Preparing for college tuition payment by applying for credit cards. Smart plan?

 

It is May and the JumpStart family is going to be spending over $7,000 sometime before the fall semester to pay JumpStart Jack’s tuition, room, and board at Radford University. The money is already in a bank account, but I plan on using a credit card to pay the college tuition bill.

Paying for college with a credit card incurs a “convenience fee” of 2.75%.

Why would I choose to incur the $192.50 convenience fee?

The fee will basically purchase bargain airline miles, hotel points, or cash back.

Charging $7,000 on my Chase United card would earn me 7,000 united miles, which is almost ¼ of a domestic round trip plane ticket.  Don’t do this.  It makes no sense.

Using my Discover card would net me $70 cash back, which is idiotic.

I don’t have the Citi double cash back card, but if I did it would give $140 cash back.  Losing $52.50 is also stupid.

There isn’t a way for normal credit card spend to be profitable with the 2.75% fee, but bonus spend can be highly profitable.

Consider the bonus on that Chase United card.  50,000 United miles after $1000 dollars in spend.  The convenience fee on $1000 of spend is $27.50, and it will result in 51,000 united miles which is enough to purchase 2 round trip domestic United flights.  Another advantage is one single charge earns the bonus, and there is no danger of being accused of manufacturing spend.

Bonus for JumpStart Jack?

At this point JS Jack’s credit is young.  He has an OK score, but I am going to nurse his credit for a while.  Discover was gullible nice enough to give him his first card, and we are grateful for the opportunity to begin building a credit history.  He may not be able to get accepted for a credit card, with a decent bonus this summer, but we will be monitoring the situation.  It will be great starting with a clean slate once he begins qualifying for bonuses.

Bonus for Mr. JumpStart?

My credit card choices are dwindling.  I am way over Chase’s 5/24 rule.  I have collected the bonus on many of AMEX’s cards, and they have a one bonus per lifetime rule.  Citi puts you in timeout for 24 months after earning a bonus.  There are some opportunities left, and I might apply for my first Capital one card.

Bonus for Mrs. JumpStart?

Mrs. JumpStart has been through quite a few bonuses as well, but she has not been nearly as aggressive as me.  A few days ago, she should dipped below Chases 5/24 rule, and the Chase Sapphire Preferred card and Chase Southwest card are on our radar.

According to the Radford University website, tuition will be due Aug 16.

We will do some credit card applications in the next month, and be ready in August with new cards on hand, with bonuses waiting to be earned.

Earning credit card bonuses is nothing new for us, but tuition payments will be much easier to complete the minimum spend requirements.  In the past we had to patiently wait until we spent enough over 3 months, or manufacture spend through gift cards, reselling, and other techniques.  It will be nice qualifying for spend bonuses without any hassles or legwork.  There is one big new aspect, and it sucks.  We are actually spending 7 grand.

Responsible disclaimer at end of post.

I want to be clear that, I will never carry a balance on any of these cards.  I will only use a credit card to pay tuition, when I am prepared with cash.  Afterwards, I will pay the balance in full, before the due date.  If you pay interest to credit card companies, you will lose at this game.  Credit card companies profit from people who pay interest and fees.  By earning bonuses and paying balances in full, it becomes possible for you to profit from the credit card companies.

Posted in College, Credit cards.

2 Comments

  1. We’re considering doing this too! We did it with the federal/state taxes we owed this spring and scored 200,000 points on Chase Sapphire Reserve cards. The one thing we need to consider is the Chase rule too – and applying for two SW cards to get a Companion Pass again next spring. Decisions…decisions! And yes, we always pay off cards at the end of the month. Not worth it otherwise!

    • We’ve been accepted for 3 cards, 2 have arrived, and 1 is still in the mail. Post coming soon about what we chose.

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