Should You Use Credit Card Rewards For Loan Payments?

Consumers love rewards credit cards because they are a convenient way to pay for everyday purchases while offering rewards for gas, groceries, travel, and more. You can redeem these rewards for discounts, statement credits, and even cold hard cash. But did you know that a few credit cards allow you to use your rewards to pay off your loans?

Hypothetically, you can use the cashback to cover the cost of a home, personal, business, or student loan. However, you don’t even need to convert your rewards to apply them to a loan with some cards. 

Using credit card rewards to ease the burden of loan payments seems like a no-brainer. But before you do it, make sure you understand the advantages and disadvantages. These tips from US News My Money can help you decide if using your credit card rewards is the right choice — or if it’s even possible.

Which Credit Cards Let You Directly Apply Rewards To Loans?

According to US News My Money, three cards allow you to make loan payments without redeeming your rewards into cashback:


  • Citi Premier, which lets you apply ThankYou Points to your mortgage, student loans, and other types of debt.
  • The Accelerate card from Sallie Mae, which gives you 25% cashback for using your rewards to pay your student loans. If users have other financial goals – like paying off other loans or credit cards or saving for a down payment – credit card rewards are convenient bonuses,” Ashley Boucher, the director of corporate communications at Sallie Mae, told US News My Money.
  • The SoFi online bank credit card, which offers unlimited 2% cashback when you use your rewards for student or personal loans. “You can get 1% cash back on all eligible purchases, and when you redeem (rewards) directly to pay down eligible debt, save or invest with SoFi, you get an extra 1% toward your goal, for a total of 2%,” SoFi’s senior manager of financial planning Brian Walsh explained. 


How To Pick The Right Credit Card For Loan Payments

If you want to earn more points while paying back a loan, find a credit card with a rewards program that aligns with purchases you usually make. For example, you likely wouldn’t use a travel card because of the pandemic, so you wouldn’t accumulate enough points to use on a loan, anyway.

“Given today’s environment, some credit card rewards might not be as beneficial today,” Boucher noted.

Moreover, several credit cards with generous rewards programs could come with expensive annual fees and steeper interest than those without an annual free. “If you carry a balance from month to month or have multiple cards that charge annual fees, chances are you are not getting enough value from your rewards points to offset the costs,” Walsh said.

Benefits And Drawbacks Of Using Credit Card Rewards For Loans

Using credit card rewards could help you pay off your loan faster, which means you save more on interest payments. However, doing so could cause you to miss out on other great opportunities to use your rewards — or spend more than you should to get them. 

Here are a few considerations to take into account.



  • Repay your loan faster and spend less on interest
  • Enjoy rewards for regular purchases
  • Chance to earn more value when you apply your rewards to a loan payment
  • Great way to use dormant rewards



  • Temptation to overspend
  • You may find preferable ways to redeem your rewards
  • Your rewards may not make a difference in your loan principal
  • You may lose value on points by using them for loan payments instead of other things like travel


Using Cashback To Pay Your Loans

If your credit card doesn’t let you directly apply your rewards toward loan payments, you can get around this is by redeeming them for cashback. However, this involves a little more effort since you will need to ask for the cashback and give your lender the additional payment. 

According to Walsh, “This is a multistep process that might not maximize your rewards points, depending on your card. Before taking this approach, you should review your card spending patterns and goals to determine if this is your best action, or explore a card that better aligns with your situation.”


  • Hampshire, Kristen. “Can You Pay Loans With Credit Card Rewards?” U.S. News & World Report, U.S. News & World Report, 31 Dec. 2020,


Ian Schindler