Can You Pay Student Loans With A Credit Card?

Paying off your student loans with a credit card may seem like a convenient way to take care of the expense every month (especially if you can earn rewards points). But in reality, the process is complicated and can get expensive.

While student loan borrowers typically can’t directly charge their monthly payments onto a credit card through their lender or loan servicer, they can use workarounds to pay their bills with credit. That includes using a third-party payment service, taking out a cash advance or transferring loans to a 0% APR credit card.

In all these scenarios, however, it’s usually best to avoid using your plastic. Doing so means tacking on extra processing fees and likely paying higher interest rates in the long run. Here’s why charging your student loan payment isn’t worth it:

For example, charging your student loan bill onto a credit card through a third-party provider like Plastiq requires you to pay a 2.85% transaction fee on each payment you make. This means that every $10,000 you pay will come with an additional $285 in fees alone.

If your private lender does offer the option to pay your student loans with a credit card, make sure you know the transaction fee before doing so, as it will likely outweigh any credit card rewards you could earn.

Taking out a cash advance from your available line of credit on a card to pay your student loan bills is another costly workaround. While cash advances are an easy way to get money fast, they often come with an interest rate that’s much higher than the rate you pay on purchases or balance transfers.

For example, the Citi® Double Cash Card has a 13.99% to 23.99% variable APR for purchases and balance transfers, but a 25.24% variable APR for cash advances. Card issuers will also often charge a cash advance fee, which is typically 3% or 5% of the total amount of each cash advance you request. For example, a $250 cash advance with a 5% fee will cost you $12.50.

Some credit cars will allow you to transfer your student loan balance to a 0% APR credit card with a balance transfer offer. This might sound tempting, since the card comes with an interest-free period when you can pay off the loans with no interest.

But there are a few things to consider. The balance transfer fee is usually at least 3% (minimum $5) of the amount transferred. Plus, you’re limited to how much you can transfer, depending the amount of your credit line. So while you might get an interest-free period to pay off your loans, it’s unlikely you’ll be able to transfer your entire balance if you have significant debt. And if you don’t pay off the balance before the intro period is over, you’ll wind up paying credit card interest rates (usually 10 to 20% or more) rather than student loan rates (which tend to be around 5 to 10%, sometimes less).