Paying off student loan with 4% cash back card

gt94sss2

nickbo wrote: »

So... providing this is true I might as well go ahead and pay with credit card, then pay it off instantly with money from parents, then grab the cash back in January!

Seem ok to y'all?

Yes - I did exactly this years ago.. at the time they weren't charging the 1.5% fee either..

Regards
Sunil

KiKi

Nickbo - as others have said, PLEASE check with Capital One first! They are the *only* people who can tell you how that sort of payment will be treated.

It is very possible that even though the SLC allow you pay off with a credit card, that *Capital One* will treat it as a cash advance. In which case you will be charged interest from the *moment* it goes through and it will end up being a very expensive way of doing it!!!

Hope you do manage to take advantage, but pleading caution with a phonecall to Capital One first!

Milarky

You could verify whether payment will be treated as 'purchase' or as 'cash' by just paying a nominal sum (like £10) just before a statement and when you get the statement it will either give cashback against that or not - but either way you won't have put the 'house' on it. (Provided you have enough time on the original 90 days of course) If it goes through as a purchase you should be clear to use it for paying the rest that you want to.

(But Capital One should be able to confirm the status of payments to SLC if you just drop their name I would have thought?)

nickbo

KiKi & nickmack - Thank you, I have taken onboard your advice and have sent Capital One a secure email asking how the transaction will go through. I figured if was best to have a reply in writing - I've lost count of the number of times something said from a call centre has gone wrong for me!

I will post their reply when I get it!

riad_2

Milarky wrote: »

You could verify whether payment will be treated as 'purchase' or as 'cash' by just paying a nominal sum (like £10) just before a statement and when you get the statement it will either give cashback against that or not - but either way you won't have put the 'house' on it. (Provided you have enough time on the original 90 days of course) If it goes through as a purchase you should be clear to use it for paying the rest that you want to.

(But Capital One should be able to confirm the status of payments to SLC if you just drop their name I would have thought?)

I agree, the most definite way to find this out is to do is to call up now and make a small payment of a few pounds... then call up Cap One 3 days later and ask if the transaction to SLC went thru as a purchase or cash advance!

Only bcos even if you do ask Cap One I really don't know how they will know for CERTAIN how it will go through. The only way they would know is by checking what SLC's MCC (merchant category code) is classed as (purchase or cash)... and to be honest, no-one will really know what this is unless you actually make the payment...!

Best of Luck Mate!!

wayoflife

nickbo wrote: »

Thanks guys,
wayoflife - I am going to pay it off with the money my parents are lending me interest free - I am just deciding if I can get some cash back off of Capital One before doing this.

This doesnt make sence, as if you kept that money in a savings account, you will undoubtably recieve more interest than the student loan, you must realise that even though your loan rate has gone up, is still a very good apr.

As with the previous comments I am 99.9% sure any way you look at it you will not be better off paying off and getting cashback (which Im sure you wont get). You have to remember that these companies are multi million/billion pound companies which spend alot of money in unerwriting

jinkssick

thats what I was thinking.

I got a 13k student loan used up and 2k of that in a savings account. wish it could have been more. but you should put that money they giving you and you put it in the highest saving possible starting with a 6.3% isa (3k) and the other 4k in ICICI at 6.41% pre-tax.

depending on what your parents say when they want the money, if theres no rush, wait 8-10 years whilst the 7k they originally lent you is making serious interest in the savings shown above, and then after when they want the money, give them the student loan its 7k back, and you keep the interests, which can get you on the road to paying the 7k back to your parents.

a little complicated but its a winner.

jinkssick

forget cashback that aint gonna give you anything!

morg_monster

and remember the interest rate is only 4.8% til next september. inflation is reasonably low at the moment so hopefully we'll be back to around the 2% interest mark from next september.
but anyway as you say you've decided to do this but just thought I'd point this out in case you didn't realise.

wayoflife

morg_monster i agree with you totally

debt is on the student loan at 4.3%
you can save at 6% and over

there doesnt seem to be much of a problem here

this is what is called 'cheap debt' its like paying your mortgage off if your mortgage rate is 4% and you can get 6% in a savings account. It doesnt make sence at alll but I suppose its psycological....

I wonder what psycological stress youll be under when your 200k in debt with an interest rate of 6%!!!!!