Student loans are a burden that many Americans carry, and managing these repayments can be challenging. If you’re currently repaying your student loans or are a recent graduate about to start, you might wonder if you can pay your loans with a credit card. Since student loan payments are often substantial, they could, in theory, help you hit spending requirements for welcome offers and earn valuable rewards. Here’s everything you need to know about paying your student loans with a credit card.
Can You Pay Your Student Loans with a Credit Card?
Federal Student Loans
- Direct Payment Restrictions: You cannot pay your federal student loans directly with a credit card. However, you can use a credit card through a third-party payment service, which typically charges a fee for each transaction.
- Third-Party Services: Using a third-party service to pay student loans with a credit card can be beneficial if you’re trying to meet a credit card spending requirement. The fee might be worthwhile if you earn a substantial sign-up bonus. However, calculate whether the rewards outweigh the additional fee.
Private Student Loans
- Lender Policies: Check with your specific lender if you wish to pay a private student loan with a credit card. Some lenders allow it, but most do not. If your lender does not accept credit card payments, consider using a third-party service.
Benefits of Using a Credit Card for Student Loans
Earn Rewards
- Points and Miles: If your loans are through a private lender that allows credit card payments, take advantage of earning rewards. For example, the average borrower owes $28,950 in student loan debt. Using a 2% cash-back card, you could earn $579 in rewards.
- Sign-Up Bonuses: Using a points-earning card can be especially valuable. The Capital One Venture Rewards Credit Card, for instance, earns 2 miles per dollar. Paying off a $28,950 student loan with this card would yield 57,900 miles, worth approximately $1,071 according to The Points Guy’s valuations.
Credit Card Recommendations
- American Express® Gold Card: Earn 4 Membership Rewards points per dollar spent at restaurants, plus takeout and delivery in the U.S.
- Chase Sapphire Preferred® Card: Earn 3 Ultimate Rewards points per dollar spent on dining.
- Chase Freedom Unlimited®: Earn 1.5% cash back on all purchases.
- Capital One Venture Rewards Credit Card: Earn 2 miles per dollar on every purchase.
- Citi Double Cash® Card: Earn 2% cash back on every purchase (1% when you buy, plus an additional 1% when you pay).
Maximizing Points with Marriott’s Eat Around Town Program
Using Rewards Cards
- Marriott Bonvoy Business® American Express® Card: Earn 4 Marriott Bonvoy points per dollar spent at restaurants worldwide.
- Marriott Bonvoy Bevy™ American Express® Card: Earn 4 Marriott Bonvoy points per dollar spent on up to $15,000 in combined purchases each calendar year at restaurants and U.S. supermarkets (then 2 points per dollar spent).
- Marriott Bonvoy Brilliant® American Express® Card: Earn 3 Marriott Bonvoy points per dollar spent at restaurants worldwide.
Key Points
- Calculate Rewards vs. Fees: Ensure that the rewards you earn from using your credit card are greater than any fees incurred by third-party services.
- Meet Spending Requirements: Using your credit card for student loan payments can help you meet the spending requirements for lucrative sign-up bonuses.
Comparing the Best Credit Cards for Student Loan Payments
Overview of Top Cards
- Bank of America Premium Rewards® Credit Card
- Best For: Bank of America customers
- Rewards Rate: 1.5 points per dollar
- Annual Fee: $95
- Welcome Bonus: 60,000 points after $4,000 in purchases within the first 90 days
- Chase Freedom Unlimited®
- Best For: Ultimate Rewards points
- Rewards Rate: 1.5% cash back
- Annual Fee: $0
- Welcome Bonus: Additional 1.5% cash back on up to $20,000 spent in the first year
- Blue Business® Plus Credit Card from American Express
- Best For: Business expenses
- Rewards Rate: 2 points per dollar on up to $50,000 per year
- Annual Fee: $0
- Welcome Bonus: 15,000 points after $3,000 in purchases within the first three months
- Capital One Venture Rewards Credit Card
- Best For: Flexible rewards
- Rewards Rate: 2 miles per dollar
- Annual Fee: $95
- Welcome Bonus: 75,000 miles after $4,000 in purchases within the first three months
- Citi Double Cash® Card
- Best For: Flat-rate cash back
- Rewards Rate: 2% cash back (1% when you buy, plus 1% when you pay)
- Annual Fee: $0
- Welcome Bonus: $200 cash back after $1,500 in purchases within the first six months
Final Thoughts
Choosing the right card to pay your student loans depends on several factors, including whether your lender accepts credit card payments and the potential rewards versus fees. Using a credit card can be a strategic way to earn rewards and meet spending requirements for bonuses. Evaluate the options and select a card that aligns with your financial goals and offers the best rewards for your student loan payments.
By strategically using credit cards and programs like Marriott’s Eat Around Town, you can significantly increase your points and miles, making every payment a step toward your next vacation or luxury stay.
