Should You Use a Credit Card to Pay For College?

By Shannon Kietzman, Contributing Writer

Updated: 3/14/2010

Perhaps the most difficult part of going back to college is deciding how you will handle paying for your education. The reality is that you have many options available to you. If you do your research, you may be able to find some great scholarships and grants that will help you pay for your education. Or, you might apply for a student loan to pay for your expenses. Yet another option you might have heard about is to use a credit card to pay for the cost of going to college – but is that the best option for you to choose?

The Drawbacks to Using a Credit Card to Pay for College

While a credit card offers you quick access to cash, using one to pay for your education can have a devastating effect. After all, credit cards generally have very high interest rates that are much higher than what you would get with a student loan or even with a home equity loan. Therefore, if you take out loans for college with your credit card, you can end up paying hundreds or even thousands of dollars in finance charges.

In addition to having to pay finance charges, you will also need to pay a minimum amount toward your credit card each month. This can put you in a financial crunch, particularly if you had to cut back on your work hours in order to make time for college. As a result, you may ultimately find yourself unable to repay your monthly bills. When going back to college, the last thing you want is to be stressed out over credit card bills. With a student loan, on the other hand, you will not have to repay the loan until after you have earned your degree, which means you won't have to worry about those bills while you are pursuing your studies.

The Benefits of Paying for College with a Credit Card

Believe it or not, there are some potential benefits to using a credit card to pay for college. In order to reap these benefits, however, you need to be in a position to pay off the bill at the end of each billing cycle. If your university allows you to make monthly payments toward your tuition, you may be in a financial position that allows you to pay your credit card off each month.

If you are able to pay your credit card bill at the end of each billing cycle, using your credit card to pay for your tuition can be more convenient and can actually help you earn a little extra money. First, you may be able to set up an automatic payment schedule with your university, which means you won't have to worry about making your monthly tuition payment because it will be automatically billed to your credit card. Second, if you have a rewards credit card, paying for your education with your credit card can help you earn rewards. Of course, these rewards won't be worthwhile if you do not pay your credit card off and you end up paying hefty finance charges. Therefore, if you want to enjoy this benefit, be certain to pay the card off each month!

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