How to juggle student loan and credit card payments

Written by
Richard Barrington
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Ready or not, it’s finally happening. For the first time since early 2020, student loan payments start coming due again in October.

After such a long pause, this is bound to come as a shock to your budget and financial routine. What makes it harder is those student loan payments are resuming at a time when Americans have a record amount of credit card debt.

With a little preparation, you may find that juggling student loan and credit card payments is easier than you think. There are things you can do to make the payments more affordable and the scheduling details more manageable.

On the other hand, if you don’t prepare you might find the problem gets bigger the longer you wait to deal with it.

Review your student loan payment details

First, ensure you’re dealing with accurate, up-to-date information about your student loan payments. If you have student loans, you may already have an account set up on the federal student loan website at If not, go to that site and create an account.

Once you log into your account, you can find information about how much you owe, what the monthly payments are, and when they’re due.

You can also look up the latest information about your student loan service to make sure you direct payments to the right place. If you were already making payments before the pandemic, be aware that this information may have changed since you last used it.

While you’re logged into your account, make sure your contact information is up to date. That way you can be sure of receiving important notices about your student loan payments.

Make all minimum payments on time

There’s one essential ground rule to establish at the start of any discussion of juggling credit card and student loan payments: make each minimum payment in full and on time.

As you’ll see, there are certain things you can do to prioritize some payments over others. But you can’t afford to ignore any of your payments.

Being late with a payment – or worse, failing to make it at all – is likely to cost you. The consequences may include:

  • Late fees
  • Accumulating more interest charges
  • Paying a higher interest rate
  • Damaging your credit score (which can make credit harder to get in the future and more expensive when you do get it)

So, be aware of the new due dates on your student loan payments, and of the billing cycles for your credit cards. Set up a system so you’re reminded not only of when to make payments, but also how much money to keep available in your bank account when the time comes.

Target credit cards first for any extra payments

One thing student loan payments and credit card payments have in common is that you can always pay more than the monthly amount due.

Paying more than the required minimum will allow you to pay off what you owe sooner and reduce the total amount of interest you’ll pay in the process.

Of course, there are almost certain to be limits to how much extra money you can come up with each month. So, you have to decide where that money can do the most good.

You should prioritize your most expensive debt for any extra payments you can afford. You’ll save the most on interest if you pay down the most expensive debt first.

Chances are, your credit cards are a lot more expensive than your student loans. According to the Federal Reserve, as of the second quarter of 2023, the average interest rate charged on credit cards was 22.16%.

Meanwhile, rates for new federal student loans in the 2023-2024 school year ranged from 5.50% to 8.05%. Rates on federal student loans taken out in prior years were often even lower.

So, if you have extra money to put towards payments, start with your credit cards, and specifically with the credit card that has the highest interest rate. That’s the most cost-effective way of paying down debt.

Note that if you have private student loans, their interest rate is likely to be higher than those for federal student loans. In that case, you should compare those interest rates with those on your credit cards to decide which should come first for any extra payments.

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Don’t use credit cards to make ends meet with student loan payments

As you resume making student loan payments, you’re likely to find your household budget stretched. You may have to pay more attention to managing that budget than before.

Whatever you do, don’t borrow on credit cards to make up the gap in your budget created by your student loan payments. As noted in the previous section, credit card debt is typically much more expensive than student loan debt. If you borrow on credit cards so you can maintain the same lifestyle while making student loan payments, you’ll essentially be trading low-interest debt for high-interest debt.

Look into income-driven repayment

Prioritizing payments is all well and good if there’s enough money to go around. But what if you simply can’t afford the full amount of your credit card and student loan payments?

One feature of federal student loans that’s often overlooked is income-driven repayment (IDR).

IDR plans base your monthly payments on your income and family situation. They are designed to make those payments affordable on your budget.

Be advised that lowering your monthly payments means it will take you longer to pay off the loan, which could result in you paying more in the long run.

However, if you’re struggling to keep up with your monthly payments, an IDR plan can be a real difference-maker. It might not only allow you to make your student loan payments, but could also give you enough money left over to make a serious dent in your credit card bills.

Participation in IDR plans does not happen automatically. You have to apply for it, and then renew every year. If it lowers your monthly payments, you should find it well worth the effort.

Consider auto-pay for student loan payments

Did you know you could set up automated payments for your student loans?

This can save you the trouble of remembering to make those payments each month. Auto-pay makes more sense for student loans than for credit cards because your student loan payments should be the same amount each month. You have to make sure you have enough money in your bank account to cover those payments, but that’s a lot easier when the amount of those payments doesn’t change.

What makes this even sweeter is that federal student loans offer a 0.25% interest rate discount when you sign up for auto-pay. So, auto-pay is not only more convenient, but also cheaper.

Nobody says adjusting to making student loan payments is going to be easy, but it’s important to know there’s help such as income-driven repayment plans and auto-pay. Add in a little of your own planning, and you should find it’s a financial challenge you can handle.

Richard Barrington
Cardratings Contributor

Richard has over 30 years of experience in financial services, including 23 years with the investment management firm Manning & Napier Advisors, Inc., where he led the Marketing Group and served on the firm’s Investment Policy Group and Executive Group. Over the years, Barrington has...Read more

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