My Balance Transfer Credit Card Idea To Pay Off Student Loans Is Dead… Sort Of

A few student loan debt updates ago I had mentioned that we were considering using some amazing 0% balance transfer credit card offers to reduce the amount of interest we’re paying on Tori’s student loan debt. This would allow us to pay her student loan debt off quicker because we would be able to pay the principal off faster.

Currently, there are credit card offers that would have no balance transfer fees AND 0% interest for up to 15 months, or a small 3% balance transfer fee and 0% interest for up to 21 months. That could have saved us some serious cash… until the idea ended up dying a sad death.

Why We Won’t Use Balance Transfer Credit Cards For Student Loan Debt

After doing a bit of research on the internet I figured out that there may be a snag in my plan. I called a credit card company the other day to ask a question that I was hoping would have a positive answer, but they shot me down. I asked them the following question:

Are the promotional balance transfers on your new credit cards just for credit card balance transfers or can I transfer a student loan balance using the promotional offer?

I didn’t like the answer the credit card company responded with. They told me that student loans were not eligible and only credit card debt was eligible. In order to transfer a student loan balance I’d have to use a cash advance and that wouldn’t qualify for the promotional balance transfer 0% interest rate.

How To Get Around The Balance Transfer Credit Card Rules

There is a way around the rules though! It took a bit of thought, but I found a way that I can get our student loan debt onto a 0% balance transfer credit card promotional rate. It isn’t free or easy. Want to know how it works? Keep reading.

Remember when I talked to the credit card company? When I asked my question, they said in order to get the student loan balance on the credit card I’d have to use a cash advance check. That is the solution.

In order to get our student loan debt included in a 0% balance transfer promotion rate we would have to use a cash advance check to put the student loan balance on another credit card. As I mentioned before, this is not free.

Every credit card is different, but the one I would use a cash advance on has a 3% cash advance fee. Then, the credit card company begins charging interest on the cash advance immediately. There is no grace period like with your normal credit card purchases that you should be paying off in full every month. This is the expensive part.

Next, as soon as the cash advance hits your credit card, you need to transfer the balance to your brand new 0% balance transfer promotional offer credit card. Since the debt is on another credit card now, it qualifies for the balance transfer promotion. I haven’t tried this personally, but I see no reason why it wouldn’t work. Of course, if someone proves me wrong I’ll update this post.

Will We Use This Balance Transfer Trick For Our Student Loan Debt?

We seriously considered using this new balance transfer strategy, but unfortunately it is too expensive for us to consider with our relatively low interest rate student loans. After paying for the cash advance fees, we would hardly have any interest expense left to save.

On top of that, after we exhaust the one balance transfer credit card with absolutely no balance transfer fees, we’d likely lose money using this strategy versus leaving the debt in the student loans. To us, it isn’t worth the risk. We’d make more money applying for sign up bonus credit cards and earning their rewards.

What do you think about my round about strategy? While it might not work out with student loan debt due to our lower interest rates, others may be able to save interest on other higher interest rate types of debt. Have you ever used a balance transfer credit card before? Share your thoughts in the comments! I’m eager to hear your stories.

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About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.


  1. robert@moneyrebound says:

    It was almost a perfect plan too. Would another credit card company not let you transfer the student loan onto their card (at standard balance transfer rates) so that you can then transfer it to 0%?

  2. I would use 0% balance transfer cards for short term debt, if there were no fees.

  3. I have considered the same tactic but a bit differently. I get at least twice a month checks from the credit card companies, I can then use one of those checks and deposit it into my bank account. This will give me the cash to pay down the student loans. I will still have to pay a 3% fee, so it still could be worth it because my student loans are 6.8 %. The second downside is you have to pay off whatever amount you transfer in 14 months. The third downside is your cash flow will be affected because you will have to pay the remaining student loan balance and now a new credit card balance.

    • We did consider that factor as well, and it is another reason we abandoned the strategy with rates at low as 4.75% to 6.8%. If it was 10%+ I’d do it in a heartbeat though!

  4. Yeah, it just seems a bit too risky to me. What happens if your transfer to the 0% promotional rate is delayed a day or two. That could cost you. I think you’re making the right choice in passing it up. You’re probably better spending another hour on this blog and earning an extra few bucks. 🙂

  5. It irks me when people refuse to spend money on a product that is worth more than the money you spend on it. Buying the right mattress for you is priceless. Getting a good night’s sleep affects every single aspect of your life. You will be better off spending a few more dollars than if you buy the lowest price item.

  6. I am not surprised that they make this so hard to pull off.. You never know when a bad financial situation (a health issue, a lost job, etc) will somehow keep you from being able to pay off your credit card in the trial period.

  7. Hm. I almost feel like I shouldn’t bring this up since it sounds like your comfortable with this no longer being an option….

    But the question you should be asking your credit card issuer is actually, “What are my options if I overpay my balance?”

    Citi has an online request form for it, as does GE Capital for my GAP Visa.

    You can also transfer into a HELOC if you have one open.

    I can get even more creative, but you get the picture…

    • Haha thanks for the options! I think we’re just going to stick with our initial plan. We don’t have enough equity to get a HELOC that would make it worth it.

  8. Jon Williams says:

    Lance, my Citi card allows me to use a balance transfer to transfer money straight to my bank account (with the 0% interest offer). This doesn’t count as a cash advance for the card I have. I haven’t used this yet for my student loans, but I did do one of these transfers once. I think it varies from card to card and you may have been using the wrong card for the strategy. Email me for more info.

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