Did you know that you can pay your tax bill with your credit card? In fact, some companies will give you an added incentive to use your credit card. Those incentives might seem inviting, but realize that instead of paying just your taxes, you are now also paying interest on those taxes. The Association of Independent Consumer Credit Counseling Agencies (AICCCA) suggests the following before charging: You owe the IRS less now than you will when you charge your taxes. The convenience of charging your tax obligation comes with a 2.49 percent fee assessed by the third-party company that processes the transaction.
Check to see if whatever reward, miles, etc. the card is offering is worth more than the fee you are going to have to pay to charge it to your card.
Every month you dont pay it off you pay interest on it. So instead of paying $5000 in taxes, you are now paying the $500 plus the processing fee, plus the interest on it every month before you pay it off.
Miss a payment and you are really in trouble. Your interest rate could jump to a staggering 30% for missed payments now you are paying 30% on the tax bill. ■
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