Can you pay off a loan with a credit card?

Can you pay off a loan with a credit card?

No, generally speaking you can’t directly pay off a loan with a credit card – but you could potentially use a money transfer card as a workaround.

These cards let you transfer cash into your current account, which you could then use to pay off your loan. But treat this as a last resort, as it could lead to a cycle of debt that can be difficult to get out of.

You may also in some cases be able to withdraw cash from a regular credit card, but this is almost always a bad idea (more on this below).

If you can, try instead to focus on keeping up with your monthly loan payments until the agreement ends. And if you're worried about not being able to make your repayments, talk to your lender as soon as possible. For tips on how to get on top of your finances, read our guide on how to get out of debt.

What our expert says...

"Paying off a loan with a credit card is rarely straightforward, and where it is possible through a workaround, the key question is usually whether the debt is being improved or simply moved around. In situations like this, the overall cost and repayment path matter more than the sense of short-term relief."

Charlie Evans, Personal finance expert

Still thinking about using a credit card? Here’s what to ask yourself:

If you’re considering using a money transfer card to pay off your loan, it’s important to think about whether you:

• Can find a good enough credit card deal

• Will actually save money in the long run – that means weighing up any early redemption charges on your loan against any credit card transfer fees and interest

• Can meet your monthly card repayments and clear the balance in full before the 0% or promotional interest rate period ends (if applicable).

Should you pay off a loan with a credit card?

It can occasionally make financial sense to pay off a loan with a credit card, but whether it’s the right option for you totally depends on your situation.

When it might be a good idea

• If you qualify for a 0% interest money transfer card – provided you can pay off the balance within the 0% period and the transfer fee and early repayment charge don't outweigh the interest you'll pay on your loan, you might save on interest

• If your loan interest is higher than what you’d pay on an interest-charging money transfer credit card – you might save on interest in this scenario too, but remember to factor in the transfer fee and early repayment charge (if applicable) when making your calculations.

When it might not work

• If your loan has a high early repayment charge – the fee for paying off your loan early could cancel out savings made by moving the balance to a credit card

• If you'll pay more in credit card interest and fees – it could work out more expensive to pay a money transfer fee and interest on a credit card

• If you’re already struggling with debt – shuffling debt from one place to another can make things worse if there’s no clear repayment plan

• If you’re only going to make minimum payments – this might reduce the pressure now, but could cost you more in interest over time

• If you can’t pay off the card before interest kicks in – once that 0% or low-interest period ends, the interest could end up being higher than the loan’s rate.

How to pay off a loan with a credit card

If you’ve weighed up all your options and decided that using a credit card is the best or only option for you to pay off your loan, here’s how it works:

1. Using a money transfer credit card

Check your eligibility for a money transfer credit card. Make sure you check:

• The transfer fee (usually a percentage of the amount of cash you want to transfer into your current account)

• The interest rate you’ll pay on the balance you've transferred as cash – some money transfer cards may offer an introductory 0% rate for an agreed time

• If there is a 0% or low introductory rate, will you be able to pay off the balance during that time? If not, you’ll be moved onto a higher rate which could make it harder to clear the balance

• Whether you need to make the transfer within a set period to qualify for the terms on offer

• All the other T&Cs, including minimum age, whether you need to be a new customer and more.

Find out more and check your eligibility in our guide to money transfer credit cards.

2. Withdrawing cash on a standard credit card

Although it could be possible to withdraw money from a standard credit card to pay off a loan, this is usually a very bad idea because you:

• Get charged a high amount of interest from the day you take out the money until the balance is repaid

• Almost always pay a cash advance fee, which is usually around 3% of the amount withdrawn

• Could dent your credit score.

Learn more about credit card cash withdrawals.

Other ways to pay off a loan

If using a credit card doesn’t feel like the right option for you, here are a few ways you may be able to repay your loan more cheaply:

Make overpayments

Check if your loan provider lets you overpay a certain amount each month without penalties, as this can reduce how much interest you pay overall.

Consolidate your debts into one low-interest loan

Consolidating debt means taking out one new loan to pay off several old ones. It can help simplify your finances and potentially lower your monthly payments.

Use savings

If the loan interest is higher than any interest you’re earning, it might be a good idea to use your savings to repay the debt. But it’s also important to have money set aside for emergencies, so weigh up what works for you.

How to get help with debt

Don’t face the stress of debt alone – there is free, non-judgmental help out there for you. You can reach out to:

• StepChange – free, expert advice and debt plans

• National Debtline – guidance and debt management support

• Citizens Advice – local and national support on financial issues

• MoneyHelper – Government-backed advice service with budgeting tools and debt help