Don’t Transfer Your Student Loan Debt to A Credit Card

There are many people out there in the United States today who have a large amount of student loan debt. There are some people out there who have managed to pay off all of their credit card debts and other loans except for this student loan debt. These people may be able to qualify for really good credit card interest rates which can sometimes be even lower than the rates that are being offered on their student loans. No matter what the rate is that you are being offered on a credit card, you don’t ever want to transfer your student loan debt to a credit card.

Here are just a few of the reasons that it is always a mistake to transfer your student loan debt to a credit card:

• Low interest rates on credit cards are almost always temporary. It is usually possible to lock in a very low interest rate on your student loans that is unlikely to ever go up because of the terms and agreements that apply specifically to educational loans. The same is not true for your credit cards. The low interest rate that you can get on a credit card is almost always a temporary low interest rate which means that failure to pay back the balance in full before the promotional interest rate is up is going to ultimately result in the application of a higher interest rate in the future. Even when low interest rates are not promotional, they can often be increased for a variety of reasons including everything from a missed payment on your part to general changes in the market.

• You can’t take breaks in payment on a credit card loan. There are actually a lot of great options available to you when you have trouble making payments on a student loan. You can defer the loan for a short period of time or you can ask for forbearance of the loan due to hardships. In most cases, these delays in payment will be offered to you without causing you any problem. That isn’t going to be true on a credit card. A late or missed payment on a credit card will result in fees and increased interest rates that ultimately exacerbate the debt problem.

• There’s always the option of using credit cards later. Once you switch your debt to a credit card, you can’t go back and put it on to a school loan down the line. In contrast, if you do decide in the future that you are ready to pay off the entire debt and you want to switch the loan to a credit card then that option is always going to be there.

There are certainly some tempting reasons out there that could cause you to want to switch your student loan balance to a credit card. It doesn’t matter how tempting these may be. It’s a mistake to go ahead and make this decision. It doesn’t leave you with enough flexibility for the future and it has a whole lot of risk attached to it. Instead, find a way to start paying off that student loan until it’s gone for good!

This entry was posted on Monday, September 15th, 2008 at 2:49 pm and is filed under Tips & Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.