Serous Pitfalls Await Consumers Using Credit Cards to... - Other News

Advertising Disclosure

Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Other » Serous Pitfalls Await Consumers Using Credit Cards to Pay Taxes

Serous Pitfalls Await Consumers Using Credit Cards to Pay Taxes

Add to Favorites:
Serous Pitfalls Await Consumers Using Credit Cards to Pay Taxes

As tax time rolls around, it’s tempting to consider using your credit card to pay the bill. But charging your taxes has inherent dangers. The IRS uses a third-party provider to process credit card payments — and sticks you with the bill. If you have a rewards card, you may think the reward justifies the expense, but you should consider if the benefit you earn is really worth it.

Convenience Fees

If you wait until the last minute to pay your taxes or you don’t have the cash on hand, paying with your credit card may be your only option. But you should be aware of the convenience fee that you will be charged for using your credit card. The convenience fees are on a scale, so the percentage changes according to how much you owe the IRS.

For example, if you owe the IRS $6,000, expect to pay a 2.35% fee. This turns your $6,000 bill into a $6,141 bill. A $2,000 tax bill turns out to be $2,047. Then, if you don’t pay off the balance when the credit card bill comes due you’ll have to add the interest cost, which really increases your tax bill.

Rewards vs. Disadvantages

For credit cardholders that think the rewards they will earn on the card will outweigh the convenience fees and interest, think again. The average rewards credit card pays only a penny for each dollar spent. This is far less of a reward than the 2.35% minimum you can expect to pay. Even if the credit card pays 2% cash back in rewards, you are still below the amount you are going to pay in fees.

The bottom line is that if you can, it is better to find another way to pay your tax bill. The IRS offers a myriad of other options. Using a debit card or even setting up an installment plan could be a better deal.

All credit cards terms, fees and rates mentioned in this article/post are actual on the posting date. See the current products’ Terms & Conditions on the issuing banks' websites.
Add to Favorites:

Related News:

Small Business Saturday Resonates With Consumers

Posted: November 21, 2017

If you know that November 25 is Small Business Saturday you are in good company because 61% of consumers know it is taking place too, according to the 2017 Small Business Saturday Consumer Insights Survey. Continue reading
Chase Adds Two New Point Transfer Travel Partners

Posted: November 20, 2017

Chase has inked a new deal with the Aer Lingus loyalty program, AerClub, and the Iberia loyalty program, Iberia Plus, making them their newest Chase Ultimate Rewards point transfer partners. This new deal lets eligible Chase credit ... Continue reading
Small Business Owners Optimistic and Going Digital

Posted: November 17, 2017

Optimism is up and on track among small businesses this quarter according to the new The Q4 Wells Fargo/Gallup Small Business Index, also finding that hiring is in the air for some of these businesses, along with upping their game when it ... Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
We'll match all the Miles you've earned at the end of your first year. For example, if you earn 30,000 Miles, you get 60,000 Miles.
For Excellent, Good Credit
INTRO OFFER: Discover will match ALL the cash back earned at the end of your first year, automatically.
For Excellent, Good Credit
Our application is quick and easy with instant pre-qualification available
For Fair / Good Credit