You can pay your private and federal student loans through various parties and each party may have accept different payment methods. The payment method that you use is the key to the cost-savings.
Private and federal student loan payment methods
Pay your student loan with a credit card
If you’re able to pay via credit card, you can not only defer your payment (via your credit card’s grace period), you can earn credit card rewards.
You should avoid paying your private or federal student loan with a credit card if doing so will result in you paying more interest than the interest being charged by your student loan lender. Of course, if the extra interest is in your budget, then this shouldn’t be a concern.
Make your student loan payment with a debit card
If you have a rewards or cashback debit card that offers cash or rewards when the card is used, your monthly student loan payment could be one of the transactions that earns your rewards each month.
If your debit card does not earn rewards, but your credit card issuer waives account maintenance fees for using your debit card, your student loan payments could help you meet the waiver requirement.
Have your student loan payment deducted from your bank account
Just like paying your student loan payment with a rewards are cashback debit card, the student loan payment is deducted from your available cash almost immediately. However, with bank account withdrawals, you likely will not receive rewards.
Some financial institutions offer bonuses to customers who use their bill pay service or have third-party withdrawals from their account.
Since it’s common for banks to waive account maintenance fees for having third-party withdrawals from your account, your student loan payment could be used to meet the waiver requirement for account maintenance fees.
The best method for making your student loan payment
You can generally pay your student loan with a credit card, with a debit card, or via a withdrawal from your bank account. You should determine how much money you will save and earn via each method.
If you’re unable to pay your student loan with a credit card or just prefer to not do so, your only two options are to use your debit card or to have the payment withdrawn from your bank account. Out of those two options, using a rewards debit card is likely going to be the best payment method for your student loan.
Whether you make your payment via debit card or via third-party withdrawal from your bank account, the funds are deducted from your account almost immediately. However, only debit cards offer ongoing rewards for doing so.