Can you pay off a loan with a credit card?

Why you can't pay a loan directly with a credit card

Paying a loan with a credit card doesn't clear the debt — it just moves it. You'd owe the same amount, only now to your credit card provider instead. For lenders, that's a red flag as it can suggest the borrower is struggling to afford their repayments.

A Direct Debit keeps things simple: the money comes straight from your bank account, and the lender knows exactly when to expect it.

Two ways to use a credit card to pay a loan

If you need to use your credit card to cover a loan payment, here are your two options.

Cash advance

A cash advance lets you withdraw cash from your credit card — at an ATM or bank — and use that money to pay your loan.

	Details
How it works	Withdraw cash on your credit card, put it into your current account and then use it to pay your loan
Interest rate	Typically higher than your standard purchase rate — often 20–30% APR
Interest-free period	None — interest starts the day you withdraw
Fees	Typically around 3% of the amount withdrawn
Eligibility	Available on most credit cards — terms vary by provider and credit score
Credit score impact	Yes, as regular use can signal financial stress to lenders

Pros:

• Quick and straightforward — no application required
• Works with most credit cards
• Useful if you've been declined for other forms of credit

Cons:

• Expensive — fees and high interest can build up fast
• No grace period - you're charged interest immediately
• Repeated use can negatively affect your credit history

Money transfer credit card

A money transfer credit card lets you send money from your card directly into your bank account. You can then use that money to pay your loan. Some cards offer 0% interest on money transfers for an introductory period, which makes them cheaper than a cash advance if used carefully.

	Details
How it works	Transfer funds from your credit card to your current account, then pay the loan from there
Interest rate	0% during the introductory period (dependent on your offer), then the standard rate applies
Interest-free period	Usually 12–24 months (on selected cards)
Fees	Typically a one-off fee of 2–4% of the amount transferred
Eligibility	You'll usually need a good credit score to access the best deals
Credit score impact	The transfer itself won’t affect your rating, but it could raise your credit utilisation, which can impact your credit score

Pros:

• Can be interest-free if you repay within the promotional period
• Lower cost than a cash advance when used correctly
• A practical option in a genuine emergency

Cons:

• The transfer fee still applies even on 0% deals
• You need a good credit score to qualify for the best rates
• If you don't clear the balance before the 0% period ends, interest kicks in

What to consider before you go ahead

Before using a credit card to cover a loan payment, it's worth asking yourself a few questions:

• Can you afford both repayments? You'd be adding credit card debt  on top of your existing loan.
• Why do you need to do this? If you're struggling to keep up with payments, speak to your lender first — many offer hardship support or payment breaks.
• Will you qualify for a 0% deal? If your credit score isn't great, you may not get a money transfer card with an interest-free period.
• Have you worked out the total cost? Even a 0% money transfer comes with a fee. Make sure the numbers add up before you commit.

If you're finding it hard to meet your loan repayments, free debt advice is available from organisations like StepChange and Citizens Advice. It's worth reaching out before taking on more credit.

Is using a credit card to pay off a loan ever worth it?

Occasionally — but it depends on the circumstances. A money transfer card with a 0% introductory period is the cheaper route if you can get one and you're confident you'll clear the balance in time. Your cost could be limited to the transfer fee alone.

A cash advance is a last resort. The interest starts immediately and the fees add up quickly, which can leave you worse off.

The first call should almost always be to your lender. If you're at risk of missing a payment, they may be able to offer a short-term arrangement, which could be cheaper.