How to Earn Points (or Make Money) When You Pay Your Mortgage, Student Loans, & Car Loans! – Using ChargeSmart for Student Loans

Disclosure: We get a commission for links on the blog. You don’t have to use our links, but we’re very grateful when you do. American Express, Barclaycard, Capital One, Chase, Citibank and US Bank are Million Mile Secrets advertising partners. Opinions expressed here are the author's alone, and have not been reviewed, approved or endorsed by our partners. Here’s our Advertiser Disclosure.

 [Disclaimer:  Information in the table below was accurate as of Saturday, September 15, 2012.  Please double check the exact rate for your lender to make sure it is accurate.]

Last week I wrote about how to earn Chase Ultimate Rewards points or cash back by using either a Chase Ink Bold / Ink Plus or the American Express Blue Cash Preferred to buy gift cards to pay your loan.

I’ve created a table below with the ChargeSmart fee for paying $100, $250, & $500 towards your student loan.

Paying $100 or $250 towards your loans is almost always going to be unprofitable because of the high fee which ChargeSmart charges.

But paying $500 towards your student loan using a Visa or MasterCard could get you Ultimate Rewards points or cash back even after taking into account the ChargeSmart fee.  But do the math to see if this makes sense for you!

PAYING YOUR Student LOAN OFF

It also appears that most lenders charge a flat fee for a loan payment, so it could very well be profitable to pay your student loan off (or make a large payment) via ChargeSmart using a credit card without having to buy gift cards in $500 increments.

For example, you pay a flat fee of only $9.95 to pay off any amount to Wells Fargo.  So you could use any credit card to pay off, say, a $5,000 loan balance for only a $9.95 fee!

So you’d earn 5,000 Ultimate Rewards points for making a $5,000 payment with your Chase Sapphire Preferred card for only a $9.95 fee.

5,000 Ultimate Rewards points are worth, at least, $50 in statement credit or more if you redeem for travel.

Readers have pointed out that ChargeSmart levies a sneaky “Large Payment Fee” in Step 4 of the payment screen for many lenders who charge a flat fee.  So do the math for yourself before making a large payment.

HOW TO SEE IF PAYING $500 VIA CHARGESMART MAKES SENSE

For example, suppose you want to pay $500 towards your student loan with ACS Educational Services. 

STEP 1 – FIND LENDER

Scroll down to the chart below and look for ACS Educational Services under “Lender

STEP 2 – FIND $500 PAYMENT FEE

Go to the last column “ChargeSmart Fee as a percent of $500 payment“  The ChargeSmart fee is 3.3% for a payment of $500

STEP 3 – FIND THE TOTAL COST

Add 1% (the activation cost of the Visa/MasterCard) to the fee to get an approximate total cost of paying your student loan with a Visa or MasterCard gift card bought with either the Ink Bold/Ink Plus at an office supply store or with the American Express Blue Cash Preferred at a grocery store.

In this example, the approximate total cost is 4.3% ( 3.3% for paying via ChargeSmart + 1% gift card activation fee.)

STEP 4 – IS TOTAL COST MORE THAN POINTS OR CASH BACK EARNED?

The last step is to see if this makes sense for your situation.

Chase Ink Bold or Chase Ink Plus:  You earn 5x Ultimate Rewards points or 5% cash back for buying the Visa or MasterCard in an office supply store with the Chase Ink Bold or Ink Plus.

To make things simple & to be conservative in valuation, let’s say you value 1 Ultimate Reward at 1 cent per point.

You’re paying ~4.3% in fees, so your net gain is ~0.7% (5% in cash back/value of 1 Ultimate Reward Point – 4.3% in fees).

The net result is that you’re earning 0.7 Ultimate Rewards points per $1 spent when you pay your student loan in $500 increments via ChargeSmart.

This may or may not be worth it to you once you factor in the value of your time, but this took less time than I thought it would.

American Express Blue Cash Preferred:  You earn 6% cash back for buying the Visa or MasterCard gift card at a grocery store with the American Express Blue Cash Preferred.

You’re paying ~4.3% in fees, so your net gain is ~1.7% (6% in cash back – 4.3% in fees).

