Lori Meadows
Paying off student loans can be a stressful and burdensome experience, but there are ways to make it more rewarding. Some credit cards offer points and cash-back rewards for paying off student loans, which can be redeemed for travel or other benefits. For example, the Citi Double Cash card offers 2% cash back on all purchases, while the Bank of America Premium Rewards card offers 1.5 points per dollar spent, with bonus points for members. Additionally, PayPal Key can be used to pay with a credit card and earn points if your student loan servicer accepts debit cards. These strategies can help ease the financial burden of student loans and make the repayment process more bearable.
| Characteristics | Values |
|---|---|
| Credit cards that offer rewards | Chase Freedom Unlimited, Bank of America Premium Rewards, Citi Double Cash, Capital One VentureOne Rewards, Chase Sapphire Preferred, World of Hyatt, SoFi Credit Card, Sallie Mae Accelerate, Laurel Road Student Loan Cashback, Amex Blue Business Plus |
| Rewards structure | Points, cash back, bonus miles, travel benefits, statement credits, cell phone protection |
| Student loan servicers that accept credit cards | Navient, Nelnet, MOHELA, Sallie Mae, Aidvantage, Laurel Road |
| Tools | PayPal Key, undebt.it |
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What You'll Learn
Rewards cards and programmes
One way to do this is by signing up for a rewards credit card. Some credit cards offer bonus points or cash back on purchases, which can be redeemed to pay down student loans. For example, the Bank of America Premium Rewards credit card earns 1.5 points per dollar spent, and if you're a Bank of America Premium Rewards member, you can earn up to 2.62 points per dollar spent on your student loan payments. The Citi Double Cash card is another option, offering 2% cash back on every purchase (1% when you buy and 1% when you pay your bill).
Another strategy is to take advantage of sign-up bonuses offered by some credit cards. For instance, the Chase Sapphire Preferred card has a $95 annual fee but offers travel benefits and a high sign-up bonus of 80,000 Chase Ultimate Reward points when you make a $4,000 loan payment via PPK. This is like getting a 40% rebate on your student loan payment.
Additionally, some student loan lenders offer their own rewards cards. For example, Sallie Mae offers the Sallie Mae Accelerate card, which allows users to redeem their cash back for 2% when paying down student loans, compared to 1.5% for other purchases. Similarly, Laurel Road offers the Laurel Road Student Loan Cashback Credit Card, which also allows users to redeem 2% cash back towards student loan payments.
It's important to note that not all student loan servicers accept credit card payments, and some may charge additional fees for doing so. Before applying for a rewards credit card, make sure your loan servicer accepts credit card payments without incurring extra costs.
Finally, there are also specific rewards programmes designed to help students earn points to pay down debt. For example, Bilt Rewards is a programme that allows students to earn rewards on their student housing payments and rent payments through a rewards card.
By utilising rewards cards and programmes, you can earn points and subsidise the cost of paying off your student loans.
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PayPal Key
For example, if you link the Ink Business Cash Credit Card to PayPal Key to send automatic monthly payments to Verizon, you will get the Verizon debit card discount and earn 5 Chase Ultimate Rewards points per dollar since this credit card provides this category bonus.
However, it is important to note that this process will only work if you pay off your credit card balance on or before the due date. Additionally, PayPal Key is no longer accepted at Plastiq.com, a popular platform for paying off student loans.
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No annual fee cards
If you're looking for a no-annual-fee card to help you earn points while paying off your student loans, there are a few options to consider.
One popular choice is the Chase Freedom Unlimited card, which offers unlimited 1.5% cash back on non-bonus purchases. This card pairs well with other Chase cards that earn Ultimate Rewards points, such as the Chase Sapphire Preferred Card or the Ink Business Preferred Credit Card. By transferring your cash-back rewards to your Ultimate Rewards account, you can unlock valuable redemption options.
Another option is the Citi Double Cash Card, which offers 2% cash back on all purchases (1% when you buy and 1% when you pay your bill). This card provides flexibility, as you can convert your cash back to ThankYou points with no annual fee.
If you're a Bank of America customer, their Premium Rewards credit card is worth considering. While it does carry a $95 annual fee, it can be offset by travel credits. This card earns 1.5 points per dollar spent, and if you're a Bank of America Premium Rewards member, you can earn up to 2.62 points per dollar spent.
For those with existing SoFi loans, the SoFi Credit Card offers an attractive rate of up to 3% cash back for the first year when you set up a direct deposit with SoFi. After that, you can earn 2% cash back, which can be redeemed toward paying down SoFi student loans or other financial goals.
Additionally, the Bilt World Elite Mastercard offers redemption options for points earned, which can be applied toward student loan payments. One Bilt Point is worth 1 cent when redeemed, and the minimum redemption amount is 1,000 Bilt Points (or $10).
When choosing a no-annual-fee card to help pay off your student loans, it's important to consider the rewards structure, any potential fees, and how the card fits into your overall financial strategy.
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Cards with sign-up bonuses
When it comes to paying off student loans, choosing a credit card with a sign-up bonus can be a strategic move. Here are some cards that offer attractive sign-up bonuses:
Citi Double Cash Card
The Citi Double Cash Card offers a simple earnings structure, making it appealing for paying off student loans. Its sign-up bonus allows you to earn $200 cash back after spending $1,500 on purchases in the first six months of account opening. You can earn 2% cash back on every purchase (1% when you buy and an additional 1% when you pay your bill). Additionally, you can earn 5% total cash back on hotel, car rental, and attraction bookings through the Citi Travel portal. The cash-back rewards are unlimited, and there are no rotating spending categories to track, making it a straightforward option.
