How to Pay Student Loans With a Credit Card

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Contributor, Benzinga
August 14, 2023

Did you know you can pay student loans with a credit card? While it's possible, it's rarely advisable. There can be potential benefits from credit cards, including rewards or interest relief through a 0% APR introductory offer. 

Paying student loans with credit cards comes with major caveats about soaring interest rates if you cannot pay it off in time and additional fees. That said, there may be cases where using a credit card for student loans makes sense. Read on for how to pay student loans with credit cards.

Can You Pay Student Loans With a Credit Card

Generally, you cannot pay student loans with a credit card directly. Most loan servicers require payments to come from a bank account. When you log in to your student loan account, you'll be able to see payment options.
There are two reasons you usually can't pay student loans with a credit card. First, federal regulations usually prohibit it. In addition, every credit card transaction involves processing fees paid by the party that accepts the card as payment. Lenders aren't willing to pay those additional fees, which are typically around 2% to 3%. 

That said, there are workarounds to pay for student loans with credit cards, including third-party payments and convenience checks. 

Ways to Use a Credit Card For Student Loan Payments

Sometimes, you can pay student loans with a credit card directly. However, it's important to understand the terms and conditions of credit card payments for loans, as many don't allow it directly. 

Online Payment Through Student Loan Servicer

Some loan servicers allow borrowers to make payments using credit cards through their online portals. This may involve convenience fees but is generally the simplest option to pay loans with credit cards.  

Balance Transfer To A Credit Card

You can transfer a student loan balance to a credit card, although it's not usually a good idea. Several major credit card issuers allow you to transfer student loan debt to their cards easily. Whether it's a good idea depends on whether the card offers a 0% APR and your particular situation.

While it can lead to cost savings if you can pay off the debt before the interest rate rises, you'll also risk carrying it with high-interest rates. 

Using Convenience Checks

Convenience checks provided by credit card issuers offer another alternative payment method. Convenience checks function like personal checks, allowing you to make the check directly to the receiver. However, with a convenience check, you'll use your available credit card balance and accrue interest at your credit card's standard cash advance rate (often 29% APR or more). 

If your loan provider accepts checks, this is a way to pay with a credit card, but you'll pay for convenience. Proceed with extreme caution as the interest rates are rarely worth the convenience. 

Using Third-Party Payment Services

Third-party platforms like Plastiq facilitate credit card payments for loans. These intermediary services charge a flat credit card processing fee, usually around 3%. That means if you owe a total of $300 in student debt payments, you'll pay an additional $9 in credit card processing fees. This, along with high-interest rates if you cannot pay off the credit card, make it a last-resort option for paying student loans.

Direct Payment Through Educational Institutions

In some cases, educational institutions accept credit card payments for tuition and related expenses, indirectly helping with student loans. Of course, this is only an option while you're actively enrolled in a college or university, and you're able to confirm with the institution about this option.

However, if you can create a payment plan for monthly withdrawals, you could reduce the total student debt incurred, reducing debt after graduation. 

Exploring Strategies For Settling Student Loans Via Credit Card

Using credit cards as a tool for managing student loan debt can be helpful for paying off high-interest debt quickly. The benefits of strategic planning when using credit cards for student loan repayment can be interest savings and faster loan repayment. Here's what you need to consider:

Consolidating High-Interest Loans

Consolidating high-interest student loans onto a low-interest or 0% APR credit card can save you money. However, this is only true if you can pay off the debt before high-interest rates start. 

Credit cards are not known for their low-interest rates. Instead, they are notorious for high-interest rates that can trap consumers in a cycle of debt. For 0% APR cards, introductory offers only usually last 12 to 21 months but could be even shorter. Check with the card issuer to understand the terms and conditions, including interest rates.  

Before consolidating student loans onto credit cards, it's essential to compare interest rates, consider fees, and ensure you're not losing federal student loan benefits. 

Taking Advantage Of Promotional Rates

Credit card companies sometimes offer promotional interest rates, like the 0% APR we keep mentioning. However, they also charge a balance transfer fee of 3% to 5%. Calculate potential savings against balance transfer costs and understand the terms to select the best option. 

Utilizing Rewards And Cashback

Using a rewards credit card for student loan payments can yield cashback or points. However, these rewards and cash back won't compensate for the additional expenses of high-interest rates on credit cards. 

