topic Re: IRS payment plan & new credit card in General Credit Topics

IRS payment plan & new credit card

Cazzieboy — Mon, 26 Feb 2024 12:51:22 GMT

Hello,

Considering paying off an "IRS payment plan" balance with a new credit card that offers 12 months 0% APR. Confident I'll be approved for the card, however my curiosity is: Will there be any negative reaction from the bank card company for that charge? The IRS debt is not shown on any credit report when they do a credit check for the application. I don't know know if that would potentially cause a problem with the credit card company, or if it would even be questioned. Would greatly appreciate some of the experienced opinions out there!

Regards,

Re: IRS payment plan & new credit card

JoeRockhead — Mon, 26 Feb 2024 13:29:33 GMT

Really depends on the limit of the card and how much of it you use. If the amount used maxes out the new card it will have a fairly significant effect on your credit scores... If you already have other accounts with high usage, it could also lead to adverse action from your lenders.

So, it really depends on what the rest of your credit looks like, and how much of the new card available balance is going to be used.

Re: IRS payment plan & new credit card

Horseshoez — Mon, 26 Feb 2024 13:48:21 GMT

@Cazzieboy, have you looked at the charge the IRS hits you with when you make a payment via Credit Card? I haven't looked for a while, but a few years ago I considered this option, and when I saw what they charge, I quickly abandoned the idea.

Re: IRS payment plan & new credit card

Cazzieboy — Mon, 26 Feb 2024 14:18:18 GMT

@JoeRockhead wrote:
Really depends on the limit of the card and how much of it you use. If the amount used maxes out the new card it will have a fairly significant effect on your credit scores... If you already have other accounts with high usage, it could also lead to adverse action from your lenders.

So, it really depends on what the rest of your credit looks like, and how much of the new card available balance is going to be used.

Hey, thanks for the quick reply.
The concerns you mentioned are not too much of an issue. 760 FICO - EXP - Approx. 1% total utilization across 5 accounts. New card available balance usage would be probably about 30%. I could do this with an existing card at a 10% promotional APR for 12 months. Even that may be less than IRS costs. Thoughts?

Thanks so much.

Re: IRS payment plan & new credit card

GZG — Mon, 26 Feb 2024 14:22:11 GMT

@JoeRockhead wrote:
Really depends on the limit of the card and how much of it you use. If the amount used maxes out the new card it will have a fairly significant effect on your credit scores... If you already have other accounts with high usage, it could also lead to adverse action from your lenders.

So, it really depends on what the rest of your credit looks like, and how much of the new card available balance is going to be used.

as stated above, the harm would come from carrying a balance on your credit card, which could lead to AA if your profile looks like you're in financial distress

the fact that it is a charge from the IRS on the card doesn't cause any outsized scrutiny otherwise

@Horseshoez wrote:
@Cazzieboy, have you looked at the charge the IRS hits you with when you make a payment via Credit Card? I haven't looked for a while, but a few years ago I considered this option, and when I saw what they charge, I quickly abandoned the idea.

dunno what it was before, but it's not bad at all now. even profitable on say a 3% paypal mastercard

Re: IRS payment plan & new credit card

JoeRockhead — Mon, 26 Feb 2024 14:28:15 GMT

@Cazzieboy wrote:
Hey, thanks for the quick reply.
The concerns you mentioned are not too much of an issue. 760 FICO - EXP - Approx. 1% total utilization across 5 accounts. New card available balance usage would be probably about 30%. I could do this with an existing card at a 10% promotional APR for 12 months. Even that may be less than IRS costs. Thoughts?

Thanks so much.

Currently the IRS says it's a 1.87% fee to pay by credit card... Given where you're at otherwise and provided you get the CL you're expecting, I'd pay the IRS off and move on to more pleasent things in life.

Re: IRS payment plan & new credit card

Cazzieboy — Mon, 26 Feb 2024 14:37:22 GMT

@JoeRockhead wrote:
@Cazzieboy wrote:
Hey, thanks for the quick reply.
The concerns you mentioned are not too much of an issue. 760 FICO - EXP - Approx. 1% total utilization across 5 accounts. New card available balance usage would be probably about 30%. I could do this with an existing card at a 10% promotional APR for 12 months. Even that may be less than IRS costs. Thoughts?

Thanks so much.

Currently the IRS says it's a 1.87% fee to pay by credit card... Given where you're at otherwise and provided you get the CL you're expecting, I'd pay the IRS off and move on to more pleasent things in life.

Appreciate you! Thanks much.

