Contact your credit card company for a convenience check
After making the payment, keep an eye on your credit card account to ensure the transaction posts as a purchase, not a cash advance. If all goes well, you’ll meet the requirements to earn the sign-up bonus, plus earn 1% back. You’ll then want to pay your credit card bill in full and on time to avoid incurring interest or late fees.
With this strategy, you’ll accomplish three financial goals at once: taking a chunk out of your student loan principal balance, saving all the interest you would have paid on that principal over the years, and earning significant credit card rewards.
And if you’re lucky enough to have a student loan servicer that accepts credit card payments for any amount with no fee, there’s no reason not to pay your student loan bill with your credit card every month, as long as you’re not carrying a credit card balance.
Read the Fine Print
Make sure you know your limitations and the terms and conditions of your card before you make the transfer. First, you’ll want to make sure you can transfer only as much as you can afford to pay back to the credit card company. Don’t get overindulgent to get the points or the rewards if you can’t at least meet the minimum payment requirements of your credit card.
Secondly, if you’re doing a balance transfer, know that these transactions may come with a higher interest rate. So if you can’t make the full payment at the end of the statement month, you may be paying a higher interest rate than a regular purchase transaction. If it’s a new card, you may be able to benefit from low- or no-fee balance transfers for the first six to 12 months.
Set aside the cash to pay off your pending credit card charge, so you don’t end up trading low-interest debt for high-interest debt.
How to Make Your Payment
Can’t do a balance transfer? You’ll write this the same way you write a check from your bank account, except it’s drawn on your credit card. But keep in mind, convenience checks can also come with a high interest rate, so you’ll want to know what rate and fees apply.