Can I Pay For Student Loans With a Credit Card?

can you pay student loans with a credit card

Currently, nearly two-thirds of college students graduate with student loans in arrears. As a result, millions of people are eager to repay these loans. Still, even the most responsible borrowers may find it challenging to repay every month due to unemployment, serious health, and other emergencies.

Using credit cards to pay off a loan is technically possible, but it’s usually not a good idea. However, if you’re considering your card to pay off loans, here’s what you need to know.

Is It Possible to Pay Off Student Loans With a Credit Card?

Before considering whether you should repay your student loan debt with a credit card, let’s see if it is possible.

Federal loan servicers don’t allow students to pay directly with their cards. Instead, they need to use a paid service that pays one and a half fees. They may also be charged a transaction fee if their private borrowing company allows them to repay their student borrowing by a card.

Some card issuers also offer convenient cashier’s checks that can be used to transfer student loan balances and pay off loans. However, additional checks are not balanced transfers and usually allow students to earn interest at a higher exchange rate than the standard annual rate.

What Are the Risks of Paying Off Student Loans with a Credit Card?

Many say it doesn’t make sense for most student borrowers to pay off a student loan debt with a credit card. Paying a student borrowing with a card will cancel the loan protection and may transfer your obligation to a borrowing product with a higher interest rate than the student loan. 

In addition, there is a high possibility that a fee will be charged at that time.

Using borrowing to cover your regular expenses is profitable but carries certain risks. Here are some of the main disadvantages you should be aware of before making a borrowing fee with credit cards.


Most plastic issuers don’t allow you to deposit money for student borrowing directly with your card. Therefore, such fees require ingenuity and may require a third party to facilitate the transaction.

Since the borrowing company doesn’t accept cards directly, they will charge a settlement fee if you deposit money by card using this service. You will also be charged fees and interest when checking your card. 

The use of an intermediary is, at best, the last option. The reason is as follows. 

Let’s say you want to repay a $500 loan. The intermediary can debit your card for $515 (payments + 3% commission) and send a check to the lender for $500. You still have credit, but it is worse than before. 


These protections no longer apply to student borrowing balances transferred to cards. If you have a federal loan, you will no longer be liable in the event of death, disability, or default.

If you can’t repay, you can change the repayment plan. Income-based repayment plans are available as an alternative to federal loans and are ideal for job hunting for new graduates or to take advantage of the gig economy while looking for a job in your area of expertise.

In other words, if you transfer your debt to a card and the economic situation changes, your ability to continue making reasonable repayments will be weakened.

Credit History

Credit combinations consider handling different types of debt, while the credit age focuses on how long they have demonstrated responsible credit behavior. Ideally, you should have a long-established account with no negative score.

Closing a student borrowing account can reduce the average age of your account if it is one of your oldest accounts and has a good score. It’s inevitable. The good news is that the credit age is one of the least influential elements in most loan ratings.

Accumulation of Significant Debt

The most obvious reason for not lending a student loan debt with a credit card is the financial impact of interest. Some cards offer referral promotions with a 0% APR for one year or more. However, you will pay higher interest rates at the end of this campaign period.

If you rely too much on credit, you can end up with a pile of card loans. Moreover, high average interest rates on cards can lead to an obligation spiral that is difficult to stop. So the question arises as to why exchange the existing debt for a worse one.

Read Also: 10 Benefits Of Using a Credit Card

What Are the Benefits of Paying with a Credit Card?

If money is an obstacle to achieving the desired life and career, loans allow you to get an education without worrying about cash flow. Getting a higher education is an investment in yourself, but, unfortunately, it also costs money. 

Financial institutions that handle federal loans can’t accept credit card payments due to U.S. Treasury rules. However, you can use an intermediary and then use cards.


Credit card payments are advantageous for many because they give you bonus points that exceed payment fees. However, this method is only effective if you have a card with the amount that you are sure you can repay each month. 

Otherwise, the profits you get from interest rates will be compromised. However, most point cards have a minimum usage limit before the advantage becomes effective, and the advantage amount is linked to the usage amount.

Buy Time Before a Payment Due Date

Student loan payments are inevitable for many students. In the United States, there is more than $ 1.5 trillion in borrowing debt, which continues to grow as college costs rise and the number of students enrolled in higher education. 

