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How to Refinance Student Loans With a 0% Credit Card Balance Transfer

While repaying my student debt, I felt the pain of paying higher interest rates of over 6%. Most student loan borrowers feel that pain, too. The average student debt of $37,172 at a typical interest rate of 5% costs $155 a month in interest alone.

Unfortunately, I was unaware of options to refinance student loans. One strategy in particular could have a smart fit: getting a zero-interest credit card and using it to perform a balance transfer to refinance my student loan. I could have used the 12-18 month introductory rate period to pay off my student loans, interest-free.

A credit card balance transfer for a student loan is possible and could be a smart move for you. However, it’s not as simple as transferring balances between credit cards. Follow this guide to perform a student loan balance transfer to a zero-interest credit card - and make sure you’re actually coming out ahead in the process.

How to transfer a student loan to a zero-interest credit card

Simply put, a balance transfer for a student loan uses funds provided by your credit card issuer to pay off your student debt.

However, the actual process can be a bit complicated. Here’s an overview of the steps involved in a student loan balance transfer.

1. Get the right zero-interest credit card

Overall, credit cards carry higher rates than most consumers pay on student loans. So a student loan balance transfer to a credit card only make sense if you’re moving the debt to a credit card with a 0% introductory APR and paying off the balance before that intro period is up.

However, not every credit card issuer allows cardholders to perform balance transfers for student loans. According to WalletHub, the following credit card issuers allow studnt loan balance transfers:

  • Bank of America
  • Barclaycard
  • Capital One
  • Citi
  • Discover
  • PenFed
  • USAA
  • U.S. Bank
  • Wells Fargo
  • SunTrust Bank
    Spend some time shopping and comparing credit cards to find one that offers both student loan balance transfers and 0% APRs for an introductory period. You should also look for cards that don’t have or will waive balance transfer fees. Once you find one you like, you can apply for the credit card. Upon approval, you’re ready for the next step.

2. Request a student loan balance transfer

The next step will be to use your 0% credit card to pay off your student loan. your credit limit might put a cap on how much you can borrow to use for a student loan balance transfer. To maximize savings, be strategic and target the student loan with the highest interest rate.

  1. Figure out the balance transfer amount you want to borrow and use to repay your student debt. Be ready with the balance transfer amount to request.
  2. Have student loan information on hand, such as your student loan servicer and account number. The credit card company might need this information to process the balance transfer and pay off your old loan.
  3. Next, reach out to your credit card issur and verify their process for giving balance transfers for student loans. They can outline how to go about requesting a balance transfer and using it to pay off a student loan.
  4. Check with your student loan servicer and make sure they will accept a check from your credit card company. Depending on how your credit card issuer handles student loan balance transfers, they might pay out these funds directly to your student loan servicer; you’ll want to be sure they will process the payment from a credit card company.
    In many cases, you will use a balance transfer check from your credit card issuer to complete the process. These work like normal chcks, but instead of being tied to a bank account, they draw funds form your credit card account.

These funds are paid out to you and your student lender. Many credit card issuers can also complete this process online or by phone.

As you move forward in this process, make sure you’re not mixing up a cash advance with a balance transfer. The two offers can be worded similarly, but a cash advance often has higher fees and costs associated with it.

3. Use funds to repay student loans

After you request the balance transfer, the transaction will process and post. Make sure you get a receipt of payment from the student loan balance transfer to prove your student loan servicer got the funds.

Alternatively, the balance transfer funds might be deposited directly into your bank account. Try to immediately use these funds as a payment toward your student debt. Don’t let the money sit in your account, where you’ll only be tempted to spend it.

4. Repay your credit card balance before the 0% APR expires

Once the funds from your balance transfer have paid off your student debt, it’s time to repay your new credit card balance - and fast.

If you still have a balance after the 0% APR expires, you’ll likely face a higher rate than you had on your student loans. Credit card rates are typically around 15% APR or higher. Any savings you might have anticipated by having an interest-free card could quickly be undermined by new, higher interest charges.

Diligently pay extra on your credit card each month. And make sure you set it aside and don’t add new purchases to the balance, either.

Pros and cons of a student loan balance transfer

Now you know how to go about getting a credit card balance transfer for a student loan. But is this a smart move for you? Here are some potential benefits, drawbacks, and other considerations you should weigh before deciding.


Save on student loan interest- The most obvious benefit of a student loan balance transfer to a 0% APR credit card is the savings on interest. How much you could save will depend on the balance you want to transfer and how high your student loan rate is.

Maybe you have a $10,000 student loan at 6% APR that’s just entering repayment. Transferring the balance to a 0% credit card and paying it off in a year would save you $3,322 in interest, over a 10-year Standard Repayment Plan.

But what would you save if you paid off the loan in a year without the balance transfer? You’d still pay some interest - but not much. Paying the $937 a month it would take to pay off the $10,000 balance in a year, you’d pay $302 in interest (saving $3,021).

When deciding whether you should do a student loan balance transfer to a credit card with 0% APR or prepay your student loan, the savings are there. But they might not be as steep as you’re expecting.

Keep yourself motivated to pay off debt- Another potential benefit of using a student loan balance transfer is that doing so can keep you motivated to quickly pay off a large chunk of student debt. The period that you have a 0% APR on the credit card is the only time you can repay the debt without incurring more interest fees.

With the expiration of your 0% rate looming, you have a deadline to work toward. This can keep you accountable and disciplined as you work toward repaying debt. Getting out of debt often comes down to changing behaviors, so this benefit can be powerful.


Balance transfer fee- You’ll also need to account for a balance transfer fee. Most credit cards will charge this fee, which is usually around 3% of the balance transfer amount.