If you have a card with an introductory reward spend target and have the cash to pay back the card in full, this can be a good choice. You could earn enough points for a roundtrip airline ticket, hotel nights, or cash back.  

However, never spend extra on these cards to get rewards or cash back. You'll end up paying more on interest. Typical cashback cards offer 1% to 5% cashback. All the cash-back benefits are negated if you're paying 25% APR on those expenses.

 Instead, focus on paying off student debt and using rewards cards for regular purchases like food or transportation without overspending.

Balance Transfer For Short-Term Relief

As mentioned before, you can transfer a portion of student loan debt to a credit card with a promotional 0% interest rate. This is only a good idea if you're sure you can pay off the balance before the promotional period ends. Otherwise, the balance transfer fees plus the high-interest rate make it an expensive loan repayment solution. 

Creating A Repayment Plan

Creating a repayment plan incorporating credit card payments can maximize rewards and savings. Once you know how much you have to allocate to student debt each month, create a plan of how to pay that maximizes interest savings and (possible) credit card rewards. 

Tips for Managing Student Loan Payments with Credit Cards

Responsible financial management and strategic planning can help you repay student loans faster. Weigh everything carefully before making your plan. If you're planning to manage student loans with a credit card, consider the following points: 

Strategic Payment Planning

When you align credit card billing cycles with student loan due dates, you'll have longer to pay off the credit card debt. For example, if student loans are due on the 1st of each month, and your credit card billing cycle closes on the 28th of each month, you'll have nearly two months from the 1st of one month to pay off the student loan credit card debt. 

This can help you avoid interest and late fees, but it only works if you are able to pay off the debt in full each month. 

Automated Payments

Setting up automated credit card payments for student loans can ensure you're never late for student loan payments. You'll need to consider the payment options above and set up recurring billing to do this. This is usually only possible directly with the school or a third-party service. To maximize benefits, it's also a good idea to set up automatic credit card debt payments from a linked bank account. 

Using Rewards For Loan Repayment

You can redeem credit card rewards like cash back for loan payments. The flexibility of using cashback or rewards points to reduce the loan balance can help you cover an additional amount. However, if you're paying an additional 3% credit card processing fee, this usually negates the benefits of cashback. 

Regular Monitoring Of Statements

It's essential to regularly review credit card and loan statements to track spending and ensure accuracy. It's also important to double-check due dates to avoid late payments. 

Prioritizing High-Interest Loans

If you have an introductory offer like 0% APR, prioritize credit card payments towards high-interest student loans. This strategy can save money on interest over time.

Tracking Expenses And Budgeting

Tracking monthly expenses and creating a budget can help you stay ahead of debt and pay off more each month. Budgeting and sticking to the plan are your allies. You can use budgeting apps, or create a simple spreadsheet to track monthly expenses, then look for opportunities to increase monthly savings and debt repayments. 

Should You Pay Off Student Loans with Credit Cards?

In most cases, the answer is no. It is less expensive and less complicated to pay student loans directly than to pay off student loans with a credit card. However, like all aspects of personal finance, it requires that you weigh your individual situation, including savings and financial goals. 

For example, paying on a credit card can make sense to reach the minimum spend for a large credit card bonus, as you immediately pay off the credit card debt. Likewise, transferring what you can pay off on a 0% APR offer can be a smart move if the debt transferred is high-interest. Understand your options and all interest and fees to make the best choice for your situation.

Frequently Asked Questions


Is it possible to pay off student loans using a credit card?


Yes, it is possible to pay off student loans using a credit card, although it’s more difficult and can be more costly. For most people, paying off student loans directly and earning credit card rewards through other regular expenses is a better option.


What are the benefits of paying student loans with a credit card?


The benefits of paying off student loans with a credit card center on 0% introductory APR offers and lower interest rates.


What are the drawbacks or risks of paying student loans with a credit card?


There are a number of risks for paying back student loans with a credit card, including higher interest, balance transfer fees, and losing federal student loan protections.

Alison Plaut

About Alison Plaut

Alison Plaut is a personal finance writer with a sustainable MBA, passionate about helping people learn more about financial basics for wealth building and financial freedom. She has more than 17 years of writing experience, focused on real estate and mortgage, business, personal finance, and investing. Her work has been published in The Motley Fool, MoneyLion, and she is a regular contributor for Benzinga.