Although it is a burdensome obligation for those just starting their careers, loans are also an opportunity to improve their credit history.

Paying a student’s obligation with a card gives the user more time to help when cash is in short supply. However, claiming a substantial fee that spends more than 20% of the available credit on your new card will hurt your creditworthiness. 

Still, this large balance will be credited if you deposit the fee before issuing the statement. 

Reduced Rate Payment

If your student borrowing interest rate is unusually high, you may want to use a middleman to repay most of your student borrowing and transfer the balance to a zero-rate card. 

However, it is only worth it if your student loan interest rate is around 4.5% or higher and you are 100% sure to repay your plastic balance within the reference interest rate period.

For example, suppose you have a 12-month referral card and use it to repay a $1200 borrowing to an intermediary service. In that case, the intermediary service will charge you $34.20; after 12 months, you will have a $1234.20 credit. You have a balance and need to refund it. That’s $102.85 a month. Student borrowing interest rates of 4.5% exceed student loan payments of $34.20. Most federal loans have relatively low-interest rates, so most people pay no more than 4.5%.

When Is It Worth Paying for Student Loans with a Credit Card?

Here are two scenarios where it would be beneficial to repay student loan debt with a credit card. The first one is a balance transfer. It is a good choice for paying off student loans with a card. 

Interest rates on student loans tend to be lower than card interest rates. However, if you do not repay all your balances by the end of the implementation period, you will pay interest on the remaining balances.

The second one is the reward. Paying off your loan with an award-winning card will give you points, miles, and cashback, just like any other purchase. However, paying off your borrowing with a card may have to pay a fee. In addition, some cards allow you to use your benefits to repay your student loan.

How Do I Choose the Right Card to Pay Off My Student Debt?

Determining a student card that suits you can be a daunting task. Start by analyzing your spending and seeing what you’re spending the most on. 

It will help you decide which plastic offers the benefits that suit your lifestyle. Student incentive cards also offer cashback or travel points for the contract signing. 

This is a good reference if you already have a card in some banks. In addition, many credit companies and banks offer cards, and you can partner with your current company to make payments more convenient.

Bank of America

Can you pay loans using it? In 2008, Bank of America announced that it would stop providing private student loans and other student loans to borrowers to cover education costs. Instead, it offers a card with individual money returns.

  • 14.74% – 24.74% variable.
  • Students under the age of 25 have no monthly service payments. The bank also offers savings accounts and cards and partners with Khan Academy.
  • The Bank of America Cash Rewards card, is perfect for students who want to be rewarded based on their expenses and receive credit without an annual membership fee.

Regarding student cards, there is nothing better than the valuable Bank of America Cash offers.

Wells Fargo

It offers up to $ 120,000 in loans to students.

  • The variable Annual Percentage Rate range ranges from 4.74% to 9.99%. The fixed Annual Percentage Rate range ranges from 5.24% to 9.99%. It has the best customer support among the banks that offer loans.
  • The bank provides useful information, interactive tools, practical strategies, and much more that students need to improve their financial literacy and achieve their financial goals.

Eliminating unnecessary costs is important for students with limited budgets. For example, Wells Fargo offers free monthly payments for daily checking accounts for students ages 17 to 24.


Citi Bank student loans are available for low-interest rates and multi-year approval. It also offers a variety of refund options.

  • 3.47% – 9.35% with autopay
  • Its credit cards can offer you a discount of up to 0.50% on interest rates. In addition, multi-year contracts can simplify long-term loans.
  • After taking the first student loan from Citi Bank, getting an additional student loan with multi-year approval will be easier.

Citi Bank loans come in 5, 10, and 15 years, with long-term loans ranging from $ 1,000 to $ 350,000.


Discover bank has been selected as the best bonus for students, as they will receive the same amount of cashback earned in the first year of use.

  • Variable Rate: 1.79% – 11.24% APR; Fixed Rate: 4.49% – 13.34% APR
  • There is no charge if you run out of funds or change your debit card. In addition, this debit card can be used at over 60,000 ATMs nationwide without commission.
  • Students with an average grade of 3.0 or higher receive $20 per year for up to 5 years, providing a unique incentive to keep their grades.

