Improving your finances means thinking about long-term consequences. For example, credit card debt has much higher interest than student loan debt. However, paying your loans with your credit card can potentially earn you rewards to mitigate your losses.
As personal finance blog Money Ning points out, conventional wisdom suggests it’s a bad idea to pay your low-interest loans with high-interest credit cards. This is true if you don’t pay it right away. However, if you pay your student loan with a credit card every month (assuming they accept it) with the amount you were going to pay towards it anyway, you can boost your credit score and get rewards:
If you meet this criteria, be sure to shop around for the best rewards and sign-on bonus options. Again, this is not a good idea if you can’t manage to pay off your credit card each month. You’ll still need to have the cash to pay the credit card company each time you make your student loan payment. Otherwise, you’re just racking up your credit card balance and paying a higher interest rate versus your loan provider. On the other hand, a good credit score and good financial habits could enable you to get paid to pay off your student loans. It’s definitely something to consider.
We already know that recurring payments on your credit cards are a good way to help your credit score. Paying off one debt with another is generally seen as a bad move, but it can actually be very advantageous if you are disciplined enough to only use your credit card for payments you were going to make anyway, and pay them off immediately.
Should You Pay Student Loans With a Credit Card? | Money Ning
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