Re: IRS payment plan & new credit card

Traveler101 — Mon, 26 Feb 2024 14:45:00 GMT

Some city's can be even worse if that's possible. We have a city here, that a 5.00 or more unpaid tax bill gets you a bench warrant in their court. Totally in agreement, get it gone

Re: IRS payment plan & new credit card

Horseshoez — Mon, 26 Feb 2024 16:53:02 GMT

@GZG wrote:
dunno what it was before, but it's not bad at all now. even profitable on say a 3% paypal mastercard

Wow, way lower than I remember; it has been quite a few years, but my memory is trying to convince me the number was more like 8%.

Re: IRS payment plan & new credit card

pizzadude — Mon, 26 Feb 2024 17:44:29 GMT

Considering that the IRS is charging you around 7% interest, if you can pay it off for around 2% the savings could be significant depending on the amount owed.

I don't think your CC will care that it's an IRS payment and even if you are close to maxed out it's one of those times where finances > FICOs.

Re: IRS payment plan & new credit card

SouthJamaica — Mon, 26 Feb 2024 18:00:31 GMT

@Cazzieboy wrote:
Hello,
Considering paying off an "IRS payment plan" balance with a new credit card that offers 12 months 0% APR. Confident I'll be approved for the card, however my curiosity is: Will there be any negative reaction from the bank card company for that charge? The IRS debt is not shown on any credit report when they do a credit check for the application. I don't know know if that would potentially cause a problem with the credit card company, or if it would even be questioned. Would greatly appreciate some of the experienced opinions out there!

Regards,

There's no reason for an IRS debt to show up on a credit report. I can't imagine that the lender is going to look into, or even care, who you're paying, so long as the amount isn't outsized compared to your limit.

Re: IRS payment plan & new credit card

CorpCrMgr1 — Mon, 26 Feb 2024 20:05:29 GMT

I'd definitely pay off the IRS. Good luck!

Re: IRS payment plan & new credit card

HotInPhoenix — Mon, 26 Feb 2024 20:56:18 GMT

If you have enough cash available, you can pay the minimum (I think it's over 5 years) with an IRS payment plan if you pay direct monthly from your bank at an interest rate of now 8%. plus up to $130 to set up the plan.

Since IRS is not reported for credit rating there really is no disadvantage of carrying it. As discussed, there are pros and cons of doing a 0% interest for like 1 -year vs. 8% over, I believe, spreading payments over 5 years. Credit Score with a card takes a hit if new since it starts history over again with a new card vs using an old card. And higher utilization hurts the score. On the other hand, if you don't need a higher score for the next few years, using the card saves the IRS 8% interest, but what about after the 0% cc rate expires? If you can't pay off may pay much more than 8% to IRS.

Long ago I was on a payment plan for about $50k but when interest rates were much lower and paid if off a few years ago.

Re: IRS payment plan & new credit card

Shooting-For-800 — Tue, 27 Feb 2024 03:26:22 GMT

Some cards let you write yourself a check.

Then you can just pay whatever you want to whomever you want.

ie - Barclays, FNBO, Discover, etc.

GL!

Re: IRS payment plan & new credit card

HotInPhoenix — Tue, 27 Feb 2024 06:02:05 GMT

But if you write a check to yourself, it is considered a cash advance and usually a 5% upfront charge, which offsets to some extent the 0% offer if it applies to cash advances.

Re: IRS payment plan & new credit card

ForwardLooking — Tue, 27 Feb 2024 18:22:58 GMT

@Cazzieboy wrote:
Hello,
Considering paying off an "IRS payment plan" balance with a new credit card that offers 12 months 0% APR. Confident I'll be approved for the card, however my curiosity is: Will there be any negative reaction from the bank card company for that charge? The IRS debt is not shown on any credit report when they do a credit check for the application. I don't know know if that would potentially cause a problem with the credit card company, or if it would even be questioned. Would greatly appreciate some of the experienced opinions out there!

Regards,

I got a Discover it card with a 15 month 0% balance transfer and 0% APR offer. I used the card originally and transfered a high interest personal loan over and paid it off in about 6 months. I then used it to pay an IRS debt, similar to what you are wanting to do, and took advantage on the 0% APR. I finished paying it off last week about 4 months earlier than the 15 month time. I took a hit on my scores because the card had high utilization. I kept making big payments every two weeks and Discover did not seem to get spooked. In fact, Discover gave me a 2k CLI during the middle of all this. With that being said, IRS Debt is a good thing to use a 0% intro offer on as long as you can pay it off before it expires.