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If you are someone who has been reading my blog from the very beginning, you might have realized that I love bone-picking. Aside from payday loans (public enemy #1), having student loans is the bane of my existence. It’s so much so that it inspired me to create Debt to Dough in the first place. Today I wanted to walk through how to balance transfer for student loans.
Shameless Plug: I happened to pay off over $40K in student loans in the last 18 months, take a look.
Even crazier is that let’s say you have a $40K loan and make the minimum payments ($333) with 6% APR (15 years).
- Initial Amount = $40,000
- After 15 Years = $60,596.62
- Interest Paid over 15 Years = $20,596.62
Yeah, no thanks. It’s bad enough to have a 15-year debt and now you want to throw an extra $20K for funsies? I’ll PASS!
Now, before I continue, I do need to point out that you should meet the following requirements.
- Credit score of at least 700
- You don’t plan to buy a home in the near future
- A semi-established credit history
- Have credit cards with an at least $5K credit limit
- Have a fairly decent plan to pay off student loans within 5 years or sooner
- Plan to aggressive in paying down your debts
- Best suited for debts $25K/under
Don’t meet these requirements? Well, you can still bookmark the page until you are more financially stable and have extra money to prioritize debt.
So Can You Balance Transfer Student Loans To Your Credit Card?
Simple Answer: Yes you can. Oddly enough, there wasn’t really much documentation regarding that.
I had to dive into old forums back in the 2000’s to get a straight answer and even then, it seemed murky. Most credit card balance transfers are used to move debt from other credit cards, but you can also use it for car loans, student loans, consolidating bills, etc.
What do I mean by balance transfer? It’s pretty simple, credit card institutions are willing to pay the debt you have in a variety of places all onto one credit card. This means that instead of you owing money from your student loans, it goes to your credit card.
I won’t go over the details on the pros and cons of doing this in this article (stay tuned if you want to know more) but rather go over the process and create a guide on balance transferring student loans to your credit cards.
Step 1: Get The Right Balance Transfer Credit Card
The biggest reason why this is required is that most credit cards allow for balance transfers. However, you will pay a fee and APR on those cards. The point of doing this is to avoid fees and interest.
Luckily, I have already created an article regarding the best balance transfer credit cards. These cards often come with 0% APR & 0 fees for at least 12 months (usually 15 months on average).
If you have decent credit with a long history (chances are you will if you have student loans and make payments on time), your credit score should be decent (700). That means your credit limit amounts should be a few thousand or more whenever you get a new card.
Depending on your amount of credit, you might need to apply for 1 or 2 of cards. I would say to start out with 1 card to get the hang of it.
Step 2: Get Approved & Request Your Transfer
All of the best balance transfer cards require you to make a balance transfer within 30 to 90 days of account opening (depends on the card). This means that after you get approved for your card, the moment you activate your card when the clock ticks.
If you get approved on May 10 but don’t get your card and activate it until the 20th of May, your countdown starts on the 20th. Make sure you set up your account online.
I’ll go over the methods from the banks I’ve used since some can be done online or via phone call.
PROTIP: MAKE SURE YOU CALL YOUR LOAN INSTITUTION AND WRITE DOWN THE ADDRESS TO SEND PAYMENT, THE PROPER NAME TO SEND CHECKS TO, AND VERIFY YOUR ACCOUNT NUMBER.
Balance Transfer Student Loans Using Bank of America
Optimal Method: Phone Call
You need to call the phone number on the back of your credit card and speak to a live representative. I know some of you don’t like calling on the phone, but a 10-minute phone call can save you thousands of dollars, so it’s worth it.
NOTE: Chances are your credit card company will require will need you to call them instead of doing it online. Check online first to see if you have an option to balance transfer that isn’t dedicated to credit cards.
The representative will ask what you need and request that you want a balance transfer. They will send transfer you over to the appropriate department. You will need to request the following:
- Name of Financial Institution
- Amount Requested
- Account Number (if applicable)
- Address of Payment (if applicable)
They should approve the amount after a couple of days. Upon approval, you will receive a pre-made check of the amount that is made out to the institution.
Upon getting the check -> Make sure you put your account number on the memo (if it hasn’t) and mail it to the financial institution immediately.
When you mail it, it should take a few days to show up on your statement.
Balance Transfer Student Loans Using Barclay
Optimal Method: Online
Step 1: Log onto your Barclay account
Step 2: Find “Services” in the menu -> Select “Balance Transfer Offers”. You will be taken to the offers section.
Since I already took advantage of Barclay, my intro APR won’t show 0%. But if you were to have the 0% intro APR then that would be the offer you select. Press “Select This Offer”
Step 3: After you press “Select This Offer” you will see this page.
By default, you will have the “Credit” tab open. You will need to press the loan tab.
Step 4: Fill out your financial institution information as needed.
Step 5: Upon completion, press “Review & Verify” -> If everything looks good, submit!
It will take 2-3 business days (possibly faster) for your financial institution to show payment. This is probably the most painless way.
Balance Transfer Student Loans Using Alliant Credit Union
Optimal Method: Online
Step 1: Log onto your Alliant account
Step 2: Find your credit card and press “Options” -> Select “Balance Transfers”
Step 3: Fill out your financial institution information as needed (Note: This form works for both credit and loan accounts)
Step 4: Upon completion, press “Continue” -> You’ll get sent to a review page.
Step 5: Review and submit for approval
It takes 3-5 business days for your financial institution to receive payment.
Step 3: Receive Payment & Plan Accordingly
Now, once you receive payment and your loan is “paid off”, those funds are no longer deemed “good debt” and will count against your credit and your credit score will take a hit. Now the tradeoff of this is that you will no longer be paying interest on your loans.
RELATED: Find ways to instantly increase your credit score. This might be before you request new credit cards as well.
At this point, the best value in using balance transfers for student loans is that you can make steady payments on your credit card and not pay interest during the “intro period”.
I recommend that you make an equal payment that you are comfortable with. If you have 10K in balance transfer debt over 15 months:
- That’s $666.66/month in monthly payments to pay it all off in 15 months (no interest)
- You might not be able to pay that amount but instead can pay $350.
- So pay $350 for 14 months ($4,900 total, $5,100 remaining)
- During the last month -> Get another balance transfer card and move your funds to a new credit card.
- Your new balance transfer will be $5,100 to be paid in 15 months
- Repeat step 3 but instead of $350, you will need about $340/month to finish your payments.
So in total, after 30 months (2.5 years) you can tackle a $10K loan instead of doing the minimum over 15 years!
I do need to mention AGAIN, that this is primarily useful for those wanting to be aggressive in paying off loans. You shouldn’t just use this if you are paying the minimum amount.
- When Are Student Loans Worth It?
- Top Value Balance Transfer Credit Cards: $0 Fees & 0% APR
- How To Keep Track & Budget For Balance Transfers
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