Pay down student loan debt with SmarterBucks

graduation cap on top of a stack of money helps students, graduates and parents pay down student loan debt faster.

The rewards program is free and works with your existing Visa, MasterCard or Discover credit card.

It’s similar to online shopping portals like eBates, Upromise and Shop Discover.

To earn rewards, log in to your SmarterBucks account, enter the SmarterBucks Marketplace, click on a retailer link, and you’ll earn cash back on online purchases with companies like Target, Walmart, Staples, Home Depot, iTunes and hundreds more.

Each month, SmarterBucks will apply any rewards balance of at least $15 toward your student loan principal. If you earn less than $15 in a month, the balance rolls over to the next month.

The company claims you can save hundreds, if not thousands, of dollars in interest payments over a decade. But you'll have to buy a lot of things to reach that savings potential.

What’s in it for SmarterBucks?

Retailers make a payment to SmarterBucks when you purchase something through the SmarterBucks Marketplace. The company also learns something about your purchasing habits, though it’s not clear how it will use this information.

Here’s an overview of how SmarterBucks rewards compare to those of popular online shopping portals based on data collected from each company’s website on Jan. 11, 2013.

Comparing Top Rewards Programs

Retailer SmarterBucks Upromise eBates Shop Discover
iTunes 2% 5% 3% 5% 4% 7% 12% 10%
DSW 3% 5% 4% 5%
Expedia 1% up to 6% up to 5% n/a
Express 2% 5% 5% 5%
Gap 2% 5% 2% 5%
Hotwire 1% up to 5% 2% 5%
Home Depot 2% n/a 3% 5%
J. Crew 4% 5% 6% n/a
Kohl's 2% 5% 6% 5%
LOFT 2% 5% 3% 5%
Lands' End 2% 5% 6% 5%
Macy's 2% 5% 6% 5%
Nordstrom 3% 5% 5% 5%
Petsmart 3% 5% 4% 10%
REI 2% 5% 2.5% n/a
Staples 2% 5% 4% 5%
Sears 2% 5% 3% 5%
TigerDirect 2% 5% 2.5% 5%
Target 1% 5% 2% 5%
Walmart 1% 5% 1% 5%

Unfortunately, SmarterBucks offers lower rewards across the board, particularly when compared with Upromise, arguably its closest competitor. Upromise also applies your cash-back rewards from online shopping to your student loans.

The key difference is that Upromise rewards can only be applied to Sallie Mae loans, while SmarterBucks can be applied to any student loan as long as the SmarterBucks account is in the same name as the student loan account.

Upromise also requires you to manually apply your rewards to your loan, while SmarterBucks does it automatically.

The ease of use is the biggest plus for SmarterBucks. Just buy it and SmarterBucks will apply it.

If there's any catch, it's that the company tries to steer you to sign up for a SmarterBucks checking account and debit card during the sign-up process.

The checking account and debit card aren’t required to earn rewards through the SmarterBucks Marketplace, so if you’re not interested, just close the window when you get to this point in the application process.

If you do sign up for the checking account, you’ll be able to earn SmarterBucks on your non-PIN debit card purchases at a rate of 0.5% back on purchases of up to $100 and 1% on any amount over $100 (so a $200 purchase would accrue $1.50 in SmarterBucks).

Another way to receive SmarterBucks is to ask friends and family to give them to you as gifts. However, there is a 3.5% transaction fee on such gifts, so it would be more efficient to ask for checks and put that money toward your student loan yourself.

You don’t need SmarterBucks to act as a middleman here.

Join all the savvy savers following on Twitter and Facebook.

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