It is that time of the year and the taxes are due.   There are some that advocate that you pay your taxes with a credit card to rake in those reward points versus sending in a check and receiving nothing.   Well, you have to know that a big fat fee is going to be involved in the event that you use a credit card for payment.

So, let us look at an example.   Remember rule #1 when using reward points--the best way to utilize points is through travel benefits. Out of all travel benefits, airline tickets would rank #1 in my book. I also prefer American Express for their rewards points system or any card that gives 1% cash back.   With every dollar you spend 1% is put towards $1 of benefit. For example, if you spend $10,000, you have created a $100 credit that can be used to offset the cost of an airline ticket.

So using that as an example, say that you use your credit card to pay the balance of a $10,000 tax bill. In order to make that transaction, the service that you would use charges a 2.29% transaction fee. So, you charge the $10,000 on the card, pay $229.00, and then receive a $100.00 benefit for it.

Creating a $100 benefit by paying $229 for it just isn’t a good deal.