02/ 11/ 2008
With April 15 quickly approaching, I've been considering paying my tax bill via credit card. Is this a good idea?
Sending Uncle Sam a check isn't the only option anymore. In fact, fewer people mail hard copies of checks now with the growing popularity of the Electronic Federal Tax Payment System. Using a credit or debit card linked to your bank account is another alternative. "This provides small-business owners with the ability to subsequently settle the card payments with ready funds while better managing cash flow, saving time and increasing efficiency," says Raghav Lal, senior vice president, small business, Visa Inc. "By using a payment card, small-business owners can take advantage of the convenience, security and rewards that card-based payments offer." Payment cards can also provide integrated reporting tools to manage taxes and business expenses--giving business owners a "dashboard" into their overall business spending and cash-flow position.
There are a few factors to consider if you decide to pay your tax bill with a card. There may be service fees applied by the government or processing agent. "The service fee must be disclosed to you at the time payment is tendered and must be listed separately on your statement," Lal says.
Though experts advise that you shouldn't float your tax bill with a credit card if you can't afford to pay it off, using a card is a great way to earn reward points--proving there's at least one perk to tax season.
