Just like any kind of unforeseen expense, getting a surprisingly large tax bill can really set you back financially. For this reason, many Washington residents will simply pay their taxes on their credit cards with the idea of paying the money back later. The problem is, for some, paying taxes with a credit card results in a never-ending debt issue.
Here are a few more reasons why it's a bad idea to use your credit card to pay your taxes:
- You have to pay more in taxes: The IRS charges people more money if they pay by credit card. In fact, sometimes they pay as much as 1.99 percent on these transactions.
- You'll pay credit card interest on the bill: If you have to hold the balance on your credit card, you'll need to pay high-interest rates on this debt.
- Don't think credit card rewards will save you: You might get a reward for spending so much money on your credit card in the form of points, but this benefit will be ruined if you ever have a late fee. Cards usually charge a significant amount of money in late fees.
Are you suffering under a mountain of credit card debt? Do you want to wipe out your debt once and for all? You may have various legal options available to you that could help you get rid of your debt a lot faster than you think. Bankruptcy might be one of those options. But there are also less involved non-bankruptcy strategies that can help individuals dissolve their debt quickly and effectively.
Source: Consumer Reports, "Why Paying Taxes by Credit Card Can Actually Cost You Money," Tobie Stanger, March 29, 2018