Pay Student Loans With Credit Card Rewards
Here’s a novel idea - use your credit card rewards points to directly pay off your student loans. To my knowledge, Citi is the only company offering this service, which is part of its Thank You Rewards Network. Of course, a person could take the cashback rewards offered by any other credit card company and apply it toward student loans, but this seems better because it will make a person pay off the loan.
It is a perfect solution for those who lack self-discipline or are merely forgetful, like myself. You can use a Citi credit card to buy groceries, gas, Expedia.com travel packages or merchandise from a large array of participating merchants. Then, you get up to five rewards points for every dollar spent, a generous offer that lasts only 12 to 24 months after card initiation, with one point per dollar thereafter. Those rewards translate to a penny per point toward student loans. My understanding is that Citi sends you a check made out to the lender and you are then responsible for mailing it to the lender. 100,000 points equals $1,000.
Citi’s Thank You Rewards Network has come under fire from some critics for what they view as stingy rewards, but you can’t please all the people all the time. Hustlerama has a great post on Citi’s Rewards Network and the best way to utilize it, including paying off student loans. From my perspective, this seems like a smart way to buy what you need to purchase anyway (groceries and gas) while still socking away money to pay down debt. Of course, as with any rewards program, this isn’t license to a shopping free-for-all in the name of debt reduction. And of course, paying off the bill each month is the smartest thing you can do. Otherwise, you’re just shooting yourself in the foot. But for savvy consumers or even those trying to restore good credit, this is a fine example of financial multi-tasking.
