Every year, on April 15th, taxes come due, and paying taxes is one of the least exciting parts of adulting. If you find yourself owing, you may notice the option to pay that bill using a credit card. I’m usually thrilled with the opportunity to use a credit card for a big purchase. However, let’s discuss whether it makes sense to use a credit card for a large tax bill.
Paying your tax bill with a credit card
You’ll notice a few different payment processor options for paying your taxes with a credit card at checkout. Each charges a fee for this service, typically around 2%. For instance, if you owe $1000 on your taxes, using a credit card would add an extra $20 to your bill.
When does paying your taxes with a credit card make sense?
There is one situation where I would happily pay an extra fee to pay my taxes with a credit card. This would be if I was working towards hitting the minimum spend on a brand-new credit card. If paying a large tax bill quickly and easily nets me a 60,000 sign-up bonus on a new card, I will happily pay that 2% fee.
When does it maybe make sense to pay your taxes with a credit card?
There are two scenarios that would lead me to consider possibly maybe paying my taxes with a credit card.
Going for elite status
Some hotels and airlines offer elite credits for spending thresholds on their branded credit cards. For instance, the Hyatt card offers two elite night credits for every $5000 spent. If you’re close to earning elite status but need a few extra nights, using your branded credit card for tax payments could help.
Earning more than 3x back
If you have a credit card that offers rewards exceeding 3x on purchases and you have an immediate need for those points (e.g., booking a big trip), it might be worth paying your tax bill with that card.
TL:DR
Paying taxes with a credit card is possible but comes with a fee of around 2%. There are a few scenarios in which I would happily pay this fee – the biggest one being if it quickly helped me hit the minimum spend on a new credit card. Otherwise, paying taxes with a credit card is a no for me.
