Student loan debt in the United States in 2012 is now approaching $1 trillion and has surpassed credit card debt as the primary source of individual debt. Partly due to skyrocketing tuition costs and partly to do with what some have called a "college bubble", this trend has led to virtually every individual under the age of 30 having at least some student loan debt that is constantly eating away at their finances and preventing long-term financial freedom. With some interest rates on student loans shockingly high and some credit cards offering amazingly low APRs, paying your student loan debt off with credit cards may have crossed your mind. Before proceeding with such an action, please review the concerns and reasons why you should (or should not) move your student debt to a credit card.
Are You Responsible?
This is the most important aspect of attempting to pay off student loan debt with a credit card. Are you comfortable that you will have a steady source of income for the next 12-24 months? Will you always make your credit card payment on time? If you said no to either, forget it. Credit card companies will penalize you and increase your interest rate if you make a late payment, which would most likely wipe out any benefits gained and leave you paying even more interest than before. If you have a low interest credit card and know that payments will not be an issue, then continue reading to learn what else you need to do.
Credit Card Terms
Generally speaking, student loan interest rates are lower than what the average credit card offers. It makes absolutely no sense to transfer a student loan @ 5% interest to a credit card with 11% interest. You will need access to a credit card that has a lower interest rate than your current student loan rate, and it needs to be at least one point lower in order to make any real difference. You will also want to make sure that the credit card being used is not one that charges large fees for balance transfers (you will most likely have to use this method as many student loan issuers do not accept CCs for payment). In many cases, you can call and ask for the balance transfer fee (if existent) to be waived.
Not For Everyone
If you have managed to pass all of the criteria above and still are interested in paying your student loan debt off with credit cards, there are still some considerations. How much debt do you have? Usually, you will only want to move to a credit card what you can pay off in 12-18 months; most credit cards that offer 0% APR or low APRs do so for a limited amount of time. If you have $50,000 in student loan debt, you could attempt to partition it and move some to a credit card but the general rule of thumb is that you do not want to move more to a credit card than you can pay in a year.