baltimoresun.com

« Cheap thrills, cheap bills | Main | Online shopping for fun and profit »

April 3, 2008

Pay taxes with plastic?

More and more taxpayers are telling the IRS to put their tax bill on their credit card.

Convenient, maybe. But does it make financial sense?

Ben Woolsey, director of marketing and consumer research for CreditCards.com, says filers might want to put away the plastic.

Of course, any bill put on a credit card can trigger interest costs if you don’t pay the balance off each month.

But on top of that, the IRS can’t pay credit card company the usual fee that merchants pay, says CreditCards.com. That 2.49 percent fee is passed on to you instead. So, a $1,000 tax bill paid with plastic carries a nearly $25 fee.

Plus, credit card interest rates typically run higher than what the government would charge under an installment plan, the group said.

When can it make sense to put taxes on a credit card? When you owe a big tax bill, need eight months or more to pay it off and your interest rate on the card is far, far lower than what the IRS installment plan charges.

So, have you paid off your tax bill with a credit card or thinking about it? Any thoughts on doing so?

Posted by Eileen Ambrose at 5:14 PM | | Comments (1)
Categories: Taxes
        

Comments

It's kind of like using a credit card to pay your Baltimore city parking tickets ... there's a service fee starting at $7. Why do it?

Post a comment

All comments must be approved by the blog author. Please do not resubmit comments if they do not immediately appear. You are not required to use your full name when posting, but you should use a real e-mail address. Comments may be republished in print, but we will not publish your e-mail address. Our full Terms of Service are available here.

Please enter the letter "d" in the field below:
-- ADVERTISEMENT --

Follow us on Twitter
Most Recent Comments
Baltimore Sun coverage
Personal Finance
Stay connected