Paying taxes is no one's favorite activity, but it's a necessary evil we all must face. While it may hurt your wallet, did you know that you can actually earn rewards or cashback by paying taxes using the right credit card? That's right, today we're going to dive into the world of credit cards that can make your tax payment experience more rewarding and, dare we say, enjoyable! Get ready to discover the best credit cards for paying taxes and start reaping the benefits.
Best Credit Cards For Paying Taxes Table of Contents
Why Use a Credit Card to Pay Taxes?
Before we dive into our top picks, let's discuss the benefits of using a credit card to pay taxes. While it may seem counterintuitive to add your tax bill to a credit card, doing so can result in significant perks, such as:
- Earning rewards or cashback on your tax payment
- Meeting minimum spend requirements for new credit card sign-up bonuses
- Improving your cash flow by using a card with an interest-free period
However, be aware that most tax agencies may charge a convenience fee for credit card payments, usually around 1.87% - 2% of the payment amount. To maximize your rewards and savings, be sure to choose a card with rewards that outweigh these fees.
Our Top Picks for the Best Credit Cards for Paying Taxes
Without further ado, let's explore the top credit cards that will make your tax payment experience more rewarding. We've considered factors like rewards rates, fees, and other benefits to bring you the best options.
1. Chase Sapphire Preferred
With its impressive sign-up bonus and flexible rewards program, the Chase Sapphire Preferred is a solid choice for paying taxes. When you spend $4,000 within the first three months, you'll earn 100,000 bonus points, which can offset the convenience fee charged by tax agencies. Plus, the card offers 2x points on travel and dining and 1x point on all other purchases, including tax payments.
2. Citi Double Cash Card
The Citi Double Cash Card is a popular cashback option. It offers a straightforward rewards system: 1% cashback on all purchases, and an additional 1% cashback when you pay off your balance. While this may not completely cover tax payment convenience fees, it helps reduce the overall cost.
3. American Express Blue Business Cash
If you're a small business owner looking to pay taxes with a credit card, consider the American Express Blue Business Cash. This card offers 2% cashback on the first $50,000 in purchases each year, with 1% cashback on all purchases after that. With no annual fee and a 0% introductory APR for the first 12 months, using this card for tax payments can save your business money.
Best Credit Cards For Paying Taxes Example:
Let's assume you have a tax bill of $10,000 and decide to use the Chase Sapphire Preferred card to pay that amount. Here's how the rewards could add up:
- Your $10,000 tax payment earns 10,000 points (1 point per $1 spent).
- Assuming a 1.99% convenience fee, you'll pay an extra $199 on top of your tax bill.
- If you meet the $4,000 spending requirement within the first three months (which may include your tax payment), you'll earn an additional 100,000 bonus points.
In total, you'd have 110,000 points, which can be worth up to $1,375 when redeemed for travel through the Chase Ultimate Rewards portal. After accounting for the convenience fee, you'd still come out ahead with $1,176 in travel rewards.
Taxes may be unavoidable, but with the right credit card, you can make the experience more rewarding and even save money in the process. Keep in mind that choosing the best card for your situation highly depends on your spending habits and reward preferences. We hope this guide has helped you find the perfect card to turn your tax payments into a more enjoyable experience. If you found this article helpful, please feel free to share it and explore the wealth of other personal finance and investing tips on Flik Eco's website. Happy tax-paying!
