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What Credit Card Should I Use To Pay My Taxes Off With?

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Tax time is upon us this week and TPG reader Vick tweeted me asking me what credit card I would recommend to use to pay my taxes.

Here is his question: @thepointsguy If I’m going to pay my taxes is it better to pay with Amex Premier Rewards Gold, Chase Sapphire Preferred or Chase United Presidential Plus Card?”

First off, when paying taxes with your credit cards, you’re going to incur fees of around 1.87% and upwards of 3% if you’re using your American Express card, so I don’t recommend using an Amex to pay taxes in general as the fees are higher. At ValueTaxPayment.com you can use a Visa, Mastercard or Discover and pay only 1.87% which might make sense if you value those miles more than the 1.87 cents apiece.

The Chase Sapphire Preferred earns you 1 point per dollar spent plus an annual 7% dividend so you’re getting 1.07 points for every dollar spent. I value my Chase Ultimate Rewards at around 2 cents per point or more and you can transfer to 10 partners like Hyatt or United and get valuable redemptions, but it really depends. If you just redeem those points for travel through Ultimate Rewards, you’re only going to get 1.25 cents apiece, so in that circumstance, it wouldn’t make sense to pay taxes with that card and incur that fee.

The Chase Sapphire Preferred is a great all-round credit card for anyone interested in travel and to pay taxes with too.
The Chase Sapphire Preferred is a great all-round credit card for anyone interested in travel and to pay taxes with too.

The Chase United Presidential Plus Card is interesting as Chase no longer issues it (it was a legacy Continental card), and the thing here is you only earn 1 mile per dollar spent, so you’d want to use the Chase Sapphire Preferred as you’re earning more and you can have the flexibility to transfer to the 9 other partners. The kicker here is that you get 1,000 flex elite-qualifying miles for every $5,000 spent on the Presidential Plus card, so depending on how big your bill is and how much you value elite status, it can make sense to use that card.

In general, when paying taxes I prefer to use my Delta Suntrust Debit Card as it only has a $2.49 per-transaction fee through Value Tax Payment, and you earn 1 mile for every dollar spent. I did that last year on my taxes and I raked in a bunch of SkyMiles, and even though they are not the most valuable currency, at that ratio, the small fee totally makes it worth it. As Delta is now partners with Virgin Atlantic and Virgin Australia, they’ve got some pretty sweet redemption opportunities as well.

The Delta Suntrust debit card.
The Delta Suntrust debit card.

So again, it depends on how savvy you are and how much value you’re going to get out of your miles. As we’ve seen this week and all year long, airline miles always get devalued. So, before you incur that fee and pay to accrue the miles, make sure you’re going to get enough value out of them.

For more information, see my recent post on Tax Time Pointers: Earning Points on Taxes.

Let me know if you have any other questions by messaging me on Facebooktweeting me or emailing me at [email protected]

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