I’ve written about the ability to pay student loans with credit cards before. I’ve also paid my own student loan with credit cards before. I paid off several thousand on one loan via credit card because I got great cash back rewards.
I paid off one of my student loans with a credit card, but not all of them. It was a good deal for one but not the others. Do you know how to tell if paying your student loan with a credit card is a good idea? Answer the following questions to find out.
Does your credit card give you enough points? Make sure you have a great cash back rewards credit card. Otherwise paying your student loans with a credit card might not be a good idea. If you have a great credit card that gives you awesome rewards, this can work well.
Do you have the money to pay off your credit card? You shouldn’t just transfer student loan debt to credit card debt. I advocate using credit cards responsibly, so I believe you should only do this if you have the money to pay off the credit card after using it to pay your student loans.
Is the fee for paying via credit card lower than the rewards? This is something you need to figure out before you use your credit card to pay your student loans. The loan companies that allow you to pay via credit card usually charge a convenience fee since the credit card companies charge them. Is this fee less than the rewards you will receive from the credit card? Break out your thinking skills and a calculator to determine if it’s worth it or not.
If you’ve answered “yes” to all of these questions then you should go for it! If not? Stop! Forget the idea! Warning, warning, warning!
Just remember, always use credit cards responsibly!