How to pay off student loans with a credit card

It’s not exactly news that credit cards tend to reward big purchases. There are cards geared toward rewarding vacations, business needs and even cars. But can credit cards help with one of early adulthood’s most frustrating expenses?

Nearly 3 in 5 (59 percent) of U.S. adults have put off making major financial decisions due to their student loan debt, according to Bankrate’s 2023 Financial Milestone Survey. Those decisions included things like buying a house, having children, paying off other types of debt and saving for retirement.

If you’re thinking about using a credit card to pay off your student loans and earn some rewards to offset the costs, you’re not alone. Many borrowers have wondered whether it’s even allowed.  Paying your student loans with a credit card is possible — but it’s usually not a smart move.

You’ll typically gain little to no rewards using a credit card to pay your loans. Most loan providers won’t allow you to do so directly, and doing so indirectly will typically result in fees that cancel out any potential points or cash back you might get.

On top of that, this route comes with several risks that could make your debt worse. Take a moment to read up on the risks that come with paying off student loans with a credit card, like losing your federal protections or tacking on a higher interest rate to your debt. If you decide the benefits still outweigh the risks, however, these steps can help you proceed with your repayment plan as safely as possible:

1. Determine whether you can make loan payments directly with a credit card

Most loan servicers require payments to come from a bank account, making it difficult to pay with a credit card. Log in to your student loan account and navigate to your payment options. Begin to make a payment and check to see if paying with a credit card is an option.

If you can’t use a credit card, use these strategies

The following strategies can potentially help you get around the restrictions from your loan services:

Work with a third-party service

Third-party services like these are designed to allow people to pay for bills — including loans, in some cases — that don’t typically accept credit card or debit card payments with their credit or debit card. When you pay for your student loans via a reputable third-party site, it allows you to pay the loan provider with their preferred method (check, bank transfer or wire transfer) while charging your credit card. This method is best used with a credit card that has a hefty welcome bonus that you can redeem as a statement credit to offset your student loan payment and service fees.

Drawbacks: Despite giving you the ability to earn rewards with your credit card, these services generally charge fees for every payment. Once you earn your welcome bonus, those fees will likely outweigh any rewards you might earn on the purchase — and can cause you to slip further into debt if you wind up carrying a balance on your card. You also need to be aware of the different processing times of the payment method your loan service accepts and plan accordingly.

Use convenience checks

If you want to avoid paying third-party sites and take a more direct approach, consider a convenience check. Similar to a personal check, it allows you to use the available balance on your credit card and can be made out directly to the receiver. You can use it anywhere regular checks are accepted, and it’s a good way around the no-credit-cards barrier that most student loan services have. It may also process faster as it does not have to go through another service.

Drawbacks: Proceed with extreme caution. Convenience checks automatically accrue the same interest rate as cash advances, which can be 29 percent or higher. You should only use this strategy if you have the cash on hand to immediately repay the charge and simply want to earn rewards — and even then, it might not be worth it. Convenience checks can come with their own set of fees, which will offset any rewards you earn.

2. Use these credit card payoff strategies

Once you know how to make a student loan payment with a credit card, you’ll want to consider your payoff strategy. Are you going to charge a large portion of your loan balance to a credit card? Or do you plan to continue with small, fixed payments each month?

For a large charge, take advantage of a 0% intro APR offer

There are plenty of cards that offer a 0 percent intro APR for new cardholders, meaning you won’t have to worry about interest for a limited time. Most offers last from 12 to 18 months, but some go up to 21 months.

The Wells Fargo Reflect® Card, for example, offers a 0 percent introductory APR on both purchases and balance transfers for 21 months, followed by an 18.24 percent, a 24.74 percent or a 29.99 percent ongoing variable APR. If you don’t have the money in your bank account to immediately pay off a charge, then using a 0 percent intro APR card will likely be your best option.

Drawbacks: While most intro APR cards have interest rates that are around the national average, credit card APRs tend to be higher than student loan APRs. You want to be sure you can pay your student loan — now credit card debt — in full before the 0 percent intro APR period ends, or else you’ll pay a lot more in interest. You’ll also have to make sure that your loan payment will count in your issuer’s eyes as eligible for your intro APR offer.

For small, recurring charges, use a flat-rate card

For those who plan on using a credit card to chip away at their balance over time, a flat-rate cash back card may be your best tool. Most rewards cards would only offer 1 percent cash back on student loan payments, since student loans don’t fall into traditional bonus categories, but flat-rate cards will offer 1.5 to 2 percent.

The Citi Double Cash® Card is a good example. This card offers up to 2 percent cash back on all purchases — 1 percent when you make the purchase and 1 percent when you pay for it. It also comes with a welcome offer that you can redeem as a statement credit and use toward your balance.

Drawbacks: Any rewards you earn with your flat-rate card, even at 2 percent, will likely be eaten away by the fees you pay to a third-party service for helping you pay with a credit card. If you use convenience checks with this method, you might fare a little better, but convenience check fees can also cancel out your rewards — especially if you don’t pay it off right away and have to pay interest. If you’re looking to move your entire loan balance out of your loan account and into a credit card account, it’s better to focus on finding a 0 percent introductory APR offer.

3. Follow these additional tips

Playing the calendar game

Timing is everything, and you can use it to your advantage. For most cards, you can change your payment due date, and many make the default on the 28th of the month. Use this to your advantage by setting your due dates for your loans and card at least two weeks apart. By doing this, you give yourself a safety net. Should an unexpected expense come up, you have time to recalibrate your budget. This can also give you a paycheck between deadlines, giving you more flexibility in your budget.

If you’re someone that tends to confuse dates or be forgetful, this method may not be the best. If the window is too large, it may be better to place your due dates closer together. However, you should leave a few days between them to allow for delays from issues like site crashes, processing time and holiday hours.

Mix and match

Who says you need to stick to one way of paying off your loans? You can mix and match methods as needed as the end goal stays the same. Look at your current spending habits and determine from there the best debt repayment method for you. Maybe that means using a third-party service to move a chunk of your debt to a 0 percent APR credit card, or maybe that means using convenience checks with a new credit card until you earn a hefty welcome bonus.

But while it’s important to find a payment strategy that works for you, you don’t want to open too many credit cards in a short window or complicate your repayment plan. Make sure to look for preapproved cards to avoid a hard inquiry on your credit card and wait at least six months to a year before opening another.

Also, don’t let curiosity or hearsay get the best of you. If you find a strategy that works with your budget and schedule, stick with it. If you want to switch, make sure to do your research.

The bottom line

Paying off your student loan debt with a credit card is a high risk endeavor that offers very little rewards in return once you factor in the additional fees and the hassle of juggling multiple payment avenues. There are a few potential advantages — such as being able to earn a welcome bonus or pay down some of your debt with a 0 percent introductory APR card offer — but you’re likely to run into drawbacks, too.

If you do decide it would be worth it to pay your loans off with a credit card, come up with a plan that works for you and is as stress-free as possible. Just be sure to also explore other alternatives to help clear your student loan debt before you start the process. While there are many private companies in the business of student loan debt relief, you can also find a range of government resources to help you get rid of your debt.