Fees on a credit card ?

jollyanna

I'm probably being very naive here, but it occured to me that I might be able to pay my sons tuition fees on a 0% credit card with the intention of paying it off before the term expires. I've a hunch this isn't allowed but not sure what reasoning would be applied. Please does anyone know? Thanks.

m277

You probably could but the uni slaps on a 2 to 4% surcharge for using a credit card. Universities aren't commercial entities so can't absorb the cost of the credit card fees hence you have to pay it. At my uni, I could pay by credit card and they charged 2.5% extra.

CLAPTON

you need to check with the specific Uni... most do allow CC payments and many make no charge.
However, why isn't your son getting a student loan for the fees?

BruceyBonus

Take the student loan and shove the money in a savings account - you would probably make a profit as the loan rate next year is 3.2%.

jollyanna

Son could get a loan but I was aiming to reduce his overall debt by paying next years tuition fees for him. I need to do some more thinking on this and phone his establishment about the CC percentage . Thanks all.

Lokolo

You can't get a tuition loan going straight to the son, so you can't make money that way. You can only make money using the maintenance loan as that gets paid to the invidivdual.

Lokolo

BruceyBonus wrote: »

Take the student loan and shove the money in a savings account - you would probably make a profit as the loan rate next year is 3.2%.

No it isn't. It is 3.8%

CLAPTON

Lokolo wrote: »

You can't get a tuition loan going straight to the son, so you can't make money that way. You can only make money using the maintenance loan as that gets paid to the invidivdual.

in this case the parent is willing to pay directly..therefore if the son got a loan then the father could save the money he was willing to pay into a saving account...giving an identical return

m277

Lokolo wrote: »

You can't get a tuition loan going straight to the son, so you can't make money that way. You can only make money using the maintenance loan as that gets paid to the invidivdual.

This is true but it's still a loan that he will have to pay back after the end of the degree.

If the annual interest rate hovers around 3-4% and the parent is willing to pay the tuition fee then, assuming the credit card surcharge is about 3-4%, they will make a saving on the interest not being charged in the later years.

The tuition fee is currently a little over £3000. Let's take £3000 and an interest rate of 3% per annum for simplicity.
If the tuition fee loan is taken out then after the degree they will have to pay back £3278. And if you take some time to pay this back then there's even more interest payable.
If the parent pays the tuition fee for the first year by CC with a surcharge of 3% then they have to pay £3090 with no interest payable because it's on a 0% CC.

EDIT- sorry. Your post was in response to Bruceybonus.

Lokolo

True but thats suggesting the OP is wlling to 'snooze' with his/her CC... which I don't think OP would prefer as they would be doing it now otherwise....

CLAPTON

m277 wrote: »

This is true but it's still a loan that he will have to pay back after the end of the degree.

If the annual interest rate hovers around 3-4% and the parent is willing to pay the tuition fee then, assuming the credit card surcharge is about 3-4%, they will make a saving on the interest not being charged in the later years.

The tuition fee is currently a little over £3000. Let's take £3000 and an interest rate of 3% per annum for simplicity.
If the tuition fee loan is taken out then after the degree they will have to pay back £3278. And if you take some time to pay this back then there's even more interest payable.
If the parent pays the tuition fee for the first year by CC with a surcharge of 3% then they have to pay £3090 with no interest payable because it's on a 0% CC.

EDIT- sorry. Your post was in response to Bruceybonus.

you are not comparing like for like

so if the parent can afford to pay 3090 at the end of year 1 he has several choices

a. use CC and pay surcharge (if applicable because as I say not all uni charge anything) but let say 3090

or b.
get a student loan and pay it off at the end of the year which would cost 3114 approx (assuming simple 3.8% interest charge)

or c.
get a loan and keep it for three year and save the 3090 in a high interest saving a/c (the son should be able to get 6% gross as he wil probably pay no tax).. (haven't worked it out)