Buzz
Not everyone receives a tax refund. If you owe the IRS but don't have the necessary funds, you might consider paying via credit card. However, it could be more beneficial to arrange a payment plan directly with the IRS.
While the IRS does not accept credit card payments directly, they allow you to pay through a "payment processor." The Consumerist offers a few key factors to consider before going this route. The most significant are the interest rate and processing fees:
If you need more time to pay your tax debt, it's worth setting up a payment plan with the IRS before resorting to credit cards. Although interest will accumulate on the balance as you make payments, the rate is usually much lower than a typical credit card APR. Since the IRS doesn't directly take credit cards, you'll have to use an authorized payment processor, each charging a fee of up to 2.35% of your tax amount. For example, if you owe $2,000, you’ll pay an additional $47 in fees, not including interest charges if you fail to pay off your card balance in time.
There are valid reasons for considering credit card payments for your taxes, but it's important to fully understand the implications. The Consumerist goes into more detail on this topic in the full article.
Image courtesy of chuck holton.
