Can you pay off a loan with a credit card?
Written by
Joe Towner
Reviewed by
Amy LancashireNot directly, in most cases. Loan providers don't usually accept credit card payments, so you can't just pay your loan off on a card. The workaround is a money transfer credit card, which moves cash from your credit limit into your bank account, and you then use that to clear the loan. It can save you money, but only if you use a 0% deal and clear the card before the deal ends. Otherwise it can cost more than the loan you started with.
Why can't I pay a loan directly with a credit card?
Most lenders don't let you repay a loan with a credit card. Card payments cost the lender a processing fee, and paying one debt straight onto another card isn't something they’re set up to accept. So while you might be able to pay some bills by card, clearing a personal loan usually isn't one of them.
What is a money transfer credit card?
A money transfer credit card lets you move money from your credit card into your current account as cash. Once it's in your account, you can spend it like any other money, including paying off a loan. Key things to know:
There's usually a fee, often around 3% to 5% of the amount you transfer, added to your balance.
Many come with a 0% period, sometimes over a year, during which you pay no interest on the transferred amount.
You normally have to make the transfer soon after opening the card, often within the first 60 to 90 days, to get the 0% rate.
There's a limit on how much you can move, usually a percentage of your credit limit.
How to make a loan payment with a money transfer card
Apply for a money transfer card and check the fee, the 0% period and the transfer window.
Ask the provider to transfer the amount you need into your current account.
Use that money to make a payment towards your loan.
Repay the card before the 0% period ends to avoid interest charges.
What about a cash advance?
Withdrawing cash on a credit card, a cash advance, is a different thing and usually a bad way to clear a loan. Interest normally starts the moment you withdraw, with no interest-free period, and the rate is often higher than normal, so it can quickly cost more. There is also usually a fee applied. See withdrawing cash from a credit card for why.
Is it worth paying off a loan with a credit card?
It can be, but only if the numbers add up. It's worth considering when:
you can get a 0% money transfer deal
the transfer fee is less than the interest you'd save by clearing the loan
you can realistically repay the card in full before the 0% period ends
You could be worse off if you only plan to make minimum payments or you won't clear it in time, because when the 0% period ends the rate jumps to the card's standard rate, often higher than a personal loan.
Watch out for two things: an early repayment charge on your loan, and the effect on your credit utilisation, since a large transfer uses up a big chunk of your card limit. Turning one debt into another only helps if it's genuinely cheaper and you have a clear plan to repay it. This is general information, not advice: work out the total cost both ways before you decide.
Paying off a loan with a credit card FAQs
There are a range of financial products available that may suit your needs. We encourage you to research your options carefully and consider seeking independent financial advice before making any decisions. This blog is for informational purposes only and does not constitute financial advice.
