School opening is just around the corner. While some parents already paid for their kids Tuition and Miscellaneous Fees, others have yet to do so. If you are short in cash this enrollment season, why not consider using your credit cards to pay for you kid’s school fees. I know it sounds scary for most people but if you do it right, it is not that all that bad. I will share to you 3 ways on how to use your credit cards to pay for your kids school fees, some are interest free and some will incur minimal interests.
REMINDER: All these options are presented under the assumption that (1) you have enough credit limit to cover for the school fees, (2) Your account is updated and you are not revolving credit (paying finance charges) and (3) this is a personal advice, and I am not a professional financial advisor.
Option 1: 0% Installments
You are lucky if your kid’s school accepts credit cards and offer 0% Installments on the tuition fees. Some schools offer this to BPI and Citibank Cardholders via SIP and Paylite on 3, 6, 9, and even 12 months terms! This is very straightforward and super hassle free. Just go to the school, swipe your card and sign. I know BPI even offers additional 100% increase on your existing credit line to accommodate the fees. This option will cut a big chunk on your credit line but you get to earn points and miles. :)
School fees P50,000
0% Paylite or SIP = P50,000/12 = P4,166.67 per month
Interest Incurred: NONE
Monthly Installments: P4,166.67 for 12 Months
Option 2: 0.99% Credit to Cash
A lot of credit card companies offer credit to cash or pre-approved loans at 0.99% monthly interest rates or less (I personally encountered Allied Bank before offering this at 0.33%). If you can avail this promo, then you may be able to get the Cash for your kid’s school fees and still pay in 12 Month monthly installments. 0.99% Translates to approximately 12% per annum so if your kid’s school fees costs P50,000, there will be an annual interest of around P6,000. So your monthly amortization will be P56,000/12 = P4,667. This is still not bad since in most schools the rates for Monthly Payment Options are always higher than one time payment, semi-annual and quarterly.
Some Credit Card Companies that I know that Offers this promo are: Allied/PNB, Eastwest Bank, Citibank, HSBC, BPI, and BDO. Call your card company if they have this promo under your account. Based from experience, BPI has the fastest processing time for this promo, as fast at 24-48 hours if you have an existing BPI account.
You can still earn points and miles when you avail this promo.
School fees P50,000
0.99% Credit to Cash = P50,000
Interest Incurred (0.99%*12) = 11.88% or P5,940
Monthly Installments = P4,661.67 for 12 Months
Option 3: The Balance Transfer Option
This may be a more complicated approach since this will involve 2 or more credit cards but most of the time, this option will have less interest than option 2. Here’s how:
Step 1: Since most schools nowadays accept credit card payments, go to the school and pay for your kid’s school fees in full, straight charge. In short, charge the full amount in one of your credit cards. Some of the best cards for balance transfers based from experience are BPI, Eastwest Bank, HSBC and BDO so if DO NOT USE THESE CARDS IN PAYING THE FULL AMOUNT OF YOUR KID’S FEES. Use Citibank, Bankard or or one of the credit cards mentioned above if you have another from that list – meaning if you have 2 cards BDO and HSBC, use one of them to pay the full amount.
NOTE: Make sure that the card that you want to do the Balance Transfer has enough credit limits to accommodate the principal amount plus the interest. ALSO, card companies only allow you to use up to 80% of your available limit for balance transfers so make sure that that 80% can cover for both the principal and interest.
To avoid confusion: We will call the Card that you used to pay for the fees in full CARD 1 and the card that you will do the balance transfer will be CARD 2.
Step 2: Upon receiving the statement of account from CARD 1. Call you’re the bank of CARD 2 and inquire on their current balance transfers promo and how much can you transfer at the moment. USUALLY, HSBC, BPI and BDO offer Balance Transfers at around 0.60% Per Month. Upon confirmation that your CARD 2 bank and your credit limit can accommodate the balance transfer, proceed with it. Usually this can be done over the Phone for HSBC and Over the Counter for BDO and BPI.
Now, I mentioned that this will be cheaper than option 2 right? Here’s how:
School fees P50,000
CARD 1 Straight Payment= P50,000
Interest Incurred CARD 1 = NONE
Balance Transfer Amount to CARD 2: P50,000
CARD 2 Interest Rate for Balance Transfer: 0.60% per Month or 7.2% for 12 months = P3,600
CARD 2 Total Due: P53,600/12
Monthly Installments = P4,466.67 for 12 Months
To Summarize @P50,000 School Fees, 12 Months to Pay.
Option 1: 0% Installment = P4,166.67 for 12 Months
Option 2: 0.99% Interest Rate/Month for 12 Months = P4,661.67 for 12 Months
Option 3: Balance Transfer @0.60% per month for 12 Months = P4,466.67 for 12 Months
Well, there you go. I hope these options help you in deciding if you are having second thoughts on using your credit cards to pay for your kids school fees. Now, how do you save money from these? It is not just money… :)
- These option will probably be cheaper than if you pay monthly directly to the school using their terms.
- You get to earn miles if you are collecting
- You get to earn points
- You get the freebies for the charge slips
- You don’t nagged by the school if you forget to pay especially before the exams
- Peace of mind
Some Final Reminders:
- Make sure that you have enough credit limit for these transactions
- Always check the current promos of your Card Issuing Banks
- Always pay in full, if your revolve, all succeeding payments will incur additional finance charges.
- I am not a professional financial advisor. These are based from personal experiences.
- I am not connected to any bank. This is purely public service. :)
Let me know if this makes sense of if it helps! :) If it did, I may need to post more Credit Card stuff!
Hanggang sa muli, Paalam!
Originally Posted On: DENCIO.COM