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?









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?
Posted by: Liz Kay | April 7, 2008 12:26 PM