Disclaimer: Please use credit cards responsibly. Trying to earn rewards points does not mean to go into credit card debt to get those points. Proceed with caution and spend responsibly. I am also not the original founder of maximizing credit cards using your student loans. This is simply my own experience, opinion and process to earn credit card points.
It’s no secret that student loans are a huge issue in our country today. We’ve all been manipulated to take out thousands of dollars in loans at the of 18-19 years old to pay for college with the dream of obtaining a degree and pursuing a career in our chosen fields. I get it, we all have the freedom to choose to go to school and choose to take out those loans. However, a lot of students do not have the knowledge and awareness or option of choosing to pursue something else other than going to college. We’ve been programmed to believe that going to college and pursuing a college degree is the only way to become successful in this world. That is not that case, but it was for a lot of us including me. Yes, I chose to go to college to pursue not just a Bachelor’s Degree but also a Master’s Degree. I do not regret my choices of going to college and getting 2 degrees by the age of 23. I am proud of my choices, but had I known what I know now, I would have realized I had more choices. By choosing to get two degrees, I ended up taking out student loans because my parents couldn’t fully afford the tuition at my school. I ended up with $20,000 worth of undergraduate loans that I want to focus on in this post. After getting my first full-time position as an Operations Associate, I made it a mission to pay off as much of my loans as I can. This post will focus on my journey of shedding $16,000 worth of student loans using credit cards and gaining credit card reward bonuses in return. Please be aware of the following privileges and/or unique situations I had to make this possible:
- I lived with my parents and did not pay rent
- My monthly bills only consisted of phone, gym membership, family’s cable, car payments
- I was in graduate school at the time, so my loans were in deferment and did not accrue interest
- I was eligible for overtime at my job and worked 9 hours per day minimum (sometimes 10 hours)
Now that we have my criterias set, we will dig into how my dad found a way to pay off my student loans and generate credit card points, what credit cards I used, how I paid payments and how much points I received after.
What Is A 529 Plan?
A 529 plan is a tax-advantaged savings plan where adults can contribute money to the plan so that their children will have money set aside for college. My dad came across this website called GiftOfCollege.com via the website FrequentMiler.com and learned about a step-by-step process to get credit card points using a 529 plan.
What Credit Cards Did You Sign Up For?
I used 4 credit cards throughout 2018-2019 to pay off student loans via GiftOfCollege to generate rewards points and bonuses. Please keep in mind, bonus point amounts change over time.
- Chase Sapphire Preferred: 50,000 point bonus (now 80,000 points!!!) after spending $4,000 in 3 Months
- SouthWest Rapid Rewards Plus Credit Card – 60,000 point bonus (now 40,000 points) after spending $3,000 in 3 Months
- Chase Business Ink Preferred: 80,000 point bonus (now 100,000 points but after spending $15,000 booooo) after spending $3,000 in 3 months
- World of Hyatt Credit Card: 60,000 point bonus (now 50,000 points) after spending $6,000 in 6 months
Over the course of 20 months, I shedded $16,000 worth of student loans using 4 different credit cards via GiftOfCollege.com
How Did You Use The Credit Cards?
So, the nitty gritty part of this post. Here is the full on process:
- Sign up for GiftOfCollege.com and create a plan for yourself and attach your loan provider if they are a partner
- At the time, you can buy gift cards @ ToysRUs (RIP Geoffrey The Giraffe) for as much as $500 per gift card with a $5.95 flat fee per gift card
- Since ToysRUs closed, there are select in-person stores in the Tri-State Area that offer GiftOfCollege gift cards, but they have limited cash value amounts, which make the $5.95 flat fee feel expensive. The GiftOfCollege website offers a maximum $200 gift card limit, which should suffice.
- Use the purchased gift card and load it into your GiftOfCollege plan.
- The company will send the gift card proceeds to your loan provider.
- You pay off the credit card using your cash.
And then boom! You just made a student loan payment by using a credit card! Here’s the benefit and the logic of taking these extra steps:
- When you make a student loan payment, great! You made a payment, which is still good because you’re paying back your debt. However, you don’t get anything but that short term satisfaction of making a payment on a debt.
