Paying taxes is an obligation that every working American share. While these tax burdens are not always a welcome expense, they are required by law. Luckily, here are several different ways to pay your taxes including the use of credit card. Let’s look and learn the pros and cons of paying your taxes using credit cards. Tax time is right around the corner, you just might want to take some notes.
Pros of Paying Taxes with A Credit Card
- You can automate your taxes: Paying taxes with a credit card is super easy and your payments will be automated. This is perfect for those who are forgetful and will help protect you from late payment fees.
- You can earn rewards points: If your credit card gives you rewards, you will gain points each time you make a tax payment. These points can be used to gain air miles and make purchases.
- Increase your credit rating: By paying your taxes with your credit card and making timely monthly payments on the card, you will boost your credit score. This is a great option for someone with poor credit or someone looking to build their credit history.
Cons of Paying Taxes with A Credit Card
- You will be paying high-interest rates: Even if your credit card payments are made on time, chances are you are paying a high-interest rate. While this might not seem like a major problem, over time the interest you are paying can really start to add up.
- You could be building more debt: If you allow your monthly balance to roll over instead of paying it off, you could be building more debt. This debt can build rather quickly and place you in financial trouble.
- Hidden fees: When you pay taxes using a credit card, you are often charged a convenience fee. This fee can cost as much as $2 each time you make a payment with your credit card. Over time this fee can add up to hundreds of dollars.