WASHINGTON (WUSA) -- Credit card rewards are a great way to get something back from everyday spending, but does it always make sense? What about charging what you owe on taxes? Does that make financial sense?
Here's what you need to know, according to USA TODAY:
- The IRS does take plastic, but paying your taxes by credit card might not mean big rewards. In fact, the cost of paying your taxes with a credit card usually exceeds the value of the rewards. That's because the government doesn't absorb the convenience fees that service providers charge to process the transaction. For you that means paying an extra 2 to 4 percent of the total payment in service fees.
- Since most cash back rewards are only about 1 percent of the total payment you lose out. Even perks like extra airline miles are unlikely to make up for the extra cost of the transaction fees.
- Also keep in mind that if surprises delay you from paying off the bill in full -- you'll get stuck paying interest. If money is tight and you're tempted to charge taxes to delay payment, think about an IRS installment plan instead.It allows you pay off your balance over time -- and won't affect your credit score.