Can You Pay Off a Loan With a Credit Card?

The standard way to pay a loan is in cash, either with a bank account transfer or a check. If money has been tight, or if you're hoping to earn cash back on the loan payment, you may be asking yourself can you pay off a loan with a credit card. It's possible, but in most cases, it's going to cost you.

Yes, you can pay a loan with a credit card, but it's usually less convenient and comes with extra fees. If you can afford to make your loan payment from your bank account, that tends to be the better option.

Hardly any lenders accept credit card payments. They almost always require you to pay with an ACH transfer from your bank account or a check. There are, however, a few workarounds that allow you to pay loans using credit cards. Here are your options if you want to do this.

Transfer the loan to a balance transfer credit card

A balance transfer credit card can be used to transfer over your debt and pay it off at a lower interest rate. These cards often have a low introductory interest rate on balance transfers. The top options offer a 0% intro APR on balance transfers for 12 months or longer, so they're a fantastic way to save on interest charges. You can compare a few of them below.

If you're going to pay off a loan with a credit card, a balance transfer will likely be the cheapest option. There are a few things to keep in mind, though:

• Not every balance transfer card works with loans. Some only let you transfer over credit card debt. Check with the credit card issuer first to see what its rules are.
• The interest rate will increase after the introductory period ends. If you won't be able to pay off the balance within that time frame, you could end up paying expensive interest charges.
• There's normally a balance transfer fee of between 3% and 5% charged by the credit card company.
• The loan amount you transfer, plus any balance transfer fee, can't exceed the card's credit limit (the maximum amount that can be spent on the card).

LEARN MORE: A Complete Guide to Balance Transfers

Get a cash advance

A cash advance is when you get cash using your credit card. You can do this at an ATM after setting up a PIN on your credit card. The credit card issuer might also offer convenience checks tied to your credit card account. These can be used just like checks from a bank account.

Cash advances aren't recommended as anything but a last resort. They usually have higher interest rates than purchases, and the card issuer can start charging you interest on the advance immediately. There's no grace period, like there is with purchases you make on a credit card.

LEARN MORE: How Does a Credit Card Cash Advance Work?

Redeem credit card rewards to make the payment

If you have any credit card rewards that are redeemable for cash back, you could put them towards a loan payment. Depending on the card, you could have your cash rewards transferred to your bank account or mailed to you as a check. You can normally do this with cash back credit cards as well as some rewards credit cards that earn points.

LEARN MORE: How Do Credit Card Points Work?

This option won't work for everyone, since you need to have some credit card rewards saved to do it. But if you've been using a rewards card and you need some money for a loan payment, don't forget that you can cash in those rewards.

You may have read that you can pay off a loan with a credit card using a third-party payment service. The service that almost always gets mentioned is Plastiq, which allows consumers to pay most types of bills by credit card, but it filed for bankruptcy in May 2023.

Plastiq is still available, and there have been reports that it's processing credit card payments as usual (for a 2.9% fee). But I wouldn't recommend using it to pay a loan or any other type of bill. A bankruptcy filing indicates that the company is going through serious financial troubles, and those could affect payments. If your Plastiq payment is late or bounces, you're the one who's going to get charged a late fee and potentially have your credit score drop.

It's generally not a good idea to pay a loan with a credit card, but this also depends on what your reason is for doing it. The most common reasons are:

You can't make the loan payment. In this case, you may want to pay by credit card so you don't miss your monthly payment and get hit with a fee.

The problem is that you'll end up in a "robbing Peter to pay Paul" situation. To pay one debt, you take out more debt with another company. And credit cards tend to have higher interest rates than loans, which is one reason a credit card balance can be even more difficult to pay off than a loan.

See if you have any other options before using your credit card to cover your loan payment. For example, the lender might be able to help you if you call and ask about a hardship program.

You want to save on interest with a balance transfer credit card. Since many balance transfer credit cards have a 0% intro APR on balance transfers, they can be a good choice for paying off loan debt.

This is the best reason to pay off a loan with a credit card. Just make sure you do the math on whether you'll be able to pay off everything during the intro period. Otherwise, you could end up paying more in interest once that intro period ends and your card's APR increases.

You want to earn credit card rewards on your loan payment. It's every rewards enthusiast's dream, but unfortunately, it's practically impossible to come out ahead because of fees. Credit cards only earn rewards on purchases, not balance transfers or cash advances.