There are some risks and additional costs to account for when determining if the rewards are really worth it.
And your credit score may take a hit.
Here’s when I do and don’t recommend using acredit card to pay your tax bill.
you might choose either Pay1040 or ACI Payments.
Both charge a fee based on a percentage of your payment.
There’s no cost for making payments directly from your bank account.
Here’s an example: Say your tax bill is $4,200 with a 1.75% processing fee.
That brings the total bill to $4,273.50.
Because your tax bill is more than the bonus requirement, you’ll earn 60,000 points.
These points translate to up to $750 when redeemed for travel through theChase Ultimate Rewards portalat 1.25%.
Before you take this route, compare the IRS’s payment options.
You might save more money by enrolling in one of those.
Plus, choosing an IRS payment plan could save you from accruing debt.
I’ve done both before.
Here are a few examples when you may choose one of those options instead.
A new high balance on your credit card could flag you as a risky borrower.
Capital One Miles are worth one cent each as statement credits applied toward travel purchases.
You’ll earn 1.5 miles per dollar spent and their miles can be redeemed for 1% cash back.
