Can you pay student loans with a credit card?

Things to consider before you try to use a credit card to pay for federal or private student loans.

If you have student loans, you may have wondered whether you can use a credit card to make payments. While it’s possible, it might require some careful thought first.

There are plenty of variables to consider. So here are a few things to keep in mind as you explore whether paying down student loan debt with a credit card is the right move for you.

Why paying student loans with a credit card can be risky

From the get-go, there may be hurdles to paying down your student loan debt with a credit card. First, federal student loan servicers and many private lenders don’t accept credit card payments.

Depending on how much student debt you have and what your card’s credit limit is, you may not even be able to cover it all with a credit card. And the Consumer Financial Protection Bureau (CFPB) makes its opinion pretty clear: “Don’t replace student loan debt with credit card debt—it can be a much more expensive way to finance your education.” 

But there are a couple ways it can be done:

  • Third-party payment services: Some companies will take your credit card payment and then pay your loan servicer or lender on your behalf. It could be one way to pay with a credit card on a month-to-month basis, but these services typically charge you a fee for each transaction.
  • Credit card balance transfer: In some situations, you might be able to transfer the balance of your loan to a credit card with a low interest rate. You could then make payments on the card instead. Balance transfers may come with a fee. And low rates may not be permanent.

Some credit card issuers may also offer other methods, such as cash advances or convenience checks. But those methods could be more expensive, because of additional fees or higher interest charges. And unlike balance transfers, they may not offer a low introductory interest rate—more on that in a second.

All those methods may let you use a credit card to pay down your student debt. But there’s plenty more to consider. If possible, it might also be worth talking with a financial expert to get advice specific to your situation. 

Depending on the credit card, here are some other things to be aware of:

  • Introductory offers: Some credit cards or balance transfers may come with introductory offers that have low interest rates. But these promotions last for a limited time. Once they end, you could be charged the standard rate on your credit card on whatever you haven’t paid off. There may also be limits on how much student debt you can transfer, which could leave you with payments to multiple lenders or servicers.
  • Fees and interest charges: There may be transfer or service fees to move your student loan debt. And beyond promotional rates, the regular APR for credit cards is often higher than that of student loans.
  • Credit scores: Using a credit card on student loans could affect your credit because it relates to a number of credit-scoring factors. How you manage your monthly credit card payments, including whether they’re on time and how much you pay, could also have an effect.
  • Credit use: Another aspect related to credit scoring is how much credit you’re using versus how much you have available. It’s known as your credit utilization ratio. Moving a large debt could make it go beyond the 30% recommended by the CFPB. And if you use your credit card for other regular expenses, you may have less flexibility if you transfer a large debt.
  • Repayment plans and relief: Federal student loans may offer benefits to borrowers in the form of loan deferments, forbearance, consolidation and forgiveness. But those programs may not be available if you transfer your loan balance to a credit card.
  • Taxes: Paying down federal student loans normally allows you to deduct student loan interest from your federal income tax returns. Some private loans may qualify too. But interest payments on credit cards aren’t tax deductible.

Now you know some of the risks involved with using a credit card to pay down student debt. It might also be worth considering other methods to handle student loans.

Other ways to manage your student loan payments

There are a bunch of strategies to pay off student loans. If you’re having trouble keeping up with your student loans, you might want to investigate the following options before you pay with a credit card:

  • Repayment plans: Federal student loans have various repayment options. If you find that one repayment plan isn’t working for you, the Department of Education says you can switch to another repayment plan for free at any time.
  • Forbearance: If you’re experiencing a period of financial hardship, you might be able to apply for forbearance. This will allow you to temporarily suspend or reduce payments. There are forbearance options for federal student loans. And you can ask your lender about options if you have private student loans. But your loan may continue to accrue interest during that time. And some forbearance agreements could affect your credit. 
  • Federal consolidation: You might be able to combine several federal loans into one. It’s a specific type of federal loan that could simplify and lower your monthly payments. But it might also extend your repayment term, and you may end up paying more in the long run. And you may no longer be eligible for loan forgiveness programs.
  • Private refinancing: By refinancing your loan with a private lender, you may be able to get a new loan with a lower rate. Similar to federal loan consolidation, refinancing may allow you to combine multiple loans—both private and federal. But other loan terms may change, and you could also lose benefits.
  • Other options: If you have a private student loan, you can try reaching out to your lender and explaining your situation. In some cases, they might be able to offer other relief options.

These are just a few considerations. Remember, talking to a financial expert, if possible, could be a big help.

What to consider if you use a credit card to pay student loans

There are expenses and risks to consider. If you still decide it’s the right move, there may be situations in which paying down student loan debt with a credit card makes sense.

One is if you can pay off your student loans before an introductory APR offer ends. But depending on how much debt you have, you may not be able to cover it within your credit limit. Remember, when you perform a balance transfer, you may be able to enjoy an initial period of 0% interest. You’re essentially giving yourself a window in which you aren’t charged interest on your student debt. And that could make it easier to pay off in full. But it’s important to remember that not all balance transfers have introductory or promotional rates. 

A rewards credit card might also be useful. Some credit cards let you put your rewards toward your account balance in the form of statement credits. Doing so could help you eliminate your debt faster if you’re paying it off in full during the promotional period. Keep in mind: Any rewards you earn could be outweighed by credit card interest if you’re still making payments on the transferred loan after the promotional period ends.

But it’s important to weigh the potential benefits with everything else. Here are a few steps you can take to help put yourself in position to decide:

  • Understand terms and fees. That’s whether you’re using a third-party service, a balance transfer, a cash advance, a convenience check or any other method you find. Be sure you know how much it might cost to use your credit card.
  • Double-check dates. Along with terms and fees, be sure you know key dates. That might include when your student loan debt will be transferred to your credit card, when promotional rates end and when your monthly payments are due.
  • Create a budget. Once you have terms and dates straight, you can use that information to plan how you’ll manage your debt. The CFPB has advice about budgeting that may help. Budgeting could help you plan your payments to avoid paying interest you could have otherwise avoided.
  • Examine the effects on your credit. CreditWise from Capital One might be able to help. It’s free to everyone—even if you’re not a Capital One customer. And you can use the built-in CreditWise Simulator to explore how certain financial decisions could affect your credit. 
  • Find the right card. Remember, your interest charges can have a big effect on how much you owe. If you’re looking for a new card, consider doing some research. Finding a card with a low introductory rate and a low regular rate could help you save money, depending on how you manage monthly payments. And checking if you’re pre-approved before you apply could give you an idea about whether your credit application will be accepted.
  • Use your card responsibly. If you’re using your card for things other than student debt, be sure you understand how interest is calculated. For example, new purchases may not be subject to a promotional rate. Using your card responsibly also means doing things like not maxing out your card, only applying for or using the credit you need and making at least the minimum payment by your due date every month.

Paying down your student loans with a credit card is possible, but there’s a lot that goes into the decision. And with such a wide range of options, you should evaluate them all before you decide. And it’s always a good idea to check with a financial adviser. Rushing into any decision could end up with you paying more than you would have otherwise.

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