Can you pay off a loan with a credit card?

Yes, you may be able to pay off a loan with a credit card, but it depends on your lender, card issuer, and the type of loan you have. In most cases, you’ll need to use a balance transfer card to do a balance transfer, rather than make a regular credit card purchase or take a cash advance. 

A balance transfer can be particularly attractive when you qualify for a credit card with a 0% introductory annual percentage rate (APR). 

However, balance transfers come with risks. You may have to pay a transfer fee, the promotional rate eventually expires, and using a large portion of your available credit can affect your credit score. 

How does paying off a loan with a balance transfer work? 

A balance transfer lets you move debt from your existing loan account to an existing credit card or a new card. 

Not every loan can be transferred directly to a credit card. Your lender must accept the payment method, and your card issuer must permit that type of balance transfer. 

Using a balance transfer 

Your card company may send payment directly to your lender or provide another method for transferring your loan balance. 

Balance transfers typically come with a fee, often calculated as a percentage of the amount transferred. Check the offer terms to understand the fee and promotional APR.  

Using a cash advance 

A cash advance allows you to borrow cash against your card and use the money to pay another debt. 

This can be an expensive way to pay off a loan because cash advances usually have high interest rates and typically begin accruing interest immediately. Cash advance fees may also apply. 

Making a credit card purchase 

A purchase is a transaction charged directly to your credit card. Most lenders don’t accept credit cards for regular loan payments, so you generally can’t pay off a loan as you would an everyday purchase. 

 ➤  LEARN MORE:What is a balance transfer?

What types of loans can you pay off with a balance transfer? 

Balance transfers aren’t limited to credit card debt, but eligibility varies by loan type, lender, and card issuer. Here’s how common types of debt compare. 

What determines whether you can transfer a loan? 

Whether you can pay off a loan with a balance transfer depends on the lender’s payment requirements, the card issuer’s rules, and how much credit you have available. 

Does your lender accept balance transfer payments? 

Some lenders don’t allow direct card payments. However, they may accept a payoff sent by your card issuer or a balance transfer check. Others may have specific rules about how payments must be processed. 

Don’t assume a loan is eligible just because you have enough available credit. Confirm the payment process with your lender before initiating a transfer. 

Does your credit card issuer allow loan transfers? 

Your card issuer also determines which types of debt qualify for a balance transfer. Read your card’s terms carefully before applying, or contact the issuer to confirm whether your loan is eligible.

When evaluating card issuers, keep these major restrictions in mind:

• Credit card debt only: Several major card issuers, including Chase and American Express, strictly restrict balance transfers to existing credit card debt. This means you generally cannot use their balance transfer checks or online transfer tools to pay off personal, auto, or student loans.
• Same-institution rule: Card issuers universally prohibit balance transfers between two accounts held by the same financial institution. For example, you cannot transfer a loan or credit card balance from a Chase loan to a new Chase credit card.
• Transfer limits vs. credit limits: Even if an issuer permits non-credit-card debt transfers, they frequently cap balance transfers at a percentage of your total credit limit (often 75%) or impose a specific dollar threshold lower than your overall line.

How much of your loan can you transfer? 

Even if the loan qualifies, your available credit may not be enough to transfer the entire balance. 

A balance transfer fee may also count toward your credit limit, depending on the issuer. Your issuer may impose a separate balance transfer limit that’s lower than your available credit. 

Can you pay off a car loan with a credit card? 

Many auto lenders don’t accept credit card payments directly. Some may allow an indirect payment method, such as a balance transfer check or a payoff sent by the card issuer, but the details vary by lender and issuer. 

Even when an auto loan can technically be paid with a card, you should compare the total cost before moving forward. A balance transfer fee, limited promotional period, or higher post-introductory APR could eliminate the potential savings. 

You should also consider whether you can repay the transferred balance before the promotional period ends, particularly if your auto loan has several years remaining. 

When does using a balance transfer to pay off a loan make sense? 

A balance transfer makes the most sense when the potential interest savings outweigh the fees, and you can realistically repay the debt before the promotional rate expires. 

When a balance transfer may be a good option: 

• You have a high-interest loan. The higher your current interest rate, the greater the potential savings. 
• You have good or excellent credit. The cards with the most attractive balance transfer offers typically require a good credit score. 
• You can repay the balance in full before the promotional period ends.  
• You have stable income. You’ll need enough cash flow to make substantial payments during the promotional period. 

Gerri Detweiler, a credit expert and author of “The Ultimate Credit Repair Action Plan,” says paying off a loan with a card can work, but consumers should carefully weigh the risks. 