- However, when you take the steps above to make the same payment, you earn rewards points which you can use for travel, hotel or even cash it out if you want (it is less value but if you want the cash you want the cash).
Lets take my situation for example:
I was not accruing interest on my student loans and I was working a full time job w/ over time. I didn’t pay rent, groceries, utilities. Just my car, gym and phone. I was racking up extra money. A lot of these credit card bonuses require $3,000-$4,000 spending within 90 days, or an average of $1,000-$1,500 per month. Which wasn’t that bad, in my situation! So what I did was, I spent a lot of time going to ToysRUs or buying gift cards online with my new credit card to meet the spending requirements. Once I bought the gift card and loaded the money into the GiftOfCollege account, I paid off the credit card right away! I received the points after I met my spending requirements and boom! I did the same thing as just paying my loans, but with extra steps, I received all these points!
How Much Points Did You Earn?
Well, let’s take a look at how much points I earned credit card by credit card!
|Credit Card||Bonus Points||Points Earned From Spending||Total Points Earned|
|Chase Sapphire Preferred (Ultimate Rewards)||50,000 points||4,000 points||54,000 points|
|SouthWest Rapid Rewards Credit Card||60,000 points||3,000 points||63,000 points|
|Chase Business Ink Preferred (Ultimate Rewards)||80,000 points||3,000 points||83,000 points|
|World of Hyatt Credit Card||60,000 points||6,000 points||66,000 points|
After this was all said and done, this is what my points balance looked per rewards program: Chase, SouthWest & Hyatt!
|Credit Card Rewards Program||Total Points|
|Chase Ultimate Rewards Points (UR Points)||137,000 UR Points|
|SouthWest Rapid Rewards Points||63,000 RR Points|
|World of Hyatt Points||66,000 Hyatt Points|
Thats a lot of points!!! All because I took a couple of extra steps and shoutout to FrequentMiler.com & my dad for finding the article. By doing this, I have been able to go to trips with with the bear with only having to pay for our SouthWest flight fees ($11.20 per person round trip)! Here are a couple of places that the bear and me traveled to using all the points I accumulated.
- Orlando, Florida – Hyatt Regency Orlando for 5 Nights + 2 SouthWest Tickets = $22.40 spent on hotel and flight
- San Antonio, Texas – Hyatt Regency Riverwalk for 4 nights, Grand Hyatt for 1 night (it snowed back in NJ so we got stuck for one extra night), 2 SouthWest = $22.40 spent on hotel and flight
- Cambridge, Maryland – Hyatt Regency Chesapeake Bay Golf Resort & Spa for 3 nights = Gas money ($40.00-$50.00?)
- Portland, Maine – Hyatt Place Portland – Old Port for 3 nights = Gas money ($40.00-$50.00)
Obviously, this does not include the food and entertainment/attractions we spent money on. However, airfare and hotel are typically the biggest expenses when you go on vacation right? We just eliminated on our biggest expenses, so you know what that meant? We balled out and spent that extra money! I mean, we didn’t go crazy, but we didn’t have to second guess if we wanted to try something or do something. In addition, we didn’t put ourselves in a hole of debt just to go on vacation. This is the power of credit cards rewards points and bonuses.
Can This Still Be Done?
Heck yeah it can still be done! Please refer to this article by FrequentMiler, the original founder (to my knowledge) of this credit card maximization! – Click here!
You really have to assess your situation before you look into maximizing credit cards. How is your credit score? Do you have sufficient funds to pay off your credit cards every month? Are your student loans high interest? Are you in deferment or currently paying them off? These are some of the questions you have to ask yourself before diving into something complex like this. To me, it’s not that complex, but to others, it can be and that’s okay. There are guides to this and ways to get it done. If you have questions, I am open to helping you maximize your credit cards today! I hope this article has helped you look at credit cards in a different light rather than a credit and life destroyer. If used correctly, credit cards are such powerful tools.