If you have a credit card in your name, you may be wondering whether or not you can use that credit card to pay your student loans. While the answer may seem obvious to you, it is not always as cut and dry as it seems.

Credit cards offer a way to make payments on different obligations while boosting your credit score with timely payments, and one of these obligations could be student loan payments.

Either way, you have probably felt the tension as you crunch the numbers to make sure you can pay your student loan bill each month. If you do have a credit card available, you may have wanted to use it a couple of times instead of drawing from your bank account.

Below, we will go over whether or not you should use your credit card to pay your student loans and what to think about if you choose to.

Can You Make Payments Towards Your Student Loans with a Credit Card?

If you have been wondering the answer to this question, the short answer is yes, you can. Making your student loan payments with a credit card may seem like a wonderful idea. After all, you have the credit line available, and you don’t have the money in hand to make your student loan monthly payment.

Now, while the short answer to the question is yes, the longer answer is yes, if your lender allows you to. The truth is, many lenders will not allow you to use a credit card to make the payment for reasons of their own.

In fact, one of the top student loan servicers, FedLoanServicing, does NOT allow you to use a credit card and will only allow you to use a checking or savings account to make your monthly payments.

When You NEED to Use Your Credit Card

If your student loan provider DOES allow you to use your credit card to make payments, you may want to consider doing so when you are in a time of need. If you fail to make a timely monthly student loan payment, it will affect your credit score. A prolonged period of not making payments can cause you to go into default.

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In these situations, you should use your credit card to make the payment to avoid any type of negative repercussions, but make sure you pay your monthly credit card statement at the same time.

Problems with Using a Credit Card to Pay Your Student Loans

One of the biggest problems with using your credit card for student loan payments is that the interest rate on your credit card is HIGHER than most student loans, even private student loan interest rates. It would make more sense to make a payment at lower interest instead of transferring it over to a line of credit with higher interest.

Now, if you are able to pay off the amount on your credit card before interest is charged, then you should be able to eliminate the threat of higher interest. With that in mind, it may make sense to make a payment early in the billing cycle with the intention to pay it off before interest compounds, but overall, it is still risky.

Another problem that pops up is that your debt-to-income ratio becomes distorted. If you show a high debt-to-income ratio, this will not only hurt your credit score, but also your chances of being approved for other forms of credit in the future. This could actually hurt your chances of qualifying for student loan options in the future such as student loan consolidation or private student loans.

Final Word

A credit card can help you make your student loan payments, especially when you are financially short one month. While it may not be the wisest decision, it does help when you are stuck in a tough spot. If you find you need to use your credit card, be smart and pay it off the moment you can, so you do not accrue a bunch of debt due to interest charges. At any rate, it should still be avoided.

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