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Tips for Students Paying for College with Credit Cards

Updated: Mar 4, 2021

Madison Smith is a personal and home finance expert at She works to help others make positive financial strides in their lives by providing expert insight on anything from credit card debt to home-buying tips.

As you first started college you may have been tempted to put your college tuition and expenses on a credit card because it is convenient, easy to apply for, and it comes with a number of rewards. Credit cards do have their benefits, but their characteristically high interest rates makes it difficult to recover from serious amounts of credit card debt if you get behind on payments.

If you are a few semesters into college and are unable to stay on top of your credit card payments, here are a few steps you can take to help you avoid more debt and catch up on payments.

Step 1: Apply for Federal Aid and Scholarships

Applying for government grants and school scholarships is one of the best ways to help you subsidize the cost of college and prevent debt accumulation in the future.

The majority of students at any university are able to qualify for different scholarships and grants that are performance based as well as circumstantial.

First, take a moment to look through your school’s scholarship directory and apply for any scholarships that you may qualify for. Keep in mind that many scholarships are annual and may be awarded to you year after year.

Second, fill out a Free Application for Federal Student Aid (FAFSA). FAFSA is backed with government funding to provide students with need-based scholarships and grants. The application takes about 20 minutes to complete and within a few days you will receive an email that lets you know if you qualify for any financial aid.

Some grants may even cover retroactive costs, meaning that under certain circumstances you can qualify for a grant that retroactively covers the cost of something from your previous school year due to a sudden change in circumstances, such as marriage. Take advantage of the free money!

Step 2: Weigh the Options of Credit Cards

Credit cards are notorious for dishing out some of the highest interest rates in the loan industry. For example, the average interest rate for a credit card is 19% whereas the average interest rate for a student loan is 5%. This means that paying for your college experience on your credit card may cost you more than 3 times more money compared to a standard student loan.

One of the few exceptions when a credit card has a better interest rate is when you secure a credit card for 0% APR. If you take out a 0% APR credit card it is only 0% APR for a set amount of time—usually one to two years. After the one to two years is up you’ll have to start paying interest on any credit card debt that remains since opening that new credit card. Using a 0% APR credit card is tricky when paying for college, it can give a false sense of wealth.

If you were interested in using a 0% APR credit card, your situation may play out in one of two ways:

On one hand, you could still be stuck with credit card debt after your 0% APR offer expires, leaving you to pay back a high interest debt after all. On the other hand, If you use a 0% APR card for your last two semesters, then graduate, then enter the workforce with a full time job, you may be able to easily pay off that credit card debt before your interest kicks in, costing you no interest in the long run.

It is a risky thing to do if your future is uncertain, but it is a potential option.

Step 3: Apply for a Student Loan

If you still have a few semesters of school left then it’s best to get a student loan—especially if you have proven to yourself that you are not able to pay down your credit card balance.

As mentioned earlier, student loans are one of the cheaper loan options, averaging in around 5%. You can seek out a student loan from your university, a private institution, or even through government programs.

If you have never taken out a loan before, here are a few key details that you need to know before you make a final decision:

  1. Interest rate: Your interest rate is determined by a number of factors, one of the most influential being your credit score. Some companies cater to those with great or poor credit scores, so make sure you find a good match for your situation.

  2. Co-signer: A cosigner is someone who signs your loan agreement with you. Co-signers, typically parents or grandparents, are willing to take on the responsibility of the loan with you. Some loans may require a co-signer, while others may offer you a lower interest rate for having the added security of a co-signer.

  3. Loan amounts: Figure out how much money you need to cover the cost of your college experience. Every institution will vary in amounts they are willing to loan, making it important that you choose an option that can cover everything you need.

  4. Monthly loan payments: Your loan payment will typically start to kick in soon after graduation. Make sure you understand your loan’s repayment terms, specifically when repayment begins and the monthly cost of repayment. It is easy to ignore that rate now when you have $20,000 at your fingertips, but you don’t want to put your future self into financial jeopardy by agreeing to bad loan terms.

Step 4: Consolidate Current Credit Card Debt

Last but not least, if you have already racked up some serious credit card debt due to paying for your schooling on credit cards, it's time to put the card down and start consolidating your existing debt. A great way to consolidate credit card debt is through a personal loan.

A personal loan is a lower interest loan used to pay off your credit card debt. In essence, you pay off your credit card debt in one payment, then pay the personal loan company back a monthly repayment fee, but with a lower interest rate than your credit card debt. A personal loan is one of the most common ways to combat credit card debt, because you essentially are refinancing your debt to a lower interest rate, thus spending less money in the long run to repay your debt.

However, a personal loan is not always the best option to get out of debt for everyone. To help you decide if a personal loan is right for you, ask yourself the following questions:

  • Can I afford the new monthly payment?

  • If I compare interest rates, terms, and total payoff amounts from my current debts against a potential personal loan, would taking out the personal loan save me money?

  • Would it take more than one year to pay off my current debt? (Any less than that and debt consolidation likely wouldn’t be worth it.)

  • Do I have a good enough credit score to get me an interest rate that is lower than my current credit card interest rate?

If you answered yes to all of these questions then I would consider looking into a personal loan. Compare the top personal loan companies here to see if this debt consolidation method works specifically for you.

On the other hand, if you answered no to any of these questions, then a personal loan may not be able to help you with your credit card debt. Without any form of income in college it would be hard to justify the benefits of a personal loan.

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