According to information provided by the United States Department of Education, it is projected that by the year 2021, around 42 million people in the United States will have student loan debt, with a total balance of nearly $1.59 trillion. The Department of the Treasury in the United States no longer accepts credit card payments for student loans. Despite this, others still look for methods to move the amounts on their student loans to credit card that offers cash back or other perks.

However, before you make that transfer from your student loan lender to your credit card provider, there are a few things that you will need to take into consideration first. Let's discuss whether or not you can earn points for using your credit card to pay down your student loans, how to do so, and whether or not this is a smart idea. Credit card companies typically offer cash-back incentives to customers who use their cards for purchases. It also depends on whether you are the kind of person who always pays the whole balance on their credit card account at the end of each month or not.

Getting the Right Card to Transfer With

To begin, you will need to submit an application for a credit card with a sizable sign-up bonus and continuous cash benefits and get it accepted. Keep an eye out for bonuses such as 1% cash back on all transactions and something like $500 cash back if you purchase $5,000 or more during the first three months of using the credit card. These credit cards are often intended for those with credit scores ranging from very good to exceptional. Remember that not all credit cards are made equal, which means that certain cards will not enable you to transfer the amount of an existing loan to another card. Therefore, you need to double-check that you have the appropriate card. Some financial institutions may allow students to transfer the balance of their student loans onto their credit cards.

In addition, the Bank of America Travel Rewards card and the Capital One Quicksilver Cash Rewards card are two of the top rewards cards available. Beginning in 2021, each of these cards will provide 0% annual percentage rate financing for 15 months. Your substantial, one-time, additional student loan payment will be made using this card and processed immediately. The next step is to ensure that your credit card issuer will not consider the transaction a cash advance before you make the payment, and you should acquire that assurance in writing. In addition, you should inform the issuer of your credit card well in advance that you want to make a significant purchase so that the transaction does not get denied or marked as fraudulent.

What Happens After You Make a Payment?

After making the payment, you should immediately check your credit card account to ensure that the transaction was posted as a purchase and not a cash advance. You will satisfy the conditions to get the sign-up bonus and earn 1% back if all goes according to plan. After that, you will want to make sure that you pay your credit card account in full and on time so that you do not accrue any interest or fines for being late. If you implement this strategy, you can make significant progress toward three different monetary objectives. First, you will reduce the principal balance of your student loans; second, you will avoid paying the interest that you would have incurred throughout those loans; and third, you will earn significant credit card rewards.

Read the Fine Print

Before you complete the transfer, you must thoroughly understand the limits and the terms and conditions associated with your card. To begin, you will want to make certain that you are only able to transfer the maximum amount that you can pay back to the credit card company. If you can't at least meet the criteria for the minimum payment on your credit card, you shouldn't overspend in the hopes of accumulating points or incentives for the card.

Instructions for Making Your Payment

Are you unable to do a balance transfer? Get in touch with the corporation that issued your credit card for a convenience check. This will be written just like a check you would write from your checking account; the only difference is that it will be drawn on your credit card. However, remember that convenience checks may sometimes come with a high-interest rate; thus, you will want to know what rate and costs apply to the account in question. Suppose you are having problems paying the payments on your student loans. In that case, your best choice is to investigate refinancing your student loans or modifying the repayment plan that is associated with your student loans.