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We can teach you how to pay your student loans with a credit card in 5 easy steps! It’s a smarter and faster way to pay off your loans!
The average debt owed by a college graduate in 2018 has grown to $29,200, according to the Institute for College Access and Success. Stuentaid.gov states that this amount of student debt will take 20 years to pay off.
With the use of credit card rewards, you can easily decrease the payoff timeframe by 10+ years.
First off, begin by placing all of your spending on a credit card and paying that card off in full each month. Getting into the habit of using your credit card for everything is important to build up rewards to help pay off those loans.
Next, sign up for a new credit card with a $400+ sign up bonus. This step is important. When spending on a credit card during a signup bonus period, your return increases from 1-2% to upwards of 15-20%.
Call your loan company and find out if they accept debit card payments over the phone or on the webpage. For example, College Ave is a company that accepts debit card payments over the phone. Another one is Great Lakes.
Now, I’m sure that is a confusing question to ask at first. Why would I sign up for a credit card and ask if my loan provider takes a debit card for payment?
My loan provider accepts debit card payments
Great! Are you familiar with Visa or Mastercard gift cards? These are debit card gift cards. There are quite a few ways to purchase these gift cards with no fees and they will also count towards your signup bonus for that new credit card.
For example, Staples and OfficeMax/OfficeDepot often run no-fee sales on $200 gift cards. These sales happen on average once every other month.
Another way to save on the fees is by purchasing the gift cards online with a cashback portal like Rakuten (Ebates) or TopCashback. You’d first need to sign up using one of those links and then follow the instructions to go to Giftcards.com or Giftcardmall.com.
Once you purchase the gift cards, you get a 1% rebate from those sites which basically nullifies the fee. Then, use those gift cards to pay off your loan balance as if they were a normal debit card.
My loan provider does not accept debit card payments
Don’t worry! There are some easy ways to circumvent this and still meet that signup bonus on your credit card.
Plastiq is an online payment portal in which you can pay bills using your credit card. You pay Plastiq and they send a check for you. Feel free to read a bit more in this post. Use that new credit card with Plasiq to pay off your student loan while inside that signup bonus timeframe. Even though the fee could be 2.5%, your return on that signup bonus is worth more.
Gift of College
Gift of College offers the option to purchase gift cards online or in some stores. These gift cards can then be used to directly pay off your loans. The fees on these cards will be about 1% when purchasing the $500 gift cards.
Now, you need to ensure that you get the signup bonus on that credit card. You’re working to pay off your loans with it, but also use that new card for all your everyday purchases. Keep track of how much you’re spending on it and use that card as your everyday card while working towards that signup bonus.
Once you get your bonus, apply 50% of the bonus to your loan balance immediately. It’s important to pay yourself first with a bonus to help avoid an impulsive spend which you may later regret. With the other 50%, use that to save up for a well-deserved vacation.
Not only should you apply 50% of the bonus, but you should also apply 100% of your statement returns as well. Those extra 1-2% returns will add up over time and shave even more off of your debt.
Repeat. Repeat! Did I mention that you should REPEAT!? Repeat the above steps. Over and over!
If you add an extra $50 per month on average, you’ll knock off 6 years of repayment time.
If you continue to follow this and sign up for 2+ credit cards every year while applying your statement rewards plus 50% of your sign up bonuses, I promise you will decrease your debt faster than any normal repayment options. Now that you’ve learned how to pay your student loans with a credit card, go do it!
When signing up for new cards, please remember to check out our referral page to sign up for new cards.
Feel free to leave your comments and questions below!