Taxes are something taxpayers cannot and should not avoid paying. You all know the penalties that paying taxes late could bring about. Besides, you may already be aware of the disadvantages of paying by credit card.
Using your credit card to pay taxes could be costly. For instance, if you have to pay a fee for using your credit card. not having enough money to pay taxes and using your credit card can also lower your credit score.
Not to mention the interest rate you may end up paying, remember that it could be really high. Having said this, you might wonder what advantages may have if you start paying your taxes with your credit card.
What are the main advantages of paying taxes with your credit card?
Those taxpayers who have a credit card and make use of their 0% APR period can pay taxes and get time extra for free. So, they will have more time to save the necessary money. Remember that most 0% ARP credit cards do not last for long.
However, if this no-interest rate period is not over yet, you can take advantage of it. They usually last for 6 to 21 months. Although you should make the necessary minimum payments to avoid paying interest.
Another reason why people prefer to pay taxes using their credit cards is to get rewards. There are several rewards you may benefit from. It could be cash back, points, or travel rewards.
What is higher the fee or the reward benefit?
It will depend on your credit card, but there are some occasions when your reward is higher than the fee for paying your taxes with it. Sometimes, the reward is as high as the fee, so they are just the same amount.
Another reason why some people prefer to pay taxes with their credit cards is to reach the spending threshold goals they have. Take for example those welcome bonuses some of them have.
It will be a way to improve your credit card status faster. There might be fees though, check if they are worth paying or not. Do not forget to check the charges the Internal Revenue Service payment processors may have. Work out all the fees and the rewards to see if it is worth doing so.