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Can you pay for student loans with a credit card?



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This pandemic has led people to explore ways to repay debts that have never been considered before, such as paying off student loans with credit cards. is it possible? Yes, but this is usually not a good idea.

Why using a credit card to pay for student loans is a bad idea

Student loans have lower interest rates than credit cards because the average interest rate is 5.8% compared to 15.97%, Respectively. It may also be cheaper to charge late fees from a student loan company instead of paying interest on a credit card.

You also have certain rights as a student loan borrower, and by transferring debt to a credit card, you lose some strong protections. These include income-based repayment plans, deferred payments or tolerance.In addition, pay off student loans Suspended until December 31, It provides some extra breathing space.

usually, as long as A good reason why you want to use a credit card to pay off your student loan is to use reward points or transfer your debt to a credit card with a credit card. The actual annual interest rate is 0%, usually 12-21 months. Even so, this is still a risk: you need to be able to repay all of this before the end of the 0% interest rate period. If this is not the case, you will recover the same debt at a higher interest rate.

As for bonus points, they are only truly valuable when you pay off the entire balance each month.nd You need to perform mathematical calculations and ensure that the total value of your reward will not be consumed by the annual fee.In addition, if it is a large sum, running out of credit cards will Increase your credit utilization And damage your credit score, which makes it harder for you to get Good interest rates for other loans.

Use intermediary services, need to pay

Federal Student Loan Service Provider Will not let you pay directly with a credit card, But you can use intermediary services, such as Prastic, Although 2.85% is charged.Some private student loan companies may accept credit card payments, but like all intermediaries, they almost certainly charge fees (usually 2-3%).

and so, Similarly, if you want to transfer debt to a credit card to claim points, the reward points value must be higher than the handling fee. For example, a 2.85% handling fee of $1000 equals $28.50. Many cash back reward categories are only 1-2%, so you will lose money in this case.

Alternative

Generally speaking, if using a credit card to pay for student loans is the last option, don’t forget that you can choose tolerant or deferred. For federal loans, please call 1 (800) 433-3243 or visit Student Loan Network, They may be able Help you lower your Monthly payment Even determine whether you are eligible for loan relief. For personal loans, please contact your loan servicer directly to learn about similar options.


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