April 15th is fast approaching and you know what that means--it's time to pay your taxes. If you owe the Internal Revenue Service (IRS) money for the 2014 tax year, you may be thinking, let me put it on my credit card. After all, it's convenient, and you'll get miles (or points or cash back). What a deal! You pay your taxes, and you can put the miles towards that GoPro mount you've been wanting since last summer!
Before you whip out the plastic, you should crunch some numbers. You can pay the IRS using a credit card via one of their payment processors, but you'll be slapped with a "convenience fee" ranging from 1.87% to 2.35% of the amount you charge on your card. If you e-file and use the integrated credit card option, you'll still end up paying a fee. These "convenience fees" range from 2.35% to 3.93%.
So let's say you owe the federal government $4,500. You have the Delta SkyMiles Credit Card and earn 1 mile per dollar spent. You've done your research and know that the GoPro mount you want costs 4,500 miles. You don't want to pay anymore than you have to, so you use the payment processor with the smallest convenience fee--1.87%. Perfect! Pay your taxes with plastic, get your GoPro mount to film your surf sessions this summer!
Not so fast. You won't be paying $4,500, you'll be paying $4,500 plus an $84.15 "convenience fee" (4,500*0.0187). Is that GoPro mount worth $84.15? Nope. You can buy it directly from GoPro's website for $19.99 and get free shipping!
Unless your credit card offers you a cash back percentage that is higher than the convenience fee, stick to the old-fashioned personal check.
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