by Emily Thompson, Newsletter & Partnerships Editor
It’s February, and for many, that means it’s time to prepare our taxes.
A question we get asked regularly is whether we recommend paying taxes with a credit card. And, as with most things, the answer is that it depends.
If you’re just earning basic rewards on the purchase, like 1 point or mile per dollar spent, the fee you’ll be charged, which often starts around 1.82%, makes it not worth it in some cases. But, if you are paying with a card that earns rewards on the charge that are worth more than the fee, or the charge is helping unlock a valuable elite status or other spending-related bonus, the equation changes.
For example, I just paid my taxes with a credit card to meet the minimum spending requirement to unlock a sign-up bonus. My bonus was worth over $800, so the value of my rewards far outweighed the fee I was charged.
Any time you have a major expense coming up — like a big tax bill — is a great time to look at a card with a higher spending requirement than you would typically go for.
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Editorial Note: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.
