You can use a personal loan to consolidate credit card debt, but can you pay a loan with a credit card?
Some lenders don’t allow you to pay loans with a credit card. For example, federal student loan servicers do not accept payments with a credit card. This is often also true of mortgage lenders.
Overall, many lenders do not accept payment by credit card. However, if you can pay your loan with a credit card, it may come with additional fees that can often outweigh any points or miles you could earn on the card account. Each lender has its own policies. If you’re not sure about their policies regarding paying a loan with a credit card, check your loan’s terms and conditions or reach out to your lender’s customer service team.
Can you use a balance transfer to pay a loan?
You may be able to pay some loans – such as personal loans – using a balance transfer credit card. This can make sense if the card offers a low intro APR on balance transfers for a period of time, and you can pay all or most of the balance off by the end of that period.
Certain types of loans, however, like a personal loan from the same bank that issues your credit card, may not be able to be transferred to your card. Also, the amount you can transfer on a credit card is typically your credit limit or capped at a lower amount and is still subject to the amount of available credit you currently have on the card. Check your credit card’s terms to understand the limitations and conditions on balance transfers.
Keep in mind that, even if you have a low intro APR offer, transferring a balance may still come with a balance transfer fee. This is usually a percentage of the debt transferred or a flat fee, whichever is higher.
You typically don’t earn points or miles on a balance transfer. Points or miles usually come from eligible purchases made with the credit card. The credit card terms often exclude balance transfers.
Should you transfer a loan balance to a credit card?
Here are some factors to consider if you’re thinking about a balance transfer:
- Your specific type of loan and whether your credit card issuer allows you to transfer the balance to the credit card
- How much credit is available to transfer on the credit card
- Your credit card’s balance transfer fee
- Your credit card’s APR after a low intro APR on balance transfers expires
- Whether you can pay the loan off before the low intro APR expires
- Personal finances/circumstances that would affect your ability to make credit card payments on time
Paying loans with a credit card is not a one-size-fits-all solution, but with a little research, you can decide if it’s the right one for you.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