Take the $10,000 student loan balance mentioned above. If your credit card changed a 3% balance transfer fee, you’d pay $300. That wipes out a big chunk of your savings.

Look for credit cards that don’t charge a balance transfer fee. For instance, the Barclaycard Ring has no balance transfer or annual fees. And it carries a 0% APR for the first 15 months for balance transfers made in the first 45 days.

If that’s not an option, you can always call your credit card issuer and ask them to waive or lessen the balance transfer fee.

Transferring a high balance can be risky- Transferring a high balance means you’re stuck spending huge payments each month if you want to beat the clock on your 0% introductory rate. This can quickly eat into your cash flow and might be more painful than you expect.

Additionally, you’ll need to qualify for a high enough credit limit to even use the strategy.

And even if you have, say, a $15,000 credit limit on your new card, you probably shouldn’t use it all up with a balance transfer. Borrowing too much against this limit could increase your credit utilization ratio too much, which might adversely affect your credit score.

If you want to pay off student loans with this strategy, make sure the balance transfer amount is 30% or less than you total credit limit. For instance, that would be about $5,000 of the $15,000 limit.

Consider student loan refinancing

With a student loan balance transfer, the 0% interest rate is a big draw. But it can also come with hassles like shopping for exactly the right credit card or coordinating with your student loan servicer. And you’ll have to force yourself to make big payments each month to stay ahead of the expiration date on the 0% APR.

There might be a better way to save on student loan interest: Refinancing your student loan with a private lender instead of a credit card.

The best student loan refinancing lenders offer rates as low as 2.30%. And you’re unlikely to face costs like a 3% balance transfer fee or a 15% interest rate hike after an introductory rate expires. You can also choose a longer repayment period to keep the monthly payments affordable.

You can do a balance transfer for student loans, but it’s not always worth it

So, what’s the “too long; didn’t read” answer? Simply put, it is possible to transfer a balance from a student loan to a 0% credit card to save on interest.

However, there are some downsides to watch for. You’ll need to make sure both your credit card company and student loan servicer allows this transaction. You should also spend some time calculating the potential savings of having interest-free debt for the introductory period. And compare whether costs like balance transfer fees might offset savings.

Overall, if you take the time to find the right low-cost credit card and pay your balance in full before your 0% APR expires, you could come out ahead.

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When I graduated from college and landed my first job, I felt overwhelmed by my student loans. My balance was higher than my nonprofit salary and I had no idea how I was ever going to get out of debt.

I started reading personal finance blogs that talked about making extra payments on student loans to pay them off faster - and I rolled my eyes. I was on a tight budget; I sometimes couldn’t find the cash to put gas in my car, let alone extra money for my loans.

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“I am incredibly concerned about significant constraints being placed on our ability to allocate and prioritize resources, make decisions and deliver on the organization’s mission,” Runcie wrote in an email to this staff obtained by the Washington Post. “[I am] encumbered from exercising my authorities to properly lead this great organization.”

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Why the Treasury Department Could Be Your New Student Loan Servicer

Recently, news broke that James Runcie, head of the Federal Office of Student Aid, resigned. According to the New York Times, Runcie’s resignation memo revealed one of the deciding factors behind his departure is the Trump Administration’s proposal to move the management of student loans from the U.S. Education Department to the U.S. Treasury Department.

This information comes on the heels of a proposal to drastically cut the Education Department’s budget over the next 10 years, which could signal some major changes for student loan borrowers. Here’s what you need to know.

Advocates of the proposal believe it could simplify student loan management

The idea of moving the management of student loans to the Treasury Department isn’t’ new.

“During the Obama administration, the idea of shifting responsibility for the student loan program to the Treasury Department had some supporters.”

James Kvaal, former deputy under the Secretary of Education, believes a move could simplify things for borrowers. That’s because student borrowers sometimes have to deal with both the Education Department and the IRS- which is under the Treasury Department.

Applications for income-driven repayment plans require information from your tax return. By moving student loans to the Treasury Department, students filling out those applications would no longer have to deal with two agencies.

The move could also theoretically increase safety. For example, the IRS’ online tool to retrive student loan borrower data for the application through the Education Department was recently hacked and had to be temporarily removed from the website.

James Runcie and other critics believe the Treasury Department isn’t capable

Advocates think the proposal is, in part, the answer to issues plaguing the Education Department. These issues include poor budgetary estimates and management of student loan services.Meanwhile, critics of the proposal think the treasury Department isn’t up to the task.

Runcie’s resignation memo states, “This is just another example of a project that may provide some value but will certainly divert critical resources and increase operational risk in an increasingly challenging environment.”

Former Treasury Secretary, Sarah Bloom Rasking, echoes Runcie. “Moving the agency that is supposed to provide stewardship for student loan borrowers to an agency that is working on a shoestring with a skeletal crew strikes me as a recipe for a policy disaster.”

The Treasury Department has already unsuccessfully tried to collect on student loans in the past. In 2015, the Treasury Department launched a two-year pilot program with the hopes of increasing collection rates and educating borrowers about their options for repayment. The program was a failure.

According to The New York Times, the private collectors used as a control group to measure the Treasury’s success during the program were more successful in their collection efforts. “[They] recovered more money and got more borrowers our of default.”

What does this mean for student loan borrowers?

As of right now, the proposal to move the management of student loans from the Education Department to the Treasury Department is still just that - a proposal. It will require Congress to take action, which means nothing is happening today.

For student loan borrowers wondering how this could impact their repayment, it’s too soon to tell.

However, there is one thing they can be sure of: Changes are coming in a lot of ways to student loans in this administration. The best thing borrowers can do is stay abreast of these changes and understand their rights at every turn.


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