Can I Pay a Student Loan With a Credit Card?

The pandemic is forcing people to look into debt repayment options they have not previously considered, such as paying off a student loan with a credit card. Is it possible? Yes, but overall it’s a bad idea.

Why Paying Student Loans By Credit Card Is A Bad Idea

Interest rates on student loans cost less than on credit cards, as the average rate is 5.8% compared to 15.97%, respectively. It may also be cheaper to charge late fees from a student loan company instead of paying interest on a credit card.

You also have certain rights as a student loan borrower, and by transferring your debt to a credit card, you lose some safeguards that include income-based repayment plans, deferral or abstinence. In addition, student loan payments have been suspended until December 31, giving some extra breathing room.

Typically, the only good reason you want to use your credit card to pay off student loans is to take advantage of bonus points or transfer your debt to a card with a 0% APR offer, which will allow you to avoid interest, usually for 12-21 months . Even so, it is a risk: you should be able to pay it all off before the end of the 0% rate period. Otherwise, you would be on the hook for the same debt at even higher interest rates than before.

As far as bonus points are concerned, they are only really valuable if you pay off your balance in full each month and you will need to do the math and make sure that the total value of your rewards is not eaten up by the annual fees. Also, if it’s a large amount, leveraging your credit card as much as possible will increase your loan utilization rate and damage your credit rating, which can make it difficult to get good rates on other loans.

Through an intermediary service for a fee

The Federal Student Loan Service won’t let you pay with your credit card directly , but you can use an intermediary service like Plastiq , although there is a 2.85% fee charged. Some private student loan companies may accept credit card payments, but like all intermediaries, they almost certainly charge a commission (usually 2-3%).

So, again, if you are transferring debt to a credit card to claim points, the value of the bonus point must be higher than the processing fee. For example, a processing fee of 2.85% of $ 1,000 would be $ 28.50. Many categories of cash back rewards are only 1-2% so you will lose money in this scenario.

Alternative options

Generally speaking, if using your credit card is the last resort for paying off student loans, don’t forget that you have options like abstaining or deferring. For federal loans, call the Federal Student Assistance Information Center at 1 (800) 433-3243 or visit and they can help you lower your monthly payments or even determine if you are eligible for a loan forgiveness. For private loans, contact your loan agent directly to inquire about these options.


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