The Worst Way to Pay Your Taxes: Put Them on a Credit Card
Many people are so scared of the IRS that they'd do just about anything to avoid any potential problems. That's one reason that paying your outstanding taxes with a credit card is so appealing: One click and you're done.
But the price of using a credit card is simply too high compared to the alternatives.
The private companies that the IRS has authorized to accept credit card tax payments charge as much as 2.35% in convenience charges up front. Even worse, if you can't pay off the resulting balance on your card, you'll boost your finance charges -- and with typical cards carrying annual rates of 16% or more, those charges will add up in a hurry.
If you have the money to pay by check, it makes far more sense than charging it. Unless you earn perks like cash-back rewards or airline miles that are worth more than the 2.35% fee, there's no good reason to pay it.
So if you're trying to figure out how you'll pay your taxes next week, think twice before you use your credit card. You might be far better off seeking another way to pay.
For More on From The Tax Center:
- Shakespeare Was a Ruthless Businessman, Scholars Reveal
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- Stephen Baldwin Joins Our Cast of 'Celebrity Tax Evaders'
Motley Fool contributor Dan Caplinger is paying his taxes the old-fashioned way next week. You can follow him on Twitter here.
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