If you are already stuck making monthly payments towards your student loan debt, then you may as well rack up some rewards from your credit card in the process, right? Unfortunately, that probably isn’t going to be the case. When it comes to paying off student loans they tend to have the same regulations as rent payments – with few exceptions credit card payments aren’t usually accepted.
Why can’t I use my credit card?
Unlike cash payments, credit cards come with an extra fee attached. If your lender were to accept credit card payments they would also be taking on the transaction fee that the credit card company adds to every charge. This generally runs around two percent, and although that may not sound like much when you consider the several thousands of borrowers that these lenders have that is a pretty big loss.
What are the exceptions?
There are a few exceptions when it comes to using credit cards to make payments towards your student loans. The majority of these exceptions come with a negative consequence attached and it is important to really consider the pros and cons before making the decision to use your credit card to pay off your student loans.
One option is, if your credit card company allows it, to write a check against your credit card account. The lenders accept this as a personal check. However, you won’t be racking up those credit card reward points, so if that was the goal then this isn’t the option for you. Especially since there is even a risk of getting some transfer fees along the way. A similar option is that some credit card companies will allow you to get a cash advance. Similarly, these advances tend to carry a higher interest rate and can even have extra fees associated with them.
Recently some lenders have begun to provide the option for the borrowers to make electronic payments online. To most this sounds like the best option so far. Most people pay everything online nowadays as it is. This options isn’t without its own issues though. When you weigh the pros and cons of this option you’ll find that the transaction fees associated with this type of payment are going to cost you more than the benefit you’ll receive from those reward points you earn.
Is using my credit card a valid option to pay off my student loans?
Probably not. Credit card companies and student loan lenders are in the business of making money. This rarely involved winning combinations for us. The companies have tons of lawyers working for them that are very good at what they do. They are skilled in the art of fine print and keeping that extra little percent whenever they see the opportunity to do so. By trying to use your credit card to make your payments you are most likely going to end up frustrated and even poorer than you were before you started.
If you find yourself struggling with debt or would like to find out about becoming debt free, call Debthelper at 800-920-2262, or visit @ www.debthelper.com.