That’s a really dumb idea if you think about it. You’d be trading a low interest loan for a high interest loan (just look at the APR % on your credit card and compare it to the APR % on your student loan). Unless you are going to pay off your credit card fully when the bill comes, don’t do it.
The answer may depend on what your credit card company offers. In general, you can use a balance transfer card for almost any kind of account where the amount you owe is less than your credit line. What happens is that when you authorize the balance transfer, the credit card company will basically give you a “cash” advance to pay off that other liability (in this case, your student loan). The cash advance may be a wire transfer between financial companies (most likely) or it may be in the form of a check or some other option. It really just depends on what the financial institutions arrange between themselves.
Now, you didn’t ask whether this would be a good idea or not but I’d like to give you some unsolicited advice that this MAY NOT be a good idea at all. Many student loans have interest rates that are subsidized by the federal government so the interest rate is lower than what it could otherwise be. It may also be a fixed rate, meaning it won’t rise over time. Also, many student loans can be easily placed in deferrment should you return to school … meaning you don’t have to make monthly payments (or maybe only smaller payments) while you’re in classes.
However, if you do a balance transfer to cover a student loan, you may lose all of that protection. Your credit card interest rate could go up quite a bit and you may find that your student loan which previously had an interest rate of ~6% is now costing you 18-20% in interest. Eek!
So, weigh your options carefully. If opportunity permits, talk with your student loan company and ask them about what protection you have and why you should stay with them, or consult with someone at a campus student loan office for their suggestions.
It all depends on the credit card company. Most likely you can, however look at the annual percentage yeild (interest rate) on the credit card and compare it to the annual percentage yeild on the studen loan. If the student loan is lower I recommend you continue making the loan payments because you will pay less interest in the long run.
Earlier, it was very easy to find credit cards which allowed to transfer balances without any fee what so ever. These credit cards came with 0% intro APR for a specified period like 6, 12, or 15 months. This was used as a goldmine by those with large outstanding balances. They would simply transfer their balances to such credit card and get rid of existing high APR’s. The 0% intro offer would then be exploited by them. Just by paying the minimum balances they would stay in the good books of credit card companies, and when the ‘golden period’ of0% intro APR was nearing its end, voila they shifted their huge balances to another credit card with similar offer.
So, this resulted in loss of revenue for credit card companies in terms of interest rates, but a more disastrous consequence of this process was that the credit card holder was increasingly getting into huge debts.
A major issuer of such no fee balance transfer credit cards, Morgan Stanley with their range of Discover credit cards, took strong exception and withdrew all such offers. Now they decided to take a certain percentage on balance transfers. To counteract such measure the credit card companies now have a different APR for balance transfer, this includes credit card with 0% intro APR. Get all information about it at: http://www.credit-card-gallery.com/credit_card_balance_transfer.html
You can pay it off with your credit card but BEWARE!!! Verify the interest that you are paying in your student loan and the interest you will be paying in the credit card. Which one is lowest?
student loan consolidation would have been a superb choice specifically to those young ones who have credit cards, personal loans, etc. Consolidating their debts might help them clear out what they owe to the banks or banking institutions slowly at a lower rate.
That’s a really dumb idea if you think about it. You’d be trading a low interest loan for a high interest loan (just look at the APR % on your credit card and compare it to the APR % on your student loan). Unless you are going to pay off your credit card fully when the bill comes, don’t do it.
Hi, KitKat.
The answer may depend on what your credit card company offers. In general, you can use a balance transfer card for almost any kind of account where the amount you owe is less than your credit line. What happens is that when you authorize the balance transfer, the credit card company will basically give you a “cash” advance to pay off that other liability (in this case, your student loan). The cash advance may be a wire transfer between financial companies (most likely) or it may be in the form of a check or some other option. It really just depends on what the financial institutions arrange between themselves.
Now, you didn’t ask whether this would be a good idea or not but I’d like to give you some unsolicited advice that this MAY NOT be a good idea at all. Many student loans have interest rates that are subsidized by the federal government so the interest rate is lower than what it could otherwise be. It may also be a fixed rate, meaning it won’t rise over time. Also, many student loans can be easily placed in deferrment should you return to school … meaning you don’t have to make monthly payments (or maybe only smaller payments) while you’re in classes.
However, if you do a balance transfer to cover a student loan, you may lose all of that protection. Your credit card interest rate could go up quite a bit and you may find that your student loan which previously had an interest rate of ~6% is now costing you 18-20% in interest. Eek!
So, weigh your options carefully. If opportunity permits, talk with your student loan company and ask them about what protection you have and why you should stay with them, or consult with someone at a campus student loan office for their suggestions.
Good luck!
It all depends on the credit card company. Most likely you can, however look at the annual percentage yeild (interest rate) on the credit card and compare it to the annual percentage yeild on the studen loan. If the student loan is lower I recommend you continue making the loan payments because you will pay less interest in the long run.
Earlier, it was very easy to find credit cards which allowed to transfer balances without any fee what so ever. These credit cards came with 0% intro APR for a specified period like 6, 12, or 15 months. This was used as a goldmine by those with large outstanding balances. They would simply transfer their balances to such credit card and get rid of existing high APR’s. The 0% intro offer would then be exploited by them. Just by paying the minimum balances they would stay in the good books of credit card companies, and when the ‘golden period’ of0% intro APR was nearing its end, voila they shifted their huge balances to another credit card with similar offer.
So, this resulted in loss of revenue for credit card companies in terms of interest rates, but a more disastrous consequence of this process was that the credit card holder was increasingly getting into huge debts.
A major issuer of such no fee balance transfer credit cards, Morgan Stanley with their range of Discover credit cards, took strong exception and withdrew all such offers. Now they decided to take a certain percentage on balance transfers. To counteract such measure the credit card companies now have a different APR for balance transfer, this includes credit card with 0% intro APR. Get all information about it at: http://www.credit-card-gallery.com/credit_card_balance_transfer.html
You can pay it off with your credit card but BEWARE!!! Verify the interest that you are paying in your student loan and the interest you will be paying in the credit card. Which one is lowest?
Yes, you can, in most cases. But it’s maybe not the best idea – do it if you really don’t have other choices.
Good luck !
student loan consolidation would have been a superb choice specifically to those young ones who have credit cards, personal loans, etc. Consolidating their debts might help them clear out what they owe to the banks or banking institutions slowly at a lower rate.
Can you pay off your student loan with a balance transfer credit card or do I have to use a regular card? | Credit Cards…
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