Paying for college with plastic costs more than you think

pay tuition credit
Anthony Filomena celebrated his graduation in May with his sister Nicole and brother Vincent.

Paying for college with a credit card costs more than you think.

Many schools charge a special fee for using plastic to pay tuition, which could add up to an extra $3,000 over four years for a private school student. That's in addition to whatever interest rate may apply to the balance.

These convenience fees average about 2.62%, according to CreditCards.com, and cover the servicing fees that credit card companies charge.

Related: Is student debt hurting the housing recovery?

Anthony Filomena learned about convenience fees when he charged $4,000 on a credit card his senior year at Columbia College, a liberal arts school in Chicago.

The extra charge amounted to about $110. While that's not going to break the bank for Filomena, it's tough to absorb for students like him who are already scraping by.

Filomena used his card when he learned that the raise he got working at Starbucks meant he no longer qualified for a state grant he'd been receiving. He couldn't get any more federal student loans, and Columbia wouldn't let him register for the spring semester of his senior year until he paid up.

Filomena plunked down a Discover card that's charging him 14.99% in interest because he had little choice.

Kids are cute...but expensive
Kids are cute...but expensive

Some students and their parents put an entire year's worth of tuition on a credit card just to rack up rewards points, but that's unwise according to Matt Schulz, an analyst at CreditCards.com.

Even if the bill is paid promptly to avoid interest charges, the fees outweigh the benefits of most credit card rewards programs, he said.

Nearly 90% of the 300 schools surveyed by the firm accept credit cards for tuition. While most large private and public universities charge a convenience fee, only 12% of community colleges do.

About 3% of families pay for tuition with a credit card, according to a 2014 study from Sallie Mae.

There are rare cases when using a credit card may be the best option, said Stuart Ritter, a senior financial planner at T. Rowe Price. But for most people there is always a cheaper way to borrow money, he said.

And if the tuition still looks too high, Ritter suggests looking at less-expensive schools.

Filomena graduated in May and is employed full-time at an advertising agency, but he has yet to start paying off his credit card bill.

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