Paying off Student Loans with Credit Card Points

Okay, first of all – sorry I haven’t gotten to last month’s round-up post or this month’s budget post – but it’s that time of year. I’ll get there, promise.

Secondly, I didn’t come up with this myself – I learned it from Jacob at I Heart Budgets, who wrote this post on paying down student loans with credit card rewards.

At first, I have to say I was skeptical. I mean, why wouldn’t I just continue to do what I do with my Chase cards? I charge to the cards, I get the points, and then I use the points to pay down the balance on the card. Then – and here’s the important bit – I transfer the same amount of money from my checking to my savings, from which I send out a student loan payment in addition to my monthly minimum payment. (You with me so far?) So, it’s LIKE getting a direct payment to my loans, but… yeah, not so direct.

But even if I wasn’t sure I wanted to try to use Citi’s ThankYou points to have them pay down our student loans, I did know that I wanted to get in on that 50,000 bonus ThankYou points offer they had going on (and still do!). So I signed up and chose NOT to make my husband a joint user, because if this worked, I planned to have him open his own card and then do the same thing all over again!

So, I was approved for the card and got to charging everything (groceries, gas, everything) to rack up the required $3,000 of spending within 3 months. I just received our bonus of 50,000 points today, and immediately went to the ThankYou Points area to look for redemption options. Here’s where it gets interesting, and here’s the reason you DON’T want to redeem your points for statement credit or something else:

When you redeem your points for a student loan payment, the points transfer like so:

1 ThankYou point = $.01

If you redeem it for other things (like statement credit), each ThankYou point is worth LESS than a penny. That’s no good. In order to get the most from your ThankYou points, you need to redeem it for Student Loan Repayment.

So, I followed Jacob’s steps (calling Navient to make sure they would accept a check from a third party) and the steps on the Citibank ThankYou site (you have to call them to do this transaction), and now I’ll just wait the 1-3 weeks (sigh) to get the checks in the mail. I was able to get one check for $500 and one for $25, as I had about 53,000 points (they do have to do the checks in separate transactions, and you may need to request that they do – the lady I spoke with did not immediately know that the checks could be cut in such small increments). After I receive the checks put in the account number in the memo line, I will mail them off (again, snail mail) to Navient. So the actual amount of time it will take to post to the account is kind of long, but I think (if it all goes through as planned), it will be worth it!

This will get you started: Citi ThankYou Premier card (<– not an affiliate link). Good luck, and let me know how it goes!

Update: Everything went very smoothly! We received the checks and sent them off right before Christmas to Navient. The payments posted before January 1st, 2016, so that’s a total win! We are thinking we will sign up H for his own card (since I didn’t make him a user on my card) and do the same thing again! Woohoo!


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