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Paying OSAP off with lump sum via credit card?

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  • May 2nd, 2008 1:37 am
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Paying OSAP off with lump sum via credit card?

A friend of mine has a student loan of 27,000. They wish to pay it off in one shot and was going to via cheque. They called the Student Loan Office and were told they could pay it off via Visa. They only have an AMEX 2% cashback. They have the following questions:
1) What VISA is available for them to get 2% (or more) cashback for this one time payment?
2) How would this affect their credit score to ask for another credit card with a 30,000 limit?
3) Is it all worth it, or is it just better to pay it off via cheque?

Thanks...
28 replies
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I believe on RBC and TD is affiliated with VISA and their rebates are inferior to the Citibank Mastercard Driver edge's 2% (only towards a car lease or purchase though). Maybe the school takes mastercard as well?

If he's paying it down completely, then by all means pay by credit card.
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skanji wrote:
Apr 18th, 2008 11:32 pm
A friend of mine has a student loan of 27,000. They wish to pay it off in one shot and was going to via cheque. They called the Student Loan Office and were told they could pay it off via Visa. They only have an AMEX 2% cashback. They have the following questions:
1) What VISA is available for them to get 2% (or more) cashback for this one time payment?
2) How would this affect their credit score to ask for another credit card with a 30,000 limit?
3) Is it all worth it, or is it just better to pay it off via cheque?

Thanks...
Which student loan office is this? OSAP or CSL? I would love to pay my loan by credit card too when the time is right.
[OP]
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alanbrenton wrote:
Apr 18th, 2008 11:57 pm
Which student loan office is this? OSAP or CSL? I would love to pay my loan by credit card too when the time is right.
both.

the credit card has to be Visa only.
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Awesomeeee. Thanks for the info, now I just have to hope I'll remember this in two and a half years time.
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skanji wrote:
Apr 19th, 2008 12:05 am
both.

the credit card has to be Visa only.

Are you 100% sure on this? I have to make a lump sum payment in 10 days, I was going to do a normal online bill payment, but some cashback would be awesome. Problem is mine is MasterCard.
[OP]
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1_black_civic wrote:
Apr 19th, 2008 12:52 am
Are you 100% sure on this? I have to make a lump sum payment in 10 days, I was going to do a normal online bill payment, but some cashback would be awesome. Problem is mine is MasterCard.
100% sure. My friend was told that they even needed a copy of the visa faxed in to them...

so back to the original question - good idea or no? what about credit history?
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good idea? Unless your interest rate on your cc is less that what the loan is charging you (highly unlikely), then no, it's not a good idea.
Even a "0%" balance transfer typically has a fixed time to repay all the outstanding money (and it's a lot less than 14yrs) so unless you can meet all the conditions, it's likely a bad move.
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Sylvestre wrote:
Apr 19th, 2008 1:30 am
good idea? Unless your interest rate on your cc is less that what the loan is charging you (highly unlikely), then no, it's not a good idea.
Even a "0%" balance transfer typically has a fixed time to repay all the outstanding money (and it's a lot less than 14yrs) so unless you can meet all the conditions, it's likely a bad move.
the point is they will be paying the entire thing off asap (ie. they have the cash now)...

so it would be using the cc to pay off the loan and then paying the cc off within 10 days...
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skanji wrote:
Apr 19th, 2008 1:41 am
the point is they will be paying the entire thing off asap (ie. they have the cash now)...

so it would be using the cc to pay off the loan and then paying the cc off within 10 days...
I assure you there will be no credit score hit if they pay the cc amount by due date. Hopefully, the will keeping the credit card too as the last balance on your card once cancelled will be reflected on the credit file.
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Sylvestre wrote:
Apr 19th, 2008 1:30 am
good idea? Unless your interest rate on your cc is less that what the loan is charging you (highly unlikely), then no, it's not a good idea.
Even a "0%" balance transfer typically has a fixed time to repay all the outstanding money (and it's a lot less than 14yrs) so unless you can meet all the conditions, it's likely a bad move.
+1

And would the CC treat this as a purchase (this gives you the 21 days grace period + 2% rebate)? or will be treated as a cash advance?

If the bank treat the payment as a cash advance; there will be no % rebate and you will get hit @ CC interest rate starting the day the withdrawal is made. I would double and triple check with the bank before pulling this off. The OSAP/CSL couldn't care less whether you get your rebate as long as they get the money.
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What kind of job does your friend have to warrant a NEW card with a $30,000 limit? That's rather high.
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alanbrenton wrote:
Apr 19th, 2008 5:39 pm
Hopefully, the will keeping the credit card too as the last balance on your card once cancelled will be reflected on the credit file.
I review credit files fairly often and am not sure what you're talking about. It will show the credit limit and a 0 balance if paid in full, whether it's closed or not.
texedomel wrote:
Apr 19th, 2008 6:27 pm
+1

And would the CC treat this as a purchase (this gives you the 21 days grace period + 2% rebate)? or will be treated as a cash advance?

If the bank treat the payment as a cash advance; there will be no % rebate and you will get hit @ CC interest rate starting the day the withdrawal is made. I would double and triple check with the bank before pulling this off. The OSAP/CSL couldn't care less whether you get your rebate as long as they get the money.
It will be treated as a purchase. The ONLY time anything shows as a cash transaction is if:

- A BT is done to a personal chequing account/LOC/credit card
- A cash withdrawal is made from a bank machine (It is obviously impossible to withdraw 27k from an ATM)
- A cash withdrawal was made from the credit card over the counter at a branch
- A cash advance cheque is paid to OSAP to cover the outstanding amount of the loan

The have payment processing 'terminals' and the transaction will be considered a purchase. Credit card providers do not offer the option to do wire transfers to student loan organizations. (None that I know of)
Drew_W wrote:
Apr 19th, 2008 10:21 pm
What kind of job does your friend have to warrant a NEW card with a $30,000 limit? That's rather high.
Was going to ask the same thing. That being said, if he/she is approved, I would strongly advise them to contact the credit card provider and make them aware that such a large transaction is coming through in an effort to avoid being declined. (Especially if its the first transaction being put on the card)
skanji wrote:
Apr 18th, 2008 11:32 pm
2) How would this affect their credit score to ask for another credit card with a 30,000 limit?
Thanks...
If the person already has an AMEX with a limit in the 30k range (and the cash to pay it off [depending on the source]), I'm going to assume that they're fairly well established financially. Due to this, their credit file shouldn't absorb too much of a hit as I would assume they have an above average Fico and a relatively stable credit file.
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logik wrote:
Apr 20th, 2008 3:34 am
I review credit files fairly often and am not sure what you're talking about. It will show the credit limit and a 0 balance if paid in full, whether it's closed or not
I just checked my credit reports and you are right. Closed accounts will reflect a zero balance.
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skanji wrote:
Apr 19th, 2008 12:05 am
both.

the credit card has to be Visa only.
Really? I wonder if they'll change it in the future...if they are, I should start paying it off now to get some cashback.
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