The world of credit card rewards can be enticing. For savvy credit card holders, earning rewards can mean free vacations, hotel stays, and more. But did you know that credit card rewards can also help you pay back your student loans? They can!
Of course, using credit card rewards for student loans is only a good idea if you are a responsible credit user and can pay back your balance in full each month.
Otherwise, it’s simply not worth it. But if you’re already using credit cards responsibly, why not get credit card rewards to help pay student loans?
Here are three ways you can use credit card rewards to pay down student loans.
1. Redeem credit card points toward student loan payments
All credit cards are not created equally. The credit cards that offer the most bang for your buck are typically rewards credit cards. These cards may have an annual fee and are usually reserved for cardholders with good credit, but come with perks such as accruing miles, cash back, or points.
One of the best rewards cards for paying back student loans is the Citi ThankYou Premier card. Using this card, you can use your ThankYou Rewards to make student loan payments!
Jacob Wade, blogger at I Heart Budgets used this very strategy to pay down $1,100 on his student loans. Wade and his wife both signed up for the credit card and earned the introductory bonus points after meeting the spending requirement.
They reached this goal by placing all of their bills on the credit card (if you can’t reach the spending requirement with your regular bills, it’s probably best to not try this strategy). Once they reached the spending requirement, they were each awarded 50,000 ThankYou points.
All in all, with the bonus and their points accrued from spending, they were able to cash out $1,100 by opting for the student loan redemption in the rewards section of the site. (Read more about their student loan success story here.)
If you try this option, your student loan payment would be mailed to your loan servicer, so it’s important to check with your servicer first to make sure they accept third-party checks and find out if there’s a special mailing address.
Aside from using the Citi ThankYou card, you can use just about any cash back rewards credit card to pay student loans.
For example, let’s say you get one percent back on all your purchases. Typically, when you redeem your rewards, you can opt for a reimbursement on your credit statement, or receive a check, direct deposit, or other form of payment for the reward amount.
Rather than taking the balance credit, you can put that money toward your student loans instead. If used properly, your credit card can actually earn you money instead of costing you.
2. Get the right kind of card to pay down student loans
There are many reward credit cards out there, but you can be strategic with the type of credit card you choose to help you pay down your student loans.
The Upromise MasterCard® is specifically designed to help you pay down eligible student loans (this option is also good for parents wanting to build college savings). It offers a strong cash back program, with 5 percent cash back for qualified travel, restaurant, and online purchases; 2 percent on department stores and movie theaters; and one percent on everything else.
The card also has no annual fee, making it an attractive option for student loan borrowers (and pretty much everyone else!).
3. Sign up for specialty rewards programs
Another way to earn credit card rewards for student loans is to sign up for specialty rewards programs.
The Upromise program is a great example, which you can take advantage of using any credit or debit card — not just the one I mentioned above — and earn cash back when you shop online at qualifying restaurants, retailers, and more.
You can link your student loan account and Upromise will automatically transfer your earnings to your loan account each month.
Using credit card rewards to pay student loans can be a unique way to make a dent in your payments and actually earn money from things you would spend money on anyway.
Keep in mind, most loan servicers don’t actually allow you to pay your student loans using a credit card. But you can still leverage credit card rewards to help chip away at your student loan debt.
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. In addition, it’s key to keep your balances low, as your credit utilization ratio, or how much of your credit limit you use, does greatly affect your credit score.
If used responsibly, credit card rewards can help you pay off student loans that much faster, so you can say goodbye to debt.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate 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 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 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.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|