Earning credit card rewards can lead to flights, hotel stays and more. But did you know that credit card rewards can help you pay back your student loans?
Is there a best credit card to pay off student loans? We’ll break down some ways you can use credit card rewards to pay down your student loans.
Find a credit card to maximize financial rewards
Redeem points toward student loan payments
Consider a credit card with a 0% introductory APR
6 credit card do’s and don’ts
Credit cards and student loans: Final word
You can use a credit card for payments you’re already making every month, whether it’s rent, gas or groceries. But this is only a good idea if you can pay back your balance in full each month.
If you’re planning this, it may make sense to consider a rewards card. It’s important to note that rewards cards may have annual fees and are usually reserved for cardholders with good credit. That being said, they come with perks like miles, cash back and points.
If you have some bucket list trips planned, a rewards credit card that incentivizes travel can help you get free flights. Then, you could put the money you would have spent on the trip toward your student loan payments.
For example, the lets you
If you’re already spending that cash on monthly bills, it may make sense to put your bills on this card and reap the rewards. Or, you may get a credit card with gas rewards to help minimize the amount you spend on commuting. The point: Focus on how you spend your money now, then look for credit card rewards that fit your habits.
In the past, some credit cards allowed cardholders to link their credit card rewards to their student loan account. While there are no credit cards that currently offer this, you could earmark cashback rewards to pay down your student loans.
For example, Citi allows ThankYou points to be converted into a check to pay your student loan servicer. In this system, 1 point is equivalent to 1 cent. A card like the rounds up to the nearest 10 points on every purchase, while you can earn .
So, for example, 2,500 points translates to $25 to pay off your student loans.
If you use this option, your student loan payment would be mailed to your loan servicer, so it’s important to see if it accepts third-party checks and find out if there’s a special mailing address.
Of course, you can follow a similar strategy with other cashback rewards credit cards and send the additional check yourself. For example, say you get 1% back on all your purchases. Typically, when you redeem your rewards, you can opt for a statement credit, check or other form of payment. Rather than taking a statement credit, you could ask for a check to put that money toward your student loans to pay down the principal more quickly.
While you may not be able to charge monthly student loan payments to a credit card, it may be possible to get a credit card with a 0% introductory APR and request a balance transfer to move the balance of your student loans to a credit card.
Of course, once you do this, the debt is no longer a student loan, and you need to remember the key word in all this: Introductory.
Some people could benefit from this approach, including those with excellent credit who have access to competitive 0% APR introductory offers. But these 0% rates are temporary, and student loan interest rates are usually lower than typical credit card interest rates.
In other words, if you have an 18-month 0% APR offer, you better plan to pay off the balance in full before the 18 months is up. For example, maybe you got a higher-paying job, are only a year out from paying your loans in full or are receiving financial support to finish paying your student loans from relatives.
If you don’t have a plan in place, it would be better to focus on other strategies that can help you maximize rewards by paying off your credit cards.
If you were wondering how to pay student loans with a credit card, you’ve learned it’s not typically possible. But to effectively use credit card rewards to pay off student loans, it’s important to be strategic. Here are some do’s — and don’ts — to follow.
Do pay your credit card bill in full each month. The interest rates on reward cards can be high, and rewards are mitigated if you carry a balance. Make sure you have a plan in place to pay the bill in full, and don’t use the credit card for just-because purchases.
Don’t ignore fees for credit card payments. Some vendors, such as an apartment management company, may charge a fee for credit card payments. If yours does, you should consider whether it’s worth using your card. For example, let’s say you have a credit card that offers 2% cash back but your vendor charges a 3% fee for credit card payments. You will still pay more if you pay by credit card than you would if you stuck to other payment methods. That said, if a vendor doesn’t charge a fee, it may make sense to automate monthly payments so they are automatically covered by the credit card that offers the highest reward options.
Do pay attention to your credit score. Reward credit cards tend to be approved for people who have good to excellent credit. If your credit score is lower than that, it may make sense to work on improving your score before applying for the card.
Don’t overlook interest rates or APRs. Yes, you are going to pay your balance in full, each and every month (right?). But, sometimes, life happens. A balance that rolls from month to month may make your student loan bill even higher than you intended. Stick to a card with a low APR and pay attention to your interest rate, since this could change over time.
Do assess annual fees. Annual fees for reward credit cards may cost several hundred dollars. Are they worth it? That depends. If you’re only planning to use the card occasionally, the rewards may not be worth the fee. But if you’re going to use the card each and every month to pay your student loans, it’s worth doing the math to see how much the rewards will equal in dollars to ensure the card pays off in the long run.
Do stick to a plan. Reward credit cards may help you achieve your goal of paying off your student loans more quickly than expected, but only if they are used smartly. Again, consider automating your credit card payments so that the balance is always paid in full.
Using credit card rewards to pay student loans can be a strategic way to make a dent in your payments and earn money from things you would spend money on anyway.
For this strategy to work, the key is to make sure you don’t end up overspending in pursuit of credit card rewards, which obviously defeats the purpose.
Be sure to read any fine print about spending requirements and ensure that you pay off your balances in full each month. If used responsibly, credit card rewards can help you pay off student loans that much faster.
The information related to the and the has independently been collected by Student Loan Hero and has not been reviewed or provided by the issuer of this card prior to publication.
Melanie Lockert contributed to this article.
Interested in refinancing student loans?Here are the top 9 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.88% – 6.15%1||Undergrad & Graduate|
|1.88% – 5.64%2||Undergrad & Graduate|
|1.88% – 5.64%3||Undergrad & Graduate|
|2.50% – 6.85%4||Undergrad & Graduate|
|2.25% – 6.39%5||Undergrad & Graduate|
|1.90% – 5.25%6||Undergrad & Graduate|
|1.89% – 5.90%7||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|2.13% – 5.25%8||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of June 1, 2021.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Interest Rate Disclosure
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.59% APR to 5.79% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.88% APR to 5.64% APR (excludes 0.25% Auto Pay discount). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 36% (the maximum allowable for these loans). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 2.04% and 5.8% to the one month LIBOR. Earnest rate ranges are current as of 6/8/2021, and are subject to change based on market conditions.
Auto Pay Discount Disclosure
You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
Student Loan Refinancing Loan Cost Examples
These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit earnest.com/licenses for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.
One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.
© 2021 Earnest LLC. All rights reserved.
3 Important Disclosures for Navient.
4 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.
5 Important Disclosures for SoFi.
Fixed rates from 2.74% APR to 6.74% APR (with autopay). Variable rates from 2.25% APR to 6.39% APR (with autopay). All variable rates are based on the 1-month LIBOR and may increase after consummation if LIBOR increases; see more at SoFi.com/legal/#1. If approved for a loan your rate will depend on a variety of factors such as your credit profile, your application and your selected loan terms. Your rate will be within the ranges of rates listed above. Lowest rates reserved for the most creditworthy borrowers. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license #6054612; NMLS #1121636 (www.nmlsconsumeraccess.org). Additional terms and conditions apply; see SoFi.com/eligibility for details. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
6 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 04/07/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.
7 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
8 Important Disclosures for PenFed.
Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.13%-5.25% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.