Do You Pay Student Loans Bills With a Credit Card?

I love using my credit card for gas (3% cash back) when I can, but there are certain situations where you simply can’t use a credit card to pay your bills. I would love to get 1% cash back on my rent, but of course the property management company I rent through ads on lots of fees if you pay via credit card, so I send in a check each month.

Now that Lauren and I are married, I’ve taken a look at our financial situation and wanted to take action on a couple of important matters.

The first was paying off some of her student loans. I’ve paid off most of mine, but we can’t say the same for her (yet).There are a lot of them, and while the large number is a little scary, I’m not expecting to pay them all off this year. That being said, I want to tackle the high interest rate loans as soon as possible. At 7.25%, I’d love to lock in that rate (I look at paying off debt the same as earning that interest rate) for the foreseeable future.

The only question was how to pay it off. I love doing things online because it’s super fast and convenient, but I’ve had trouble in the past with paying off student loans online because by default, the payments are applied to all loans (both principal and interest) instead of paying off just the principal of the loan I wanted. I wanted to save money on the student loans, I didn’t want to make payments on the loans with lower interest rates!

So we called in together to find out how we could pay just the expensive loan, and were surprised to hear that we could pay it off over the phone, using our credit card. Um, score! I was planning on paying off $7,000, and to know that I’d be getting 1% back means I got $70 for paying via my credit card (which never carries a balance from month-to-month).

Readers, Does your student loan company let you pay via your credit card? Does this encourage you to pay off your balance sooner?

12 Responses to Do You Pay Student Loans Bills With a Credit Card?

  1. Kathleen @ Frugal Portland says:

    ACK that sounds so scary — at least the title was! My student loans will only allow ACH, not credit card payment.

  2. That’s fantastic! I remember when we were paying college tuition there was an option to pay with a credit card. Unfortunately there was also a sizeable “service fee” for using a credit card that was more than our cash back would be!

    It doesn’t hurt to ask!

  3. This is awesome. I’ll have to get my girlfriend to look into this for her loans. It’d be an easy way to save 1% which definitely wouldn’t hurt w/ her loan balance.

  4. Ira says:

    The math is a bit fuzzy to me. If you pay off $7,000 and get 1% back, isn’t that $70 (not $50).

  5. Rebecca @ Trim Waist Fat Wallet says:

    A lot of student loans knock down the APR if you are enrolled in auto pay. You might want to see if that’s an option as well instead of using a credit line, even if it’s paid off each month. Also, some cards charge you interest even if you pay it off.

    Props to taking a look at the highest interest debts first! It’s what truly matters money-wise!

  6. Evan says:

    There was no fee for doing this? My Student loan company charges me some ridiculous fee

    • Daniel says:

      @Evan, yup, I was pretty pumped about that. Makes paying student loans a little bit more inviting. But really it’s still terrible, I hate parting with my money even if it’s the smart thing to do.

  7. Squeezer @Personal Finance Success says:

    Thats good that you can pay it by a credit card. My University allows you to pay tuition by a credit card without any fees, so I use that.

  8. Paul says:

    I’m a little older than you guys but we never had that option in the UK and I’m reliably informed we still don’t.

    Great idea nevertheless! I’m not a lover of credit cards guess I better dust them off again after reading a few of your posts.

  9. Free Student Loan Advise says:

    Well, I would like to know the procedure of paying back the loan over the phone, with the help of credit card.

  10. Rosey says:

    I think you’ve found one of the rare loan companies that will let you a). pay w/a credit card and b). without a fee

    Kudos for doing the research (and for sharing it)!

  11. Kevin says:

    Great blog post, but i was always bought up by my parents to never pay debt with credit.

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