Chase Freedom Unlimited
The Chase Freedom Unlimited card is another excellent choice for sign-up bonuses and ongoing rewards. It offers a $200 bonus after you spend $500 on purchases in the first three months of account opening. The card provides 5% cash back on travel booked through Chase Travel, 3% back at drugstores and restaurants (including takeout and eligible delivery services), and 1.5% back on all other purchases. If you pair it with other Chase cards in the Ultimate Rewards family, you can convert the cash back into points, making it even more rewarding.
Bank of America Premium Rewards Credit Card
The Bank of America Premium Rewards credit card is unique as it offers rewards and a sign-up bonus without a high annual fee. Its sign-up bonus allows you to earn 60,000 bonus points after making at least $4,000 in purchases in the first 90 days of account opening. Cardholders earn 2 points per dollar spent on travel and dining and 1.5 points per dollar on all other purchases. If you're a Bank of America Premium Rewards member, you can earn up to 75% more bonus points, boosting your rewards rate.
SoFi Credit Card
The SoFi Credit Card offers an attractive sign-up bonus of $300 if you spend $3,000 in the first 90 days, and it charges no annual fee. For cardholders with existing SoFi loans, the card provides up to 3% cash back for the first year when you set up direct deposit with SoFi. After that, you earn 2% cash back, which can be redeemed toward paying down SoFi student loans or other options like savings or investments within a SoFi account.
Upromise Mastercard
The Upromise Mastercard offers a unique rewards structure with a 1.529% rate on all purchases. The cash back is automatically deposited into your CollegeCounts 529 account once you reach a minimum threshold of $50. This card is particularly appealing if you're saving for college or want to invest in a 529 plan.
It's important to remember that while sign-up bonuses are enticing, you should also consider the long-term benefits of a credit card, its ongoing rewards, and whether it aligns with your spending habits and financial goals.
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Cards with high redemption values
When it comes to credit cards with high redemption values, there are a few options that can help you pay off your student loans faster. Here are some cards to consider:
Bilt Rewards with the Bilt Mastercard
Bilt is a loyalty program that allows renters to earn points on their rent payments, which is usually a significant monthly expense that doesn't yield any rewards. By partnering with major landlords, Bilt has launched the Bilt Mastercard, which lets renters earn points on rent with no fees. These points can be redeemed to pay down student loans directly. The redemption rate is currently 1 cent per point, so 10,000 points would give you $100 towards your student loan balance. This rate is higher than other Bilt redemption options, such as statement credits or using points for Amazon or Lyft, making it a good choice for those focused on paying down debt.
SoFi Credit Card
The SoFi Credit Card offers unlimited 2% cash back on most purchases, which can be redeemed for cash to apply to the balance on a SoFi student loan refinance. There is no minimum redemption amount, and rewards can be redeemed at any time. For example, if you spent $15,900 in a year, you could earn $318 in cash back when redeeming for student loan payments (up to $477 if you set up direct deposit).
Chase Freedom Unlimited
The Chase Freedom Unlimited card has no annual fee and offers 1.5% cash back on non-bonus purchases. If you have another Chase card that earns Ultimate Rewards points, such as the Chase Sapphire Preferred Card, you can transfer your cash-back rewards to your Ultimate Rewards account for valuable redemption options. Additionally, in the first year, you can earn an additional 1.5% cash back on everything (up to $20,000), which can quickly add up.
Citi Double Cash Card
The Citi Double Cash Card has a simple earnings structure, offering 2% cash back on every purchase (1% when you buy and 1% when you pay your bill). This straightforward structure makes it appealing for paying off student loans. Additionally, it offers a sign-up bonus of $200 cash back after spending $1,500 on purchases in the first six months of account opening.
Capital One Venture Rewards Card
The Capital One Venture Rewards Card is a great option for those who also want to earn travel rewards. It offers 2 miles per dollar spent across all purchases, and you can transfer your miles to airline partners and hotel loyalty programs. The high flat-rate earn rate and flexible redemption options make it a good choice for student loan payments.
It's important to remember that while these cards can help you earn rewards to pay down your student loans, they should be used responsibly to avoid accumulating more debt. Always pay off your credit card balances in full and on time to avoid interest charges.
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Frequently asked questions
You can earn points by paying off your student loans with a credit card. Some credit cards offer bonus points or cash back on purchases, which can be redeemed for points.
The Bank of America Premium Rewards credit card offers 1.5 points per dollar spent, with an additional 25%-75% bonus points for Premium Rewards members. The Citi Double Cash card offers 2% cash back on purchases, which can be converted to ThankYou points. The Chase Freedom Unlimited card offers 1.5% cash back on non-bonus purchases, with no annual fee.
Ensure your student loan servicer accepts credit card payments. Some servicers charge additional fees for credit card payments, so it is important to check their policies. You can also use PayPal Key, a virtual debit card linked to your credit card, to make payments if your servicer accepts debit cards.
Yes, it is important to pay your credit card bill in full and on time to avoid interest and late fees. Failing to do so may result in additional debt and affect your credit score.
Yes, some companies offer rewards programs specifically for student loan borrowers. For example, Bilt Rewards and Laurel Road offer cashback or points on student housing payments and other expenses, which can be redeemed towards paying off student loans.
