Maximizing Travel Rewards: How to Gain Value from Paying Tuition with a Credit Card in Canada

Tuition is one of the largest expenses most Canadians will ever face, and can seem daunting to pay. Given that nearly 60% of Canadians choose to pursue post-secondary education, I feel it's worth looking into a way that you can derive (further) value from your education (besides, of course, the education itself :). After all, if you already have to pay for school, why not reward yourself for it? You can earn travel rewards by strategically putting your tuition on a rewards credit card, especially when you consider card signup bonuses and third-party services like Chexy or Plastiq. In this article, we’ll walk through the benefits, the math, and real-life examples that show you how to unlock maximum value from your tuition payments.

Why Pay Tuition with a Credit Card?

• High Spending Yields a Strong Signup Bonus: Tuition is a large, one-time expense that helps you meet the minimum spend required for lucrative bonus points.

  
  

• Base Rewards and Bonus Points Combine: Even if your purchases earn standard points (or cashback), pairing that with a powerful signup bonus can multiply your returns.

  
  

• Travel Rewards Redemption Is High-Value: Many Canadian rewards cards offer point redemption rates approaching or exceeding 1.25 cents per point when booking flights.

Understanding the Math: A Step-by-Step Walkthrough

Let’s look at some concrete examples to see how the numbers work:

Scenario 1: Using a Basic Travel Rewards Card

Imagine you have a travel rewards card that:

• Earns 1 point per CAD 1 on general spending.

• Offers a signup bonus of 40,000 points when you spend CAD 4,000 within the first few months.

• Has a redemption value of approximately 1.25 cents per point when booking flights.

Now, suppose your tuition is CAD 10,000. Using a bill payment service like Plastiq (with a 2.5% fee), here’s how it might break down:

1. Base Rewards:

   • Tuition Payment: CAD 10,000 × 1 point per CAD 1 = 10,000 points

   • Value: 10,000 points × 1.25¢ per point = CAD 125

2. Signup Bonus Impact:

   • Trigger Bonus: 40,000 bonus points

   • Value: 40,000 points × 1.25¢ per point = CAD 500

3. Combined Rewards:

   • Total Reward Value = CAD 125 (base) + CAD 500 (bonus) = CAD 625

4. Processing Fee Calculation:

   • Fee Charged: 2.5% of CAD 10,000 = CAD 250

5. Net Reward Benefit:

6. Net Rewards = CAD 625 (total rewards) − CAD 250 (fee) = CAD 375

In this scenario, even after paying the fee, you’re potentially gaining CAD 375 in travel rewards value.

Scenario 2: Leveraging a Premium Card with Enhanced Rewards

Consider another example with a premium Canadian rewards card, such as the TD® Aeroplan® Visa Infinite® or American Express Cobalt® Card. These cards might offer:

• Base rate: 1 point per CAD 1 on all spending.

• Enhanced travel redemptions at up to 1.25 cents per point.

• A more substantial signup bonus, let’s say 60,000 bonus points upon meeting a CAD 4,000 minimum spend.

For a tuition bill of CAD 20,000, here’s the math:

1. Base Rewards:

   • Tuition Payment: CAD 20,000 = 20,000 points

   • Value: 20,000 points × 1.25¢ per point = CAD 250

2. Enhanced Signup Bonus:

   • Bonus: 60,000 points

   • Value: 60,000 × 1.25¢ per point = CAD 750

3. Total Potential Reward Value:

   • Total = CAD 250 (base) + CAD 750 (bonus) = CAD 1,000

4. Processing Fee:

   • Fee (2.5%): CAD 20,000 × 0.025 = CAD 500

5. Net Reward Benefit:

6. Net Gains = CAD 1,000 − CAD 500 = CAD 500

This example shows that with a premium rewards card, the net travel reward potential can be even higher, effectively providing a discount on your tuition through future travel savings.

Summary Table of Examples

Tuition Amount (CAD)	Reward Structure	Base Reward Value (CAD)	Signup Bonus Value (CAD)	Total Rewards (CAD)	Processing Fee (2.5%) (CAD)	Net Gain (CAD)
10,000	1 point/CAD & 40,000 bonus at 1.25¢/pt	125	500	625	250	375
20,000	1 point/CAD & 60,000 bonus at 1.25¢/pt	250	750	1,000	500	500

Maximizing Value: How Chexy and Plastiq Enhance Your Strategy

Since most Canadian institutions don’t accept credit cards directly for tuition, bill payment services like Chexy and Plastiq become essential tools. Not only do they allow you to pay your tuition with your preferred credit card so that even fixed expenses turn into rewards-earning opportunities, but they also make it easier to meet the minimum spend required for attractive signup bonuses that everyday spending might not cover.

Some of these services also allow for cash flow flexibility by offering up to 60 days of float, which means you can budget effectively without having to completely blow through your cash savings. To a cash-strapped student, the opportunity to split tuition up could be a blessing. Even with the convenience fee of 2–3%, when you factor in a generous signup bonus and favorable point redemption rates, the net gains in travel rewards can be substantial.

For instance, if your tuition is CAD 10,000 and the fee is 2.5%, you’ll pay CAD 250 in fees. But as seen in the previous example, if your rewards from your card (including the bonus) sum to CAD 625, your net benefit is a significant CAD 375 toward your travel fund. Note that this takes the purely cash value, and it's quite easy to get significantly outsized value by transferring credit card points to other loyalty programs (such as Aeroplan).

Important Considerations

Before you charge tuition to your credit card, keep in mind these key points:

• Pay Off Promptly: To avoid high interest rates (which in Canada can be 20% or higher), always pay off your balance in full. Some cards also give you the option to break up purchases into monthly payments- make sure to double-check the terms of these services!

  
  

• Institutional Acceptance: Verify whether your school uses a third-party service for tuition payments or restricts payment methods. Some credit cards may also not be available- until very recently, Plastiq did not accept American Express.

  
  

• Credit Utilization: A high-charge tuition payment may temporarily impact your credit utilization ratio; plan accordingly. This can be offset by breaking up the tuition into multiple payments, which can also help build credit history.

  
  

• Long-Term Rewards Planning: Align your credit card spending and rewards strategy with your travel goals. The value you obtain from converting points into travel rewards can be substantial, but it differs by card and redemption method. Make sure you know what you want before you decide whether to pay your tuition this way!

Final Thoughts

For savvy Canadian students and their families, putting tuition on a rewards credit card—when executed wisely—can be a strategic way to transform a mandatory expense into valuable travel rewards. By using services like Chexy or Plastiq to facilitate the payment, and pairing that with a premium rewards card offering a generous signup bonus, you might unlock hundreds of dollars in travel value after fees.

Are you ready to turn your tuition payment into your next great adventure? With careful planning and smart use of rewards, every dollar you spend on education can help you earn closer to a peaceful getaway or that dream vacation in the future. Happy earning and safe travels!