Paying off student loan with 4% cash back card

Tirian

If your savings are not in an ISA, and you are a basic rate taxpayer, then 6.41% gross will only come to 4.9% net, so you would be barely any better off with the money in savings than paying down the debt. As such it's not a strategy that's going to net you any significant amount until at least next September or so when the rate changes again.

So if you're earning and your student loan runs out at any point in the next year, and you have enough money in savings at anything less than 6.1% gross, you'll be better off paying the loan off now.

People often rave about how much better it is to have money in savings than to pay down a student loan .. but it's not a clear-cut thing at the moment. The only reason I'm not paying mine off right now is because my savings are in an ISA, so I do actually make a bit ...

Lavendyr

Tirian, it depends on what your intentions are with that money, though. Even if you're barely earning more interest on it in a savings account than you're paying on your student loan, if you're planning to buy a house in the next few years, it's far better to save the money up and put it towards a deposit - thus avoiding having to borrow more for a mortgage at a higher rate of interest later on.

anniecave

I made a payment with my tesco (RBS) credit card to student loan company and it was treated as a purchase (not a cash advance).

nickbo

Hello!

Thank you all for your advice over whether or not to pay it off, however, I am really just after advice on the cash back question. I know I could "make" money by keeping the money in savings, but I want it paid off so I can get into the mindset of saving again rather than repaying a loan. I know it's not how a lot of you see it but....

Anyway, update... I finally got a reply from Capital One:

Sent: Mon 19 Nov 07
Subject: Re[1]: Transaction with Student Loans Company

Thank you for telling us that you want to make payments to student loans company by using your Capital One credti card.

For information about loans please contact directly to loans department. Please call Account Servicing 08009525626 #8097 from Trent #8297 from Loxley Delinquency 08009525055 #8100.

These will be usually be treated as cash transactions.

If you need any other help, please call us on 08458 400 400*. We're here 24 hours a day, 7 days a week.

(*Please note, calls to 0845 numbers will be charged at a local rate. The cost will vary depending on your service provider. Calls may be recorded/monitored for training purposes.)

Sven Lagerberg
Customer Relations Manager

Last 1 Message(s)

Sent: Thu 01 Nov 07
Subject: Transaction with Student Loans Company

I am thinking of making a payment to the Student Loans Company using my Capital One credit card. I have phoned them and asked how the transaction will be put through and they have said as a purchase. Please can you confirm that it will go through as a purchase therefore being entitled to the interest free period of up to 45 days and 4 cash back and not as a balance transfer or cash advancement. Many thanks.

To me it doesn't make much sense, do they think I was asking to take out a loan? Maybe they are trying to confuse me out of doing it (I have no idea what "Loxley Delinquency" might be???)... Unless anybody can make anything of this, I am either going to shoot myself or pay it off with a debit card.... Getting cash back was a nice idea but I'm not sure I can be bothered with this much faff...

Thanks again,
Nick

gt94sss2

nickbo wrote: »

To me it doesn't make much sense, do they think I was asking to take out a loan?

Capital One have misread your message to them.

As I have told you previously I have paid off my Student Loan with a credit card and collected cashback - it was not treated as a cash advance.

However, if that is not enough for you, then there is not much you can do.

I don't think a credit card company can tell you the status of a particular merchant anyway, unless they are the company that provides that merchant with their credit card facilities..

Regards
Sunil

pcyam

I have previously made a number of lump sum repayments via credit card from a number of providers on cashback credit card before discovering this site, and every one went on as a purchase and not a cash advance. Now, only the minimum payments are going towards the loan from my salary, with the savings in a high savings account.