As tax season is already underway, some taxpayers may consider using a credit card to settle their IRS debts. However, financial experts caution that this could be a costly mistake.
First off, you'll end up paying more because the IRS uses credit card processors that impose surcharges on payments. While the fee is generally less than 2%, it can add up.
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For example, if you're paying $1,000, that amounts to about $20 in fees — money that could have been saved.
Additionally, the average credit card interest rate is currently just over 20%, which can lead to even more expenses if the balance isn’t paid off quickly.
For those in need of additional time to pay their taxes, the IRS offers payment plans that typically have lower interest rates compared to most credit cards.
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Furthermore, while some taxpayers may be lured by the prospect of earning credit card reward points, experts suggest that the rewards are often not worth the extra costs associated with the IRS surcharges.
Taxpayers are encouraged to carefully review the terms of their credit card agreements before making a decision. But it’s important to weigh the potential costs before choosing to pay taxes with a credit card, as financial planning today can prevent unnecessary expenses in the future.
This story was initially reported by Susan El Khoury with the Scripps News Group and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
