Pay Loan with Credit Card? Here's How to Regain Control

Are you feeling overwhelmed by your loan repayments and considering using a credit card to lighten the load? You're not alone. Many Australians are exploring different ways to manage their debts more efficiently. However, the question remains: can you pay a loan with a credit card? Let's dive into this topic and see if it's a feasible option for you.

Understanding the Basics of Paying Loans with a Credit Card

Before we delve into the specifics, it's crucial to understand the fundamentals of using a credit card to pay off loans. Generally, most lenders in Australia do not allow direct loan repayments via credit card due to the processing fees and the risk of increasing debt for borrowers. However, there are some indirect ways to use your credit card to manage loan payments.

One common method is through a balance transfer. Some credit card providers offer balance transfer facilities that allow you to transfer the outstanding balance of your loan to your credit card. This can be an attractive option if the credit card offers a lower interest rate than the loan, at least for a promotional period.

Current Market Rates and Options

In 2026, the Australian financial landscape offers a variety of credit card options with balance transfer features. Here are some current market rates and key information you need to know:

It's important to be aware of the revert rates after the promotional period ends, as they can be significantly higher than standard loan rates, ranging from 18.99% to 20.74%.

Additionally, eligibility criteria often include a good credit score (typically above 650), proof of income, and a stable financial history. These requirements ensure that you can manage the credit card debt responsibly.

How to Pay a Loan with a Credit Card

If you're considering using a credit card to pay off a loan, follow these steps to make an informed decision:

1. Evaluate Your Current Financial Situation: Assess your outstanding loan balance, interest rates, and monthly repayment amounts. Also, review your credit card options and their terms.
2. Compare Credit Card Offers: Look for credit cards with favourable balance transfer conditions. Consider the promotional balance transfer rate, duration, and revert rate.
3. Apply for the Credit Card: Once you've selected a suitable credit card, submit an application. Ensure you meet the eligibility criteria and provide necessary documentation.
4. Transfer Your Loan Balance: After your credit card application is approved, initiate the balance transfer process. This usually involves contacting the credit card provider to arrange the transfer of your loan balance to the credit card.
5. Monitor Your Repayments: Keep track of your credit card repayments to ensure you pay off the balance before the promotional period ends to avoid high revert rates.

Expert Tips and Considerations

Here are some expert tips to consider when using a credit card for loan payments:

• Be Wary of Fees: Balance transfers often come with fees, usually around 1-3% of the transferred amount. Make sure to factor these into your decision.
• Plan for the End of the Promotional Period: Create a repayment plan to clear the balance before the revert rate kicks in, as failing to do so can lead to higher debt.
• Consider Alternative Options: If a balance transfer isn't viable, explore other debt consolidation options through Esteb and Co's network of 83+ lenders, which may offer more favourable terms.
• Avoid Adding New Purchases: Resist the urge to make new purchases with your credit card while you're paying off the transferred balance to prevent accumulating more debt.

Frequently Asked Questions

1. Can I pay my mortgage with a credit card?
   Direct mortgage payments via credit card are generally not allowed by lenders. However, you can explore balance transfer options or speak with a mortgage broker to find alternative solutions.
2. What happens if I can't pay off the balance transfer in time?
   If you can't pay off the balance before the promotional period ends, you'll be subject to the revert rate, which is often much higher. It's crucial to plan your repayments accordingly.
3. Are there any risks to using a credit card for loan payments?
   Yes, the main risks include accruing higher interest rates after the promotional period and potential fees. Make sure to understand all terms before proceeding.
4. How does using a credit card for loan payments affect my credit score?
   Properly managed, it can have a neutral or positive impact, but missing payments or accruing high debt can negatively affect your credit score.
5. What are the alternatives to using a credit card for loan repayments?
   Consider debt consolidation loans, personal loans with lower interest rates, or restructuring your existing loan through Esteb and Co's extensive lender network.