68% of Americans Don't Know the IRS Charges a Processing Fee for Paying Taxes With a Credit Card
April 6, 2011 (Business Wire) 68 percent -- are unaware that the Internal Revenue Service (IRS) charges a processing fee of 1.90 percent to 3.93 percent for people who pay their taxes with a credit card. This revelation comes from the FreeScore.com Consumer Credit Awareness Survey* of 1,000 Americans, age 18 and older, conducted during the first quarter of 2011.
Further, 66% of Americans who are planning to pay their taxes with a credit card already have a balance on the card. Adding a processing fee to an existing credit card balance can easily increase the total amount paid for taxes.
According to Carrie Coghill, director of consumer education for FreeScore.com, "If you don't have the cash to pay your taxes and are thinking about using a credit card, take some time to consider all of your options first. For example, I recommend comparing the interest rate that the IRS will charge you for late payments versus the interest rate on your credit card. Or see if you have a relative who'd be willing to loan you the money interest-free if you paid it back within a reasonable amount of time. The point is, paying with a credit card in many instances should be a last -- not a first -- resort."
Coghill continued, "Filing on time is key -- whether you pay the full amount of taxes you owe at that time or not, to avoid larger late payment penalties. Of course, if you have the cash to pay off your credit card bill in full and on time the month after paying your taxes with a credit card -- you may gain some extra credit card points and rewards that could end up saving you some money in the long run. It's all about what makes the most sense for you -- the main point is -- don't avoid managing your taxes; look into what the best option is for you and your wallet."
Survey results also revealed that 49% of Americans are unaware that the deadline for filing their tax returns in 2011 has been extended three days, from April 15 to April 18.