With tax season approaching, many people are considering whether it’s worth it to charge their taxes to a rewards credit card in order to earn cash back or points towards travel. While there are fees associated with using a credit card to pay taxes, there are still a few reasons why it can be worthwhile.
One reason is if you need to hit a minimum spending threshold on a new card in order to earn a welcome bonus. This can be especially beneficial if the bonus is a significant amount of cash back or points. Additionally, some credit cards offer perks like elite-qualifying miles with an airline card or a free night award with a hotel card when you reach a certain spending threshold.
Another reason to consider paying taxes with a credit card is if you have a card that offers a 0% APR on purchases for a certain period of time. This can give you some breathing room to pay off your tax bill without incurring interest charges.
However, there are some caveats to consider when paying taxes with a credit card. First, you need to make sure that the rewards you earn outweigh the fees associated with using a credit card. Second, you need to be able to pay off your credit card balance in full to avoid interest charges and late fees.
When choosing a credit card to pay taxes, it’s important to consider the earning rates and rewards offered by different cards. Some cards offer higher earning rates for tax payments, while others may offer more valuable rewards. It’s also important to factor in the convenience fees charged by third-party payment processors when calculating the overall cost of paying taxes with a credit card.
In conclusion, paying taxes with a credit card can be beneficial if you need to hit a minimum spending threshold for a welcome bonus or qualify for perks like elite-qualifying miles or free night awards. However, it’s important to carefully consider the fees and interest charges associated with using a credit card and make sure that the rewards you earn outweigh the costs.