Q:

Can I use credit card to save interest on personal loan?

I currently have a student loan that charges me interests every 1st of each month. The interest rate is about 3.5 to 5.5%. Can I use my credit card to pay off an amount of the loan at date of 25th for example, and then, once the 1st has passed, I retake money from my loan and repay my credit card (for example on the 5th) to save interests ? (and since I pay my credit card before having interests)
I ask because it doesn't make sense to me that the bank hasn't thought of that, therefore, I'm sure I must be in the wrong here.
Aditionnal info: I live in Canada

A:

Your plan misunderstands how interest is most likely calculated. It will be calculated on the average daily balance over the period (month). So if you start with $10k on the 1st, pay off $3k with your credit card on the 25th and "take out" the $3k to pay back the card (if you can even do that), your average daily balance will be (assuming a 30-day month):
25/30 * 10,000 + 5/30 * 7,000 = 9,500

So you'll be paying interest on 9,500 instead of 10,000. If your interest rate is 5.5% (the high end of your range), you'll pay interest of 43.54 instead of 45.83. Seems like a lot to go through for $2 in interest savings.
Plus, many loan servicers will charge you a 2-3% fee for using a credit card as payment (since they're passing on the merchant fee to you), so you may pay $90 just for using your credit card.
All in all, this is not a wise plan.

A:

This won't work.
Note I'm assuming your student loan works like a line of credit (because the question wouldn't make sense otherwise).
The deal breakers are:

Most lenders will not allow you to make loan payments with a credit card. If they did, it would cost them at least a 2-3% fee per payment and they would very likely pass this fee on to you. Those fees would cost you at least 24% interest annually.
You could pay with a credit card by using the cash advance feature, but when you do this you do not get a grace period and so you pay the higher CC interest from day one. Presumably your student loan interest rate is already lower than the CC cash advance rate.

Ask your lender if they will allow you to make payments with a credit card, and if they charge a fee to do so. If they allow it without a fee, update your question and we'll take it from there. (And I'll be shocked that they allow it, but I think in that case your idea would work.)