“Your card issuer may offer a low-rate balance transfer that you can use to pay off a loan at a higher rate, but often you’ll have a relatively short time period to pay off the card before the intro rate expires and a higher rate kicks in. 

“A 0% intro APR, for example, may give you up to a year or more at no interest, but if you don’t pay it off before that rate expires, the ‘go-to rate’ will often be much higher (it is usually the same as the normal purchase rate).” 

When a balance transfer may not be a good option: 

• Your credit score is too low to qualify for a competitive 0% offer. 
• You can’t realistically repay the balance during the introductory period. 
• The balance transfer fee significantly reduces your savings. 

Before making the move, calculate how much you’ll need to pay each month to eliminate the balance before the promotional APR expires. 

Balance transfer vs. personal loan 

A balance transfer may offer short-term interest savings, while a personal loan typically provides a fixed repayment schedule. Compare the costs and repayment terms before deciding which approach fits your needs. 

Compare the total cost of borrowing, including interest, fees, and the amount you’ll need to pay each month. 

Pros and cons of paying off a loan with a credit card 

There are pros and cons of using a balance transfer to pay off a loan. It can reduce interest costs, but fees, promotional deadlines, and potential credit-score effects can offset the savings. 

Pros 

• Potentially save hundreds or even thousands in interest. A 0% introductory APR can significantly reduce interest costs during the promotional period. 
• Faster debt payoff. If you’re able to direct the money you would have spent on interest toward the principal, you may be able to eliminate the debt more quickly. 
• Simplify payments. Consolidating debt onto one card can make it easier to track what you owe. 

Cons 

• Balance transfer fee. Many cards charge a fee of 3% to 5% for transferring a balance, reducing your potential savings. 
• Limited introductory period. A 0% APR offer doesn’t last forever.  
• Higher APR afterward. Any remaining balance may be subject to the card’s regular APR once the promotional period ends (which may be much higher than your existing loan rate). 
• Credit utilization impact. Moving a large loan balance onto a card can increase your credit utilization ratio, which could lower your credit score. 

How to transfer a loan to a credit card 

If you’ve determined that a balance transfer makes financial sense, follow these steps. 

1. Check if your lender accepts balance transfers 

Contact your lender and ask whether it accepts payoff payments initiated by a credit card issuer. Find out what payment methods are available and whether there are any restrictions. If you’re considering a convenience check, confirm with your card issuer that it will be treated as a balance transfer rather than a cash advance. 

2. Compare balance transfer cards 

Look at the promotional APR, length of the introductory period, balance transfer fee, regular APR, credit limit, and other terms. You can use a balance transfer calculator to estimate potential savings. 

3. Apply for the card 

Once you’ve identified an appropriate card, submit your application. Keep in mind that applying for new credit can result in a hard inquiry and may temporarily lower your credit score. 

4. Request the transfer 

If you’re approved, request the balance transfer according to the card issuer’s instructions. You will usually need information about the loan account and lender. 

5. Continue making payments until the transfer completes 

Keep making your normal loan payments until you confirm that the balance transfer has been processed and the loan is paid off. 

Stopping payments prematurely could result in a late payment.  

6. Pay off the credit card before the promotional period ends 

Calculate the monthly payment you’ll need to eliminate the transferred balance before the 0% introductory APR expires. If you can’t pay it off in time, the remaining balance will generally accrue interest at the card’s regular APR. 

Alternatives if you can’t transfer your loan 

If your lender or card issuer doesn’t permit the transfer, or the costs outweigh the savings, other repayment and refinancing strategies may be worth considering. 

Refinance your personal loan 

You may be able to refinance your existing loan with a new personal loan that has a lower interest rate. A fixed rate and predictable payment can make budgeting easier. 

Consolidate your debts 

A debt consolidation loan can combine multiple debts into a single loan and may offer a lower interest rate than your existing accounts. 

Use a home equity line of credit 

A home equity line of credit (HELOC) allows eligible homeowners to borrow against their home’s equity. However, because the debt is secured by your home, it carries risks that unsecured debt does not. If you fail to repay the debt, you could lose your home. 

Try the debt avalanche method 

With the debt avalanche method, you prioritize paying off the debt with the highest interest rate while making minimum payments on your other debts. Once you eliminate the highest-rate debt, you move to the next one. 

Make extra principal payments 

You don’t necessarily need a new financial product to save money on interest. Making additional payments toward your existing loan’s principal can reduce the amount of interest you’ll pay over time and shorten the repayment period. Check whether your lender charges a prepayment penalty. 

Frequently asked questions