With no annual fee, you can get up to a 5% cash refund on activation for daily purchases at various locations each quarter.


The USAA previously operated a borrowing referral program with Wells Fargo. However, the company canceled the program in December 2016 due to a lack of demand. So instead, we are focusing on other products and services that benefit all members, not just some groups.

It still offers college-related products such as bank deposits, secure cards, and college savings investment accounts.

Best Personal Credit Cards Review
We have found a good compilation of personal credit cards with different APR and credit score ranges. But not all of them are trusted.

Choose only “Strongly recommended” cards to avoid scams and high fees.

Read More: Best Credit Cards For Students

How to Make a Credit Card Payment on Student Debt: A Step-by-Step Guide

If you have a student loan, you may be wondering if you can pay student loans with a credit card. It is possible, but it seems that you must first think carefully. There are various nuances. So, here are a few things to keep in mind when deciding whether repaying your borrowing debt with credit cards is the right thing for you to do.

5 Steps Before Paying Student Debt With a Credit Card

Understand Terms And Fees

Please read them carefully. Otherwise, you may be charged a higher interest rate than the normal plastic interest rate.

Create a Budget

Effective budgets should be written on paper or created in spreadsheets. This budget makes a list of all income and then lists all expenses.

Examine the Effects on Your Credit

Understand the balance transfer fee and compare it with interest savings during the implementation period.

Find the Right Card

At the end of the promotion period, you will pay the normal interest rate on the card, which is likely much higher than the borrowing interest rate. So consider whether it is worth risking.

Use Your Card Responsibly

If you use your plastic irresponsibly, your credit score will be low for a while, and you may lose interest in future loans and cards.

How to Pay Student Debt With a Credit Card

Despite many disadvantages, cards can ultimately handle loans. However, additional procedures are required.

Use of Third-Party Payment Systems

If you want to cover your next loan with a card, you can use a third party. However, a usage fee will be charged. When the fee processor receives your payments, it will send a check for the amount specified by you to the borrowing provider.

Receive a Convenience Check From the Card Issuer

If your loan company doesn’t accept cards directly, you can use the credit card issuer’s convenience check. It is treated like a cash check but works like a regular bank check.

Build a Plan

Make a copy of your credit report, correct any errors, and increase your chances of passing the loan review. Then check your solvency and consider the cards offered within your solvency. Once your new plastic is approved, they will start paying off your borrowing a few days before the due date.

What Happens After the Payment Is Made?

After making payments, you need to monitor your credit card account to ensure the transaction is recorded as a purchase, not a cash advance. A cash advance is not the same as withdrawing money from a checking account or a card. 

Instead, there is a cash commission, sometimes up to 5% of the deposit. In other words, paying off a $30,000 student loan this way costs $1,500 more for commission alone.

Read More: Best Student Loans Without A Co-Signer

Bottom Line

Using credit cards to repay a borrowing is attractive at first glance. In theory, using credit cards to repay a loan can save money. However, in reality, most financial institutions don’t support direct card payments, and the cost of using a third-party fee service can offset the savings. 

There is also a risk of paying more interest if refunds have expired during the 0% campaign period. Therefore, you should do everything possible to repay your loan obligations with regular funds. 

Even if you try to use plastic, you only delay the inevitable situation. And if you are not careful, you can suffer even greater financial losses.

Sources Used in Research for the Article:

  1. What are the different ways to pay for college or graduate school, Consumer Financial Protection Bureau,
  2. Credit cards key terms, Consumer Financial Protection Bureau,
  3. Credit Scores, Federal Trade Commission,


Why can't I pay my student loans with a credit card?

Most borrowing providers don’t allow you to use your card for a fee. Service providers (and the federal government) don’t want to convert loan obligations into personal ones. Student loans have special rules, so the obligation is usually separate and treated as one.

How long does paying my student loans with a credit card take?

It usually takes 10 to 20 years to repay a loan. The term of a loan is determined by a long list of loan types, borrowing amounts, interest rates, and more. But the faster students pay off the loan, the better.

What's the best credit card for paying off student debt?

Choosing the best card for your borrowing depends on several factors. First, you need to find out if your borrowing company can accept your card and the conditions. It is also important to check if your borrowing payments are encoded as cash receipts. Finally, consider the benefits of paying off your loan with your card.