“Alternative Strategies to Pay Off Student Loans Without Using a Credit Card”

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How to Pay Student Loans With a Credit Card

Federal student loan servicers and most private student loan providers do not accept credit cards as a payment method. However, there are some workarounds, such as using a third-party payment provider, a balance transfer, or a cash advance. These methods can be risky and expensive due to extra fees and higher interest rates.

If you’re struggling to afford your loans, consider options to reduce or pause payments. If you can afford to pay off your loans in full and want to earn credit card rewards, calculate the fees first; using a workaround may not be worth the hassle.

Using a Third-Party Provider

Services like Plastiq allow you to pay bills with a credit card, but they charge fees on each payment (Plastiq charges a 2.9% base fee and $0.99 delivery fee per transaction). These charges will add to the cost of your loan, and not all credit card issuers allow this option.

Balance Transfer

Some credit cards allow student loan balance transfers, which could be beneficial if you qualify for an introductory 0% APR balance transfer offer. You’ll have a period of months to pay off the balance interest-free, but you’ll need a good credit score and will likely pay a balance transfer fee—often 3% or 5% of the transferred amount.

Cash Advance

Your credit card issuer may allow you to get a cash advance on your credit line, either at an ATM or via paper check. While you can use this money to make a student loan payment, cash advances come with high fees of 3% to 5% of the transaction amount and interest rates that can reach 29.99% or higher. Consider this option a last resort.

Why You Shouldn’t Pay Your Student Loans With a Credit Card

There are many reasons why paying student loan debt with a credit card can backfire:

• Added fees: Student loan interest might sting, but fees and interest charges from a bill pay service or cash advance will likely be worse.
• Effect on your credit score: Increasing your credit card balance can negatively affect your credit scores by raising your credit utilization rate.
• Loss of loan protections: Transferring a student loan balance to a credit card means losing consumer-friendly student loan repayment options like forbearance and forgiveness.

Alternative Ways to Pay Off Your Student Loans Without a Credit Card

There are better alternatives to paying off student loans with a credit card. The best option for you depends on your motivation:

Pay Less Interest

Student loan refinancing: If you have good or excellent credit, you may qualify to refinance your student loans to a lower interest rate. This option gives you more time to pay off your loans at a lower rate without paying a balance transfer fee. However, refinancing turns federal loans into private loans, so you’ll lose access to federal loan benefits.

Affording Payments

Income-driven repayment: This is the best option for federal student loan borrowers who are concerned about affording their loans long term. Income-driven repayment plans limit student loan bills to a percentage of your discretionary income and offer forgiveness after a certain number of years.

Deferment or forbearance: Both federal and private student loans offer options for pausing payments temporarily. If your financial hardship is short-term, you can apply for deferment or forbearance to get a break from student loan bills.

Consolidation: Federal student loan consolidation replaces multiple loans with a single new loan. While it doesn’t lower your interest rate, it can extend your repayment term or make certain types of loans eligible for income-driven repayment, giving you a smaller monthly payment.

The Bottom Line

Paying student loans with a credit card generally isn’t possible directly, and using a workaround like a third-party bill pay service or balance transfer can be costly and complicated. Instead, consider other ways to meet your student loan goals, such as lowering your monthly payment using income-driven repayment or cutting your interest rate with private loan refinancing.

If your motivation to pay off student loans with a credit card is to earn travel rewards, try other strategies, like picking the right rewards credit card and making use of shopping portals and rotating bonus categories.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We are here to help you with the best solutions tailored to your needs.

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