Can you pay student loans with a credit card?
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The Federal Reserve conducted a survey of over 6,600 Americans in 2016 and found that the average monthly student loan payment is $393. So it’s no wonder that student loan payments are a large part of many people’s budgets.
Like with all other types of expenses, those of us in the miles & points hobby are always looking to maximize our spending and earn rewards for everyday expenses. And there’s really no way of getting around it – you’ll have to pay off your student loan debt one way or another. So earning rewards, be it miles, points, or cash back, is a nice way to benefit from your responsibilities.
So, we’ve put together a list of the best credit cards for student loans. And have also provided details to help you decide if using a card to pay off student loans makes sense for your particular situation.
Best cards to pay your student loans
- Chase Freedom Unlimited®: Best for earning Ultimate Rewards points
- The Blue Business® Plus Credit Card from American Express: Best for earning Amex Membership Rewards points (see rates & fees)
- Capital One® Venture® Rewards Credit Card: Best for flexible rewards
- Bank of America® Premium® Rewards credit card: Best for Bank of America customers
- Citi® Double Cash Card: Best for cash back
Best for earning Ultimate Rewards points
With Chase Freedom Unlimited, you can earn a $200 bonus after you spend $500 on purchases in the first three months from account opening. You also can combine the points you earn with other eligible Chase cards, which helps you save money on travel.
The main Chase Freedom Unlimited benefit is the ability to earn unlimited 1.5% cash back on purchases, with no minimum redemption amount. You’ll also get 5% back on Lyft rides through March 2022.
Freedom Unlimited cardmembers are eligible for three months of complimentary DashPass, which normally costs $9.99/month and gets you waived delivery fees on DoorDash orders of $12+ at participating restaurants. You must activate this benefit by Dec. 31, 2021 to qualify and after the first three free months you can continue the membership at a 50% discount for the next nine months.
Best for earning Amex Membership Rewards points
This card isn’t offering a bonus at the moment. But having a no-annual-fee credit card (see rates & fees) that earns 2x points per $1 on $50,000 in purchases per year is an excellent deal. Similar no-annual-fee small-business cards have a lower earning rate.
The Amex Blue Business Plus card earns 2x Amex Membership Rewards points on the first $50,000 in purchases per calendar year (then 1x Membership Rewards point per $1 on all purchases).
Although the Amex Blue Business Plus is a credit card with a set credit limit, Amex offers the ability to spend above your limit. This is helpful for small-business owners with a large upcoming purchase.
Cardholders will also get access to perks like:
- Amex Offers
- Free employee cards (see rates & fees)
- Extended warranty
- Car rental loss and damage insurance
- Baggage insurance
- Purchase protection
- Free Shoprunner membership
The card has no annual fee. (See rates and fees)
With the no-annual-fee Amex Blue Business Plus card you’ll earn 2 Amex Membership Rewards points per $1 on the first $50,000 in purchases per year (1 Membership Rewards point per $1 on all purchases after that).
If you spend the maximum, you could earn 100,000 Amex Membership Rewards points per year. That’s a great deal for a card with no annual fee (see rates and fees) . I plan to keep mine forever to have a card that delivers bonus points without thinking about bonus categories. For more detailed information, check out our full Amex Blue Business Plus review.
Best for flexible rewards
After approval, you can earn a limited time offer: Earn up to 100,000 bonus miles when you spend $20,000 on purchases in the first 12 months from account opening, or still earn 50,000 miles if you spend $3,000 on purchases in the first 3 months.
In addition to the card’s valuable welcome bonus, the Capital One Venture’s benefits and perks, include 2x Venture miles on all purchases, a statement credit for Global Entry or TSA PreCheck (up to $100) and no foreign transaction fees.
The card also comes with Visa Signature benefits, like secondary rental car insurance, travel accident insurance and lost luggage insurance.
Being able to earn two Venture miles on every purchase is pretty great, especially because you don’t have to worry about tracking bonus categories — everything is simple and straightforward.
One thing that makes the Capital One Venture worth the annual fee is its straightforward rewards program. All you have to do is pay for travel expenses (such as airfare, hotel stays and parking) with your credit card, then log in to your account and erase the charge by redeeming your miles.
It also has a smaller annual fee than other cards that reimburse Global Entry or TSA PreCheck application fees, which usually have higher annual fees that are often between $450 and $550 .
