We all know that student loans are nothing less than a financial burden today. Especially in the USA, student loans are too high and necessary if you want to continue your higher studies. The biggest question that comes to play is regarding the possibility of paying student loans with a credit card. Is it possible to pay student loans with a credit card? We are going to answer this question in detail here in this article.
Students mostly get two types of loans in the United States. These are private student loans and federal student loans. However, loan repayment has multiple methods. If you are considering paying off your loan using a credit card, this article will be helpful. You will learn about the merits, demerits, and alternatives of paying off your student loan. So, let us proceed and clear all your questions.
Can I Pay Student Loans with a Credit Card?
To answer this question directly, unfortunately, student loan providers do not directly accept repayment through credit cards. Yes, you cannot make loan repayment directly through a credit card. Then, what is the alternative? You can make the loan repayment through third-party services. These third-party services allow you to pay student loans as an intermediary between students and loan providers.
One thing you must consider while choosing these third-party services is that they will take extra charges from you. Hence, it is an expensive alternative to repay your repayment.
Both advantages and disadvantages come when you pay student loans with a credit card. What are these? Let us talk about it in the following section.
Disadvantages When You Pay Student Loans with a Credit Card
Higher Interest Rates
The first disadvantage when you pay your student loan with a credit card is higher interest rates. We all know the fact that student loans are already very high. In addition, would you like it if you will have to pay additional charges? No, right? Hence, paying your total student loan with a credit card is one of the demerits.
Negative Impact on Credit Score
Do you know that if you pay student loans with a credit card, it can harm your credit score? Yes. When you pay off your loan with a credit card, it increases your credit utilization rate. Therefore, the second disadvantage comes with paying your student loan with a credit card.
High Fees or Even Penalties
The third disadvantage of paying your student loan with a credit card is the risk of maxing out your card. Hence, it can cause you high fees for repayment or even penalties.
These are the main disadvantages you can have as a student if you use your credit card to pay off your loan.
Advantages of Paying Off Student Loans with a Credit Card
Some benefits come with paying off your student loans with a credit card. What are these? Well, the following points will prove all these advantages to you:
If you have a working credit card with a 0% introductory APR period, you can pay off your student loans without any interest rate for a particular time interval. Hence, if you manage to pay off your student loan before the end of the introductory period, you can save a lot of money.
Some credit cards offer rewards or cashback when you use them. These cards also provide you with additional tips and benefits. It can be helpful to you in paying off your student loan.
So, these are the prime advantages of paying student loans with a credit card. Hence, now we are aware of the advantages and disadvantages. Are there any other alternatives to pay your loans without your credit card? Let us talk about them a bit in the following section.
Alternatives To Pay Your Student Loan Without Using Your Credit Card
There are many different alternatives that you can select if you want to avoid paying student loans with a credit card. What are these? The following ways will help you to pay off your student loan quickly:
Direct Debit: It is the easiest way that you can follow to repay your loan. Many lenders allow you to debit from your checking account every month directly. You can schedule automatic payments, which will repay your loan each month.
Online Methods: Online payment is one of the most popular methods of repaying your loan today. There is an option where you can set up your student loan as a bill payee. You can do it with your credit union or bank. It will ensure you make payments directly from your savings or checking account.
Money Order Or Check: Paying your loan with a check or money order is the next thing you can do to avoid paying student loans with a credit card. You can do it to the lender’s payment address. Moreover, ensure you include the loan account number while you pay.
Therefore, these are some of the main methods to repay your loan. You can also repay using your phone or directly by a meeting. Select the process that will be perfect for you. It would help if you considered that it is essential to repay your loan on time. Otherwise, it can harm your credit score.
Therefore, if you are a student in the USA and have taken a student loan, you cannot directly pay student loans with a credit card. You can pay your loan, but you can only do it through a third-party service provider. Hence, choose a method that suits your financial situation. You can always get professional consultation or advice from your trusted people. How you repay your loan depends on income, interest rates, and credit score.
Ensure that you analyze all the merits and demerits before deciding. Making your decision with complete calculations will help you avoid any mistakes you make along the way. So, now you know all the aspects and can choose the best way to repay your student loan.
If you want to have to improve your financing health, we recommend you to check our students discounts.