Maybe Charge It

The pros and cons of paying your taxes with a credit card

f you’ve hesitated a bit when it comes time to pay your taxes, we totally understand. You’re about to watch a big wad of cash (that you may or may not have at the ready) seemingly disappear. It can be quite daunting. This is why some people turn to credit cards when tax season comes to a close. But before you use your card instead of cash to pay your taxes, it’s a good idea to consider the pros and cons. Read on.

Pro – It’s convenient

While the IRS doesn’t take credit card payments directly, it’s quite easy to locate a qualified third party company that will process the transaction for you. Once you’ve paid with a card, there’s no worrying about the check and if it will clear when the time comes for the IRS to cash it.

Con – Processing fees

Those third party companies we just mentioned? Yeah, they’re not doing the service for charity. As USA Today reports, the charge is typically anywhere from 1.87 percent to 1.99 percent of the amount you’re paying, plus a flat-fee of around $3.00.

Pro – Rewards add up

Paying for your taxes with a credit card might make sense if you use a card that will send you back plenty of rewards points. That tax payment could turn into a free, cross-country flight. Of course be sure to pay your credit card bill quickly, or the reward will not be worth it.

Con – The debt

Anytime you make a giant charge on your card, you’re risking sending yourself into debt. It’s always a good idea to put a big expenditure like this on your card with the lowest interest rate. And before you use your card to pay your taxes, first make sure you’ve budgeted out how you’re going to pay the balance off quickly.

Chris O'Shea

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