A loan is an amount of money you borrow to return with interest. You can get a loan from financial companies such as banks, credit unions, and financial technology companies. A student loan is a special credit that helps students to finance their education needs. Students can pay their school fees, buy books, and support their upkeep when in school. Most loans are payable after the end of the schooling period. But can you pay student loans with a credit card?
We all know you can service your loan using your bank account, preferably your checking account. All you need is the account details of your loan issuer, then make the proper payments for the specified period. Your loan issuer clears you after settling everything plus interest. Loans come with interest, which is the extra money on top of the borrowed amount.
Credit cards can help you to settle bills. The cards allow you to borrow finances from your issuer to repay after every billing cycle, usually after every month. During the repayment, you have to part with some interest, just like it is with ordinary loans. The interest is what the card issuers get from giving you the card services. In this article, you will learn if clearing your student loan using a credit card is possible.
How do you get a student loan?
To get a student loan, you must apply for it from the relevant authorities. Usually, you have to apply for it from the Federal Student Aid (FAFSA®). To start the process, you should complete and submit the loan application form for Federal Student Aid (FAFSA®). Based on the results of your form, your learning institution will send you a financial aid offer that may include federal student loans.
Once you get the offer, you can then proceed to borrow. Usually, student loans have fixed interest rates compared to other kinds of loans and are thus very suitable for scholars.
Who can get student loans?
Usually, loans are for people with less financial capability. However, almost every student can get a student loan. If you are a student who shows a great need for a loan, then you are likely to get approval compared to others. The federal student loans require the following.
- Demonstrate the need for financial aid
- Have a Social Security number
- Be a U.S. citizen. Non-citizens may also apply if they qualify
- Enroll in an eligible degree/certificate program
- Make outstanding academic progress
- Register with Selective Service
- Register at least half-time for Federal Direct Loans
Can you pay student loans with a credit card?
As I mentioned, a loan must be repaid at the agreed time. The truth is that student loan issuers do not allow you to pay your loan with a credit card. However, you can pay using indirect means by getting cash advances. The following are ways you can make your payments.
1) Get a convenience check
A convenience check is a special check you request from your card issuer. The check, also called a credit card check, operates like an ordinary check whereby you can deposit it in your bank account for processing. If you have a student loan, you can use the check to repay your loan. You should first deposit the check in your bank account, then pay your loan from the bank account balance.
2) Withdraw money from your ATM
Another option you can use to pay your student loan using a credit card is withdrawing money from your card’s account at an ATM. A credit card usually comes with a PIN that you can use to authorize money withdrawals at an ATM point.
Once you withdraw the money, you can then proceed to repay your loan. You can deposit the money in the loan issuer’s bank account and get the receipt for verification or put it in your account and make the payments.
3) Deposit over the counter
You can even walk into a branch with your card, withdraw money over the counter, and deposit it in your bank account to make a payment. You can also request the cashier to deposit the funds directly in the account of the loan issuer and get a receipt to show the payment.
Can repaying my student loan increase my credit scores?
All types of loans allow you to grow your scores. That means your student loans should help you grow your scores during repayment. That means you can get poor scores if you default on your loan.
Credit scores are vital since they show your creditworthiness. Financial companies usually check your scores before giving you suitable loans or lines of credit. The higher your scores, the higher your loans, and lines of credit limits.
However, student loan issuers do not check credit scores when issuing loans. After all, where will a student get credit scores from yet they have never worked anywhere?
How can you repay your loan faster?
Repaying your loan faster can reduce the burden of loans. It gives you peace of mind to major in other development issues. There are various ways you can make your payments faster, which include the following.
- Make additional payments to reduce the principal.
- Start early repayment with a part-time job in college.
- Stick to a budget and use the extra money to reduce your debt.
- Establish a college repayment fund.
- Apply for loan forgiveness.
- Consider refinancing from other financial companies.
- Make use of discounts to lower your interest rate.
- Take advantage of tax deductions.
- Ask your employer to assist you in the loan repayment.
There are various advantages to repaying your student loan faster. First of all, you can reach your financial goal faster. Debts can prevent you from preparing yourself adequately as far as financial matters are concerned. Secondly, faster loan repayment helps you improve your debt-to-income ratio and qualify for other funding.
Bottom line
A loan is an amount of money you borrow from financial companies. Student loans are particular types of loans that allow you to fund your education. You have a high chance of getting a student loan if you are a needy student. Student loan interest is usually fixed, and you can begin paying when you finish schooling. Repaying your student loan increases your credit scores.
