Paying Off Student Loans Via Credit Cards: Top 6 Credit Cards Discussed
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Paying off student loans with a credit card may seem like an unusual idea, but with some careful planning and the right tools, it's possible to save on interest costs. However, it's important to note that most student loan servicers do not accept credit card payments directly.
Balance transfer cards are designed to help you transfer debt from one card to another at a lower interest rate, often with an introductory 0% APR period. This can save interest on credit card balances.
One indirect approach to using a credit card for student loans is through a bill payment service like Plastiq. This service allows you to pay the loan servicer by mailing a check while charging a service fee (around 2.85%). Using a balance transfer card with a low or 0% introductory APR may offset this fee cost if the debt is paid off during the promotional period.
Some recommend using certain balance transfer or rewards credit cards, such as the Chase Freedom Unlimited, Citi Double Cash, or American Express Blue Cash cards, combined with a bill payment service to pay student loans. This strategy could potentially save on interest compared to standard loan rates.
However, balance transfer cards often charge a balance transfer fee around 3%-5% of the transferred amount, which can add to your total cost if not managed carefully. Therefore, it's crucial to weigh the potential savings against these fees and service charges.
Some cards offer long 0% introductory APR periods for balance transfers (up to 21 months), which could effectively reduce interest costs if you pay off the balance quickly. For example, the Citi Double Cash Card offers a balance transfer promotion with 0% intro APR on balance transfers for 18 months, then a variable APR of 18.24% - 28.24%.
The Chase Freedom FlexSM card is another popular choice, offering a 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 18.99% - 28.49%. It also has a $0 annual fee and offers a $200 bonus after spending $500 on purchases in the first 3 months from account opening.
The Amex Blue Cash Preferred card is another option, earning up to 6% cash-back on purchases: 6% cash-back at U.S. supermarkets, 6% cash-back on select U.S. streaming subscriptions, 3% cash-back on transit, 3% cash-back at U.S. gas stations, and 1% cash-back on other purchases.
While the Chase Slate EdgeSM Credit Card doesn't offer cash-back rewards, it does offer a 0% Intro APR for 18 months from account opening on purchases and balance transfers, with a variable APR of 20.24% - 29.24% applying after the introductory period ends.
In conclusion, using balance transfer cards to pay student loans is possible in an indirect and often more complex manner. It requires careful cost-benefit analysis for your particular situation. If the savings in interest outweigh balance transfer fees and service charges, this strategy could be worthwhile. Always remember to read the terms and conditions of any card before using it for this purpose.
- While focusing on personal-finance management, one might consider the role of banking-and-insurance services in facilitating loan repayment strategies.
- For a proactive approach towards debt management, the realm of education-and-self-development resources might offer insight into effective methods of managing financial obligations.
- Intriguingly, some professionals in the finance industry recommend using strategies like balance transfer cards and bill payment services to tackle student loan debt.
- The entertainment industry, too, has a part to play in financial education, as it can present various financial topics, including investing in credit cards, in engaging ways.
- In the realm of business and industry, credit card companies often compete by offering attractive incentives, such as low-interest rates on balance transfers or cash-back rewards.
- To make an informed decision, it's essential to research and compare the terms and conditions of different credit cards, as well as the potential costs associated with their use.
