Disclaimer: Credit cards can be a dangerous tool that helps dig you into massive debt at a high interest rate. I NEVER recommend anyone using the below strategies who has been in massive credit card debt AND who is NOT on a budget plan. It took us 3 years running a cash-only budget before we could dip our toes into credit cards, and I recommend anyone starting out take at least 1 YEAR on a cash-only budget to build good money habits before attempting to get credit card rewards.
Yup, you read that right. I’m getting into debt to get out of debt!
Ok, not exactly. But we ARE using credit card bonuses to help us tackle the last remaining debt we have (outside the mortgage).
A little while back, the Citi Thankyou Premier card was offering a generous 50,000 point bonus! Since we’ve decided that paying to travel is stupid, we naturally signed up for two cards to get ourselves another 100,000 points to add to our collection for future travel plans.
But something I read about Thankyou bonus points caught my eye. They have an option that allows you to convert points into a check that Citi will send to your Student Loan servicer. The points are worth $.01 a piece, which means the bonus is worth $500 cash toward your student loans!
How It Works
We signed up for two cards so we could each get the bonus. There is a minimum spending requirement of $3,000 within 3 months of opening the card, so we placed all of our bills and spending on the card to hit the spending requirements. We automated our bills to be paid by credit card each month, so it was as simple as going to the web pages and changing the payment information.
Once we hit the spending requirements, we ended up with about 55,000 total points on each card after our spending. We were able to log into www.thankyou.com to see our total points
There are a ton of ways to use the points (travel, gift cards, etc) under the “Shop” tab, but I was unable to find the “Student Loan Redemption” section. I used the “Search Rewards” bar at the top and typed in “student loan”, which brought me right to this page below:
There was a redemption drop down with different amounts, but the button to redeem just said “call to redeem.” I called in, and they gave me the low-down.
- Points could be redeemed toward a student loan or mortgage payment
- Payments would be made by check from “Thankyou Rewards” and mailed direct to the institution
- Payments can only be made in the following amounts; $25, $50, $75, $100, $250, $500, $750 and $1000.
- You MUST call your institution and make sure they can accept a check from a 3rd party institution
Since our student loans were transferred to yet ANOTHER federal loan servicer (MOHELA, in case you were wondering), I had to call them anyway to ensure auto-pay was still set up. I gave them a ring and asked them about accepting checks from a 3rd party, such as my bank (Citi Bank, that is). They said yes, no problem, but they required the checks be mailed to a specific address. I got the mailing information (name, PO Box) and was also told to put my student loan account number and name on the checks as well.
I called Citi back and let them know that yes, we could send a check to our student loan servicer, no problem. I told Citi I wanted to use ALL the points, which put me at $550 total for each card. Since they only do specific increments, they are sending two checks per card, one for $500 and one for $50. The checks are sent straight to our address to add the additional account info, and we will then mail them to our student loan account!
BOOM! $1,100 paid down using nothing but credit card rewards!
UPDATE: Payment Has Been Applied!
Can I Do This With Other Cards?
Once I found out about the potential to pay down our student loans with credit card bonuses, I started looking around at other options to do this. I found a few options that we want to pursue to pay them down even more. I’d like to put at least another $2,000 onto the loans with rewards in the next 12 months 🙂
- Capital One Spark Cash Business Card. Just signed up for this card. Will give us $500 CASH after spending $4,500 within 3 months. At 2x cash back, we’ll be able to put $590 onto the loans after we hit the bonus.
- Chase Sapphire Preferred. It’s been over two years since Michelle and I applied for these. If we can grab two more, they pay out 40,000 bonus points after spending $4,000 in 3 months. After the spend, that’s 44,000 bonus points, which we can redeem for cash back, meaning $440 per card, or $880 total.
We also have another 50,000 Chase points sitting around for the occasional Hyatt stay, but if we convert to cash, that’s another $500! That would put our grand total at $3,070 paid on the student loans with credit card points! That’s pretty insane, considering we only have $6,000 left on the loans.
Want To Do This Too?
If you want to follow along, always ben on the lookout for the best credit card bonuses. I find them by digging all over the internet, but I’ll share a few of them right here.
- Citi ThankYou Premier – 50k bonus after spending $3,000 in 3 months. Can be put toward student loan or mortgage payment. 50k points worth $500.
- Capital One Spark Cash Business Card – $500 bonus after spending $4,500 in 3 months. Only for those who own a business (hint: selling stuff on eBay qualifies you as a biz).
- Chase Sapphire Preferred – 40k bonus after spending $4,000 in 3 months. Can be converted to cash back via a statement credit. Occasionally there’s a 50k bonus, maybe like once a year. 40k points worth $400.
Note: These are not affiliate links, I do not receive any compensation if you sign up for these cards.