.5% for credit card payments, every $10,000 you pay in tuition will come with an additional $250 in fees. Even if you are using a no annual fee credit card, the additional costs that come with charging a tuition payment can add up quickly to outweigh any cash back or rewards you may be redeeming.

2. The only time using a credit card to pay for tuition makes sense

The key determining factor when deciding whether to use a credit card to pay for tuition is if the benefits outweigh the cost.

"Bonus reward points, introductory interest-free repayment periods and cash back can tip the scales in favor of using a credit card if the balance is repaid before standard rates and fees are added," McClary says.

The U.S. Bank Visa® Platinum Card is one of the best low interest cards with its 0% introductory APR for the first 20 billing cycles on balance transfers and new purchases (then 13.99% to 23.99% variable APR). This is one of the longest interest-free periods for both balance transfers and purchases.

If you were to use a card like this one, you would have 18 months to pay off your tuition payment — but it is essential that you pay off the full balance before the 0% introductory period ends. If you fail to pay off your balance, or if unexpected life events arise that make it impossible, you will be charged with a high APR and end up having to pay more than you needed to in the first place.

3. Other financing options to pay for college

If you plan on paying for tuition over a number of years, as many Americans do, there is likely a way to pay for college with lower interest than credit cards.

Many universities offer installment payment plans, which enables students and their families to make interest-free, monthly installments toward tuition.

Since interest rates play such an important role in deciding how to fund your college education, you may also consider using a traditional student loan which typically offer lower interest rates and fees. There are a variety of student loan options, ranging from federal to private, each with their own set of terms.

The first step in choosing how to finance college is to apply for financial aid. You'll need to complete the Free Application for Federal Student Aid (FAFSA) every year to see how much aid you are eligible for. This aid will include grants, scholarships, loans or programs like work-study where students can work part-time while attending class.

4. Deciding how to pay for college

Financing the cost of an education is different for every individual, and it requires planning and research to determine what is the best route for the student and their family's budget. Every decision about how to fund a college education begins with a few key questions:

  1. What is the total cost of your tuition?
  2. How long is your financing period?
  3. What are the finance charges and fees?

The College Board's latest 2019-2020 academic year data shows that the average tuition and fees for a 4-year degree at a private university costs $36,880 and $10,440 at a public university. In other words — much too high to finance with a credit card, even if it offers 0% APR for 15 billing cycles like the BankAmericard® for Students (then 14.49% to 24.49% variable APR).

On the other hand, if you plan to attend a 2-year degree program at a public university where the average tuition and fees cost $3,730, it may make sense to charge this, assuming you have a plan to pay the balance off in full before the 0% introductory period on your credit card ends.

The same goes for non-credit courses and non-credit certificates with a lower price tag. For instance, a copy editing course at NYU School of Professional Studies costs about $679 — a much less daunting amount.

"If the balance has to be carried for any length of time beyond an interest-free introductory period," McClary says, "it makes better sense to avoid the plastic."

With the wide variety of options available to students and families, you can likely find an accessible way to pay for college without paying extremely high interest rates.

Information about the U.S. Bank Visa® Platinum Card and BankAmericard® for Students has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.