Charging a poems to win your ex girlfriend back big tax bill on your card could put you within spitting distance of your credit limit, making it easy to max out the account and incur penalties.
If you can redeem those points for.02 each by transferring to a travel partner youll get the equivalent of 2 cash back, thereby offsetting the payment processing fee.
You Could Hurt Your Credit Scores Any time you make a large purchase and drive the balance up on your credit card, you could negatively impact your credit scores.
Or maybe youre new to the credit card rewards game, and want to earn points for paying Uncle Sam.
By doing this, you could pay less interest than you would with a standard credit card, and you also wont affect your credit utilization and scores.The exception: If your card has a limit well in excess of your tax bill, charging it might not hamper your purchasing power or hurt your credit score much.So if you dont have enough money in your bank account to pay your tax bill, you should consider signing up for a payment plan (also called an installment plan) with the IRS.On the subject of tax, paying yours could reap its own rewards, because the ATO actually prefers it if you pay your tax bill using a credit card!In those cases, youd merely offset the credit card fee.With that, youd owe.52 in interest, plus 30 in late fees, for a total.52.
If you use the Chase Sapphire Preferred Card ( Review for example, youll get 1X point per dollar when paying your taxes.
While its a convenient option and can help you avoid late fees from the IRS here are four downsides of paying your taxes with a credit card.
Since cash advances come with outrageous fees, we recommend avoiding them at all costs.
Heres what each strategy would cost (on top of the 3,000 you already owe 18 APR credit card with 2 cash back: Since the.98 credit card processing fee and 2 cash back basically cancel each other out, youd pay 18 interest x 3,000 over.Then the faster you pay it down, the more youll save on interest and penalties.The fact is, however, that with some exceptions, harkins rewards sign up rewards points remain tax-free (for now, at least).If you plan to pay your credit card balance in full when the statement comes, you can skip this section.If you want to pay taxes with a credit card to earn rewards, you might end up disappointed.While your favorite restaurant might see fewer diners if they dont accept cards, other businesses like landlords, insurers, schools, and contractors dont have strong reasons to make payments convenient after all, its unlikely that you will reject an apartment or school just because they dont.Thats because your credit utilization ratio, or the percentage of your credit limits youre using, plays a major role in credit scoring models.Both of these options are better than using cash-advance convenience checks.
As an example, lets say you have a 3,000 tax bill that you plan to pay off over six months.
One of the biggest exceptions to these lackluster rewards comes in the form of signup bonus offers, which require a large amount of spending for a large reward like 50,000 points for spending 3,000 in 3 months.