Best for Bank of America customers
The welcome bonus on the Bank of America Premium Rewards offers you 50,000 bonus points after you spend at least $3,000 on purchases in the first 90 days of account opening.
In addition to a strong earnings rate, you’ll also get some travel perks. Cardmembers of the Bank of America Premium Rewards receive:
- 2 points per $1 spent on travel and dining purchases
- 1.5 points per $1 spent on all other purchases
- A credit of up to $100 for airline incidentals per calendar year
- A credit of up to a $100 for Global Entry or TSA PreCheck
- No foreign transaction fees
Between the card’s welcome bonus of $500, the up to $100 airline-incidental credit per calendar year, and an up to $100 credit for Global Entry or TSA PreCheck, the math shows that the card’s small annual fee of $95 is worth paying. Plus, if you’re part of the Bank of America Preferred Rewards program, your rewards could be worth as much as 75% more.
You can read our full review of the Bank of America Premium Rewards here.
Best for cash back
The Citi Double Cash card does not have a welcome bonus offer.
The Citi Double cash card earns a straight forward 1% cash back when make a purchase and 1% cash back when you pay for that purchase. To earn the cash back you’ll need to pay at least the minimum amount due on time.
This card has no annual fee.
Anytime you can earn 2% cash back (1% when you buy, plus 1% when as you pay) on a no-annual-fee card it’s nearly impossible to go wrong. But, having the possibility of being able to take advantage of the Citi ThankYou transfer partners allows you to greatly increase the value of your rewards. For example, you can transfer 15,000 Citi points to Turkish Airlines and book a round-trip United Airlines partner award from the continental U.S. to Hawaii. Normally, 15,000 points would be worth $150 cash back, but even a cheap flight to Hawaii would cost you three times that much.
Plus, Citi recently added the ability to convert the cash back rewards you earn with the Citi Double Cash card into Citi ThankYou points at a ratio of $1:100 points, so each penny is worth one ThankYou point. If you have either the Citi Premier® Card or Citi Prestige® Card you can combine your Citi ThankYou points together and then transfer them to any of Citi’s 15 airline partners. That makes the Double Cash card the best way to earn Citi ThankYou points on non-bonus category spending.
The information for the Citi Prestige has been collected independently by Million Mile Secrets. The card details on this page have not been reviewed or provided by the card issuer.
Should I pay student loans with a credit card?
As it is with almost everything in the miles & points hobby, you’ll have to do the math to see what makes sense — weigh any fees you might be charged with the value of the rewards you’ll earn.
Some credit cards may charge a cash advance fee for paying a student loan. And some loan servicers may not accept particular types of credit cards. For example, Sallie Mae, one of the largest loan servicers, doesn’t accept American Express credit cards.
A good tip is to charge a small payment to your card to see if the issuer charges a cash advance fee. Another tip is to use a third-party payment service like Plastiq. They accept all major card issuers, but imposes fees of up to 2.5% on credit card payments. So again, do the math to see what makes sense.
Oftentimes it can make sense to pay a bit in fees to earn a large welcome bonus from one of the top credit cards for travel.
For example, say you’re trying to earn the 60,000 Chase Ultimate Rewards points welcome offer on the Chase Sapphire Preferred® Card, which requires $4,000 in spending within the first three months of account opening. But, you can only spend $2,000 of that minimum spending requirement organically. You could opt to pay your student loan with Plastiq to meet the other half of the spending requirement. In doing so you’d pay $50 in fees to Plastiq (2.5% of $2,000), but you’d earn a sign-up bonus worth at least $600 in travel — well worth it!
There are a number of factors to consider when you’re determining whether or not to pay your student loans with a credit card.
First, you’ll need to figure out whether your loan servicer accepts credit cards and if so, if there’s a fee for using a card for payment. It’s also important to figure out whether your credit card issuer will code the payment as a cash advance, because you don’t want to end up paying any unexpected fees.
From there you can narrow down your options when it comes to earning rewards for your student loan payments. For example, you could use the Chase Freedom Unlimited® if you’re looking to earn Ultimate Rewards points or the Citi® Double Cash Card card if you want the best cash back earning rate. And it could even be worth paying extra to use a third-party processor like Plastiq if you’re looking to earn a valuable welcome offer.
For rates and fees of the Blue Business Plus Card, please click here
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