How to spend your money now that student loan payments are on hold

Editor's Note: APYs listed in this article are up-to-date as of the time of publication. They may fluctuate (up or down) as the Fed rate changes. CNBC will update as changes are made public.

The student loan relief policies under the CARES Act, which were set to expire on September 30, have been extended through the end of the year. With this extension, most federal student loan borrowers can keep their monthly payments on pause without incurring any interest in the meantime.

This means that millions of borrowers can delay budgeting for their monthly loan payment, with no penalty, until January 2021.

The additional three months of relief comes in handy, especially if you're struggling with other forms of debt. With student loan payments on hold, here are three options of what you can do with that money instead.

The economic fallout from the coronavirus pandemic has reminded many how important it is to have back-up savings. In fact, a recent MassMutual survey found that more than one in five Americans have saved at least $1,000 during the pandemic.

In uncertain times like these, an emergency fund can help you withstand unexpected expenses, like medical bills or sudden income losses, such as being laid off or having your hours reduced.

The general rule of thumb is to build up an emergency fund of three to six months' worth of your living expenses, but right now setting aside any amount of cash that you can will help.

To maximize your saving, use a high-yield savings account versus a traditional savings account. With a high-yield account, you can earn a larger return on your money and see your savings grow at a faster rate.

For example, the Varo Savings Account offers an APY of 3.00% to all savings account holders, with the opportunity to earn up to 5.00% if you meet certain monthly requirements. This is more than 20 times the national average savings rate.

Though interest rates for online high-yield savings accounts hover around 1% across the board, that still earns you more than your usual brick-and-mortar bank. If you find an account that comes with zero monthly fees and no minimum balance deposits or requirements, it could be a no-brainer.

The Synchrony Bank High Yield Savings fits the bill for a no-monthly-fee account. Plus, it comes with the convenience of unlimited withdrawal transactions with its optional ATM card for account holders. And if you're on the road and need to use an out-of-network ATM provider, Synchrony will refund ATM fees in the U.S. up to $5 per statement cycle.

If you have a safety net of savings already, use whatever amount of money you would normally pay toward your student loans to chip away at your credit card debt.

Because credit cards typically impose double-digit interest rates whenever you carry a balance month to month, it is important that you pay off your charges as soon as possible, and in full if you can. The longer your outstanding debt lingers on your credit card, the bigger a hole you dig yourself into.

With the typical monthly student loan payment ranging between $200 and $299, according to the Federal Reserve, you can instead take that couple hundred dollars and knock off chunks of your credit card balances. Given the additional three months of relief through December 2020, that frees up $600 to nearly $900, using the Fed estimates above, that can go toward your ballooning debt.

The extended suspension on student loan payments means you can work towards getting ahead, even while your loans are in deferment or forbearance.

Student loan payments will eventually resume again, and so will interest. Student loan borrowers can continue making their monthly payments now so that, at the end of the suspension, interest is charged on a much lower balance.

By being proactive now and taking advantage of the waived interest for the rest of the year, borrowers' monthly payments from now through December would also go directly to their current principal balance.

At the end of the day, the sooner you can pay off this debt, the better. Putting off loans, even in a deferment period where interest doesn't collect, can be a strain on both your budget and your peace of mind.

Information about Synchrony Bank High Yield Savings and Varo Savings Account has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication.