Credit Card Companies Pursue your Tax Business

Filed in archive Credit on February 14, 2006

There have been a lot of articles lately on the new strategies that the credit card companies are offering us: now they are planting incentives in our minds so that we will use our credit cards to pay off our taxes.

Here is one financial blog that talks about it. This is what he says about a couple of card companies:

Chase is offering double mileage on the United Mileage Plus SignatureVisa card.

american express offers near the same on its Delta and Starwood cards.

If you do use credit cards then it makes sense in some cases when reward offers are made that you take advantage of them and paying off the balance of the card so that you don't sustain any charges from waiting past the due date.

But in the case when you use cards to pay off taxes there is an automatic 2.49% surcharge imposed upon any third-party company that processes the transaction. The consequences to you will be that even with the incentives offered by the credit card companies you will end up with an overall net loss.

Evidently these sometimes large taxes that are owed are too tempting for the companies to pass up. How much will they make on you while you pay them back over the years?

From the financial perspective there is really no reason to enter into this type of debt from your taxes. You should do whatever you can to pay them from other resources.