You’re not alone there. According to research we conducted in cities and regional areas across the country, about 1 in 5 parents have used their credit card to pay for their children’s school fees. This sees as many as 750,000 Australians risking hefty interest charges and excess fees if they can’t pay off the full amount within their interest-free period.
What makes these figures concerning is that they don’t count the extra cost of supporting your child’s study. Stationery, textbooks, uniforms, shoes, personal devices — it all adds up, along with the cost of excursion fees and other social events throughout the school year.
Adding strain to a stretched dollar
Back-to-school expenses come at an inconvenient time. With credit cards regularly taking a hit over the Christmas season, households with school-aged children are already under tremendous financial pressure as they stare down the year ahead. Of the parents who told us they paid for their kids’ education on plastic, over half of them (55%) said they would prioritise paying off their debts if they could.
Credit cards do offer the comfort of knowing you have fast access to funds in an emergency. And with a decent rewards program, they can be beneficial when paid off monthly. But when major costs like school fees get charged, along with other purchases and day-to-day expenses, you could be feeling the sting of those high interest rates for years.
Of the parents we surveyed who paid for their kids’ school fees on their credit card, most of them have multiple cards on the go. About half (52%) have a combined credit card limit of $10,000 or more, with the average limit at around $15,000. That’s potentially a lot of debt, compounding year on year, preventing thousands of Aussies from living the life they dream of.
Smarter ways to spend
Budgeting, and keeping track of your spending can help you stay on top those back-to-school expenses. But there are other ways to save on the bigger bills too. Consider negotiating a payment plan with the school, or taking out a personal loan that offers better interest rates than your credit card company.
At the start of term, ask your child’s year coordinator about the excursions and social events planned for the year. This lets you get a head start on saving for school camps, balls, clothing purchases, technology and other essentials. And, where possible, consider secondhand options to save money.