School fees can be a significant expense for many families, but did you know that you can also earn valuable rewards while paying these fees?
Read on to find out how you can join others who earn credit card points when they pay school fees, even if your school doesn't accept credit card payments.
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Key takeaways
- It is possible to earn credit card points by paying school fees with a credit card. Many people already do!
- There are fees to be aware of. Check that it makes financial sense for you to pay them.
- Interest incurred when not paying the balance in full quickly negates the value of any points earned.
How to pay school fees if credit cards aren't accepted
It isn't uncommon for schools to not accept credit card payments for school fees due to the high processing fees associated with these transactions. But there are still ways to earn credit card points when your school fees bill comes due.
Use a payment platform
Better known for helping businesses pay suppliers or renters pay landlords that don't accept credit cards, payment platforms make it possible to use your credit card and earn points. But, of course, there is a catch. They don't come for free. These intermediaries charge a fee to process your payment, which is often around 2% of the amount being paid. The benefit is getting something (points) for paying school fees.
School EasyPay
- A payment platform designed specifically to manage school fee payments.
- Pay with American Express, Diners, Mastercard, and Visa credit cards.
- Supports split payments so bills can be shared between parents and grandparents, for example.
Sniip
- A free mobile app to make payments from any credit or debit card to any BPAY biller.
- A standard 1.5% fee applies for payments made with an Australian-issued American Express, Diners, Mastercard, or Visa credit card.
- International credit cards incur a 3% fee.
- Payments made with debit cards are free.
Citi PayAll
- Available exclusively for Citi credit cardholders to pay bills and earn rewards points.
- Supports one-time or recurring payments.
- Can be used for most bills, including school fees.
- A standard 2% fee applies.
Pros and cons
Pros
- Spread the cost. You can pay off your fees over time if you have an introductory offer for interest-free purchases.
- Earn points you otherwise wouldn't get. Whether you use a payment platform or a debit card, you're earning points on an unavoidable expense.
- Hit a sign up bonus faster. If you plan ahead, you can use school fees to trigger a large Qantas credit card sign up bonus.
Cons
- Debit cards that earn points have a poor earn rate. While you can earn points, you might not get that many compared to a credit card.
- Payment platforms charge a service fee. As the fee is a percentage of the amount paid, it can add up. You are essentially buying points.
- You could get into debt. This is especially true if you can't pay off the credit card and start to incur interest.
Alternatives to using a credit card
There is another option if credit cards are not accepted or you would prefer not to use a credit card: use a debit card that earns points. The problem is the lack of debit cards that earn rewards points on the market and the extra hassle. The hassle may be worth it if your school fees are high and you want to avoid credit.
Bankwest's transaction accounts — and their linked debit cards — are the best-known debit card of the kind. Do not expect the earn rate to be high, though. You'll earn substantially less than 1 Qantas Point per $1 spent, the rate many credit cards offer.
Is it worth it?
With school fees ranging from $20,000 to $45,000 per year, there is a lot of potential to earn rewards points from something you have to pay anyway.
In order to use a credit card, you'll probably have to use a payments platform or pay a surcharge if the school accepts credit cards. That being the case, can you justify the extra fee and repay the card without incurring interest?
Say you put $30,000 on a credit card earning 1 point per $1 and incur the 2% fee. You would earn 30,600 points at a total cost, including the fee, of $30,600. In effect, you are buying points for about 2 cents each.
Although it's not the most glamorous way to spend points, that's enough for a return flight from Sydney to Melbourne in Business Class (assuming you earned Qantas Points and fly with Qantas on both legs).
Since this flight would cost around $1,500 to buy with cash, you are getting something (a flight that would cost $1,500) that's worth considerably more than what you paid for the points (the $600 fee).
However, this would quickly change if you do not pay off the balance in full and start incurring interest at the rate of 20% p.a. (or 1.66% per month). At that rate, just one month of interest would come to $507 and largely negate the value of the points earned.
