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Can you pay off student loans with a credit card?

It's not possible to pay off federal student loans with a credit card, but you may be able to use credit to pay your private student loans. Using a credit card to pay off your student loan debt has both benefits and drawbacks.

While most credit card interest rates will be greater than student loan interest rates, finding credit cards with introductory APR offers can allow you to pause interest on your transferred student loan balance during the introductory window.

Paying off student loans with a credit card might make sense for you, but it's important to get all the facts before you decide how best to tackle your student loan debt.

Risks: paying off your student loans with a credit card

While the prospect of getting a lower interest rate on a transferred balance is enticing, paying your student loans with a credit card does have risks:

Your student loan may not be eligible for credit card payments

Many loan services don't allow student loan payments to be made with a credit card. This is why balance transfers are generally the best option for using a credit card to pay off your student loans.

You lose the chance to negotiate with your student loan provider

If you have trouble making your student loan payments, your loan provider(s) may be able to offer you a temporarily reduced interest rate, an interest-only repayment plan or forbearance. Moving your loan balance to a credit card will prevent you from taking advantage of these repayment options.

Credit cards typically have higher interest rates

While credit cards may seem to be a way to save you from missing your student loan payments, any amounts you move to your credit card will be charged at the higher APR of a credit card, instead of the lower interest rate of a typical student loan.

Balance transfer credit cards have fees, limits, and introductory windows

Given that direct credit card payments for student loans aren't attractive when you look at the amount of interest you will accrue, balance transfers of your student loan balance to a credit card are often more appealing. Many of these balance transfer cards provide a lower interest rate for the amount you transfer, with some cards offering an introductory period where the APR is very low or even 0% through the first 12 or 18 months.

However, be aware that balance transfers often (1) have limits on the amounts you can transfer, (2) charge fees for either the amount you transfer or the number of transfers you perform, and (3) apply higher APRs against your entire balance when any introductory window expires.

Credit score can drop

As you move your student loans to credit cards, you reduce your credit utilization ratio, which factors for up to 30% of your FICO® credit score.

Rewards: paying off your student loans with a credit card

Paying student loans with a credit card does offer some unique benefits:

Credit cards may offer more repayment flexibility

Once your student loan grace period ends, your loans are like any other: they must be repaid on a regular schedule. If you are able to transfer your student loans to a credit card, you may be offered a minimum balance that aligns with your current needs. You may also end up with a more favorable APR.

Transferring your student loan balance to your credit card can sometimes reduce your interest payments

When you transfer your student loan balance to a credit card, you can sometimes enjoy a lower interest rate. Many balance transfer cards offer introductory APRs at or near zero percent. Still, these low rates are typically offered only for your first 12 or 18 months as a cardholder and may charge fees like traditional credit cards. Your rate will go up thereafter, charged against whatever your remaining credit card balance is.

Are student loan interest rates typically lower than credit card interest rates?

Student loan interest rates are generally lower than credit card interest rates — with the exception of balance transfer cards, which typically offer very low rates for a limited amount of time.

For the 2019-2020 school year, federal student loan interest rates ranged from 4.5% to 7%. Private loan interest rates can fall within this range but can also be higher (into the mid-teens).

Credit card interest rates, meanwhile, average nearly 17% and can be even higher, depending on your credit score and the terms set by your card issuer.

What are my student loan payment options?

Credit card balance transfers aren't your only option for paying off your student loans. You can also pay them directly (that is, in line with your loan promissory agreement), via a credit card cash advance, or through a special repayment plan negotiated with your lender.

Your options for paying student loans are as follows:

  • Pay your loans off as agreed in your promissory note. When you take out a student loan, you sign a promissory agreement that stipulates when your loan comes due and what your interest rate is. Repaying your student loans as originally agreed will likely provide you with the most flexible terms and lowest interest rates.
  • Get a cash advance on one or more of your credit cards. Your card(s) may allow for cash advances, which you can use to make your student loan payments. Cash advances may also activate a hefty APR and will increase your credit card balance, though, making this a costly approach.
  • Negotiate a repayment plan with your loan issuer/servicer. Federal loans offer several repayment options for borrowers who qualify, including extended repayment, graduated repayment or income-based repayment. Private loan issuers aren't obligated to offer these options but may be willing to work with you-or offer temporarily lowered payments if you can prove financial need.

Paying off student loans: the pros and cons of using a credit card

Paying off your student loans with a credit card comes with both risks and costs. Paying your student loans with a credit card is a possibility if you have private student loans, and it's an approach that can grant you more repayment flexibility. Get the full picture before determining if this student loan repayment strategy is right for you.