Meeting the spending requirements, paying taxes

[rudolphreindeer]

Cheers everyone!

I got too many welcome bonuses to work on spending requirements. I am planning to pay our tax return with credit cards. I see the fee for that will be big on Amex card, so I got brilliant idea to split payment in two and pay one part with Amex card (for SUB) and one with Discover Miles which has 3% cash back and can cover the fee. I never paid taxes with CC before, but I heard that it's a good way to meet spending requirements. [Mod cut: Discussion of this practice is not allowed on the myFICO Forums.]

[rudolphreindeer]

I mean that the fee is big on both cards - %1.96 min, but Disco with 3% can cover Amex 1х. 

Do you guys pay taxes with CCs and [Mod cut: Discussion of this practice is not allowed on the myFICO Forums.]?

[Horseshoez]

@rudolphreindeer, I was thinking of paying my taxes this year with a credit card, but when I read the fine print regarding the extra fees charged compared to using ACH (or just sending a check), I decided it was definitely a money losing proposition, even with SUBs and Rewards taken into account.

[longtimelurker]

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@Horseshoez wrote:

@rudolphreindeer, I was thinking of paying my taxes this year with a credit card, but when I read the fine print regarding the extra fees charged compared to using ACH (or just sending a check), I decided it was definitely a money losing proposition, even with SUBs and Rewards taken into account.

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Certainly doesn't have to be.  The official IRS processors are now charging between 1.96 and 1.99%  (not a huge range!) and with a 3% card plenty of room to be somewhat cheaper than ACH/check.

[Mod cut: Discussion of this practice is not allowed on the myFICO Forums.]  Safest just to take the 1% net reward on the amount actually owed.

[summerterrace]

It appears that the 1.96-1.99% processing fees would eat up most of the points/dollars received from using the card.  

Also I saw where Chase has revised their terms and conditions and starting in mid-April if you use their cards with a third party payment processor the payment will be counted as a cash advance, subject to higher fees/interest, and no points will be rewarded.  Not sure if the IRS would count but many tax authorities and utility companies, etc use payment processors. 

[longtimelurker]

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@summerterrace wrote:

It appears that the 1.96-1.99% processing fees would eat up most of the points/dollars received from using the card.  

Also I saw where Chase has revised their terms and conditions and starting in mid-April if you use their cards with a third party payment processor the payment will be counted as a cash advance, subject to higher fees/interest, and no points will be rewarded.  Not sure if the IRS would count but many tax authorities and utility companies, etc use payment processors. 

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If you use a 3% card then you get just over 1% back, whereas if you use a check/ACH you are getting 0% back!   There is also a tiny advantage even using a 2% card, and entering the card info is not much harder than entering ACH info, why not.

I doubt if the Chase language covers the official IRS processors, but if in doubt use other cards.

[K-in-Boston]

Reminder: The discussion and advocation of manufactured spending practices is not permitted on the myFICO Forums.  Multiple posts have been edited or removed.  For further information, please refer to the myFICO Forums Terms of Service.

[K-in-Boston]

The third party payment processors language has been added to Chase, Amex, and others' terms to cover transactions like peer-to-peer Venmo, PayPal, etc. charges.  It should never affect actual transactions for goods and services such as the 3 payment providers that the IRS uses, Western Union SpeedPay used by many utility companies, etc.

As long as the rewards outweigh the fees for processing, there's really no reason not to pay them with a credit card.  Any card giving back 2% or more will usually result in a net gain, and when SUBs are involved that would not have been met otherwise the percentage of return can be great.

[rudolphreindeer]

My Gold card happened to have an internal limit of $2,000, so first the transaction was declined despite the fact that I paid all the balance that was on the card earlier. So I called the # on the back of it and a very nice Amex rep helped me to do the transaction. In order to use my card for a transaction more than $2,000, I had to prepay my card and make a negative balance on it. He processed this payment from my bank account and after that paying taxes processed successfully! I am very pleased 😀 

P s I got a welcome bonus on Gold card with the requirements to spend $4K in 3 months, not in 6 as usual. 

[K-in-Boston]

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