You’re effectively earning 1.7 cents cash back per $1 spent when you buy Visa or MasterCard gift cards at a grocery store with the American Express Blue Cash Preferred and pay your student loan in $500 increments via ChargeSmart.

Again, this may or may not be worth it to you once you factor in the value of your time.

CAUTION

Million Mile Secrets reader Brant wrote in that some banks will apply only your 1st payment towards the monthly payment and ALL other subsequent payments go towards reducing the principal balance.

This could mean that your lender will ding you for not making the full monthly payment so be very careful when you break up your monthly student loan payment into more than 2 payments.

For my student loans it is the opposite, multiple payments all go towards future monthly bills and do not reduce the principal unless I click that option online.

Also make sure that you can pay your credit card bill in FULL.  Credit card interest is much, much higher than interest on loans and you just won’t get ahead by paying interest on credit cards.

LenderChargeSmart Fee for $100 Student Loan PaymentChargeSmart Fee for $250 Student Loan PaymentChargeSmart Fee for $500 Student Loan PaymentFlat FeeChargeSmart Fee as a Percent (%) of $500 Student Loan Payment
ACS Educational Services
$7.24
$10.68
$16.4
No3.3%
AES Graduate Services
$7.24
$10.68
$16.4
No3.3%
Alaska Student Loan Corporation
$7.24
$10.68
$16.4
No3.3%
American Education Services
$7.24
$10.68
$16.4
No3.3%
Aurora Loan Services
$34.95
$34.95
$34.95
Yes, $34.957.0%
Bank of America - #59
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - #630
$7.24
$10.68
$16.4
No3.3%
Bank of America - #65
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - #6824
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - CT
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - FL
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - MA
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - ME
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - NH
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - NJ
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - NY
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - PA
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - RI
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - Line of Credit
$14.95
$14.95
$14.95
Yes, $14.953.0%
Bank of America - Loan Products
$14.95
$14.95
$14.95
Yes, $14.953.0%
Capital One Installment Loans
$7.24
$10.68
$16.4
No3.3%
Great Lakes Educational Loan Services
$7.24
$10.68
$16.4
No3.3%
HSBC
$29.95
$29.95
$29.95
Yes, $29.956.0%
IOA Student Loan Corporation
$7.24
$10.68
$16.4
No3.3%
Nelnet
$7.24
$10.68
$16.4
No3.3%
Oklahoma Student Loan Authority
$7.24
$10.68
$16.4
No3.3%
PHEAA
$7.24
$10.68
$16.4
No3.3%
Sallie Mae
$7.24
$10.68
$16.4
No3.3%
The Student Loan Corporation
$7.24
$10.68
$16.4
No3.3%
UC Regents Berkeley
$7.24
$10.68
$16.4
No3.3%
University Accounting Service, Inc.
$7.24
$10.68
$16.4
No3.3%
Wells Fargo
$9.95
$9.95
$9.95
Yes, $9.952.0%
Western States Learning Corp
$7.24
$10.68
$16.4
No3.3%

 

* If you liked this post, why don’t you join the 25,000+ readers who have signed-up to receive free blog posts via email (only 1 email per day!) or in an RSS reader …because then you’ll never miss another update!

Editorial Disclaimer: Neither the responses below nor the editorial content on this page are provided or commissioned by the bank advertisers, and have not been reviewed, approved or otherwise endorsed by the bank advertisers. Opinions expressed here are the author’s alone, not those of the bank advertisers. It is not the bank advertisers’ responsibility to ensure all posts and/or questions are answered.

Leave a Reply

Your email address will not be published. Required fields are marked *

3 responses to “How to Earn Points (or Make Money) When You Pay Your Mortgage, Student Loans, & Car Loans! – Using ChargeSmart for Student Loans

  1. Pingback: Debit Card Miles | Million Mile Secrets

  2. Are these considered “cash advances”, or are they considered purchases? Will this website (ChargeSmart) work to meet spending requirements for bonuses on new cards?

  3. I checked chargesmart and the flat fees option to pay wells fargo student loan doesnt work. Are there other websites that let you use your credit card to pay student loans for a small fees?