Also in this playlist...
This transcript is automatically generated
April 8 C it's tax day right around the corner and if you're worrying about your taxes.
There may be an option you're not thinking about your credit card.
Think that but before you grab your wallet -- need to consider the pros and the cons and charging your taxes here to help John Alzheimer president of Smart credit dot com.
Okay -- and -- honest with here.
I'm not really buying this idea that you put your taxes on your credit card but we're gonna work out the pros and the cons of the people to make up their -- may be even handed about this.
Let's start with the pros why would you -- it.
Your taxes on your credit card.
-- -- I think the most.
I'm the most attractive reason for charging -- taxes and sort of riding it Shaq.
Would be to convert.
IRS debts to revolving unsecured debt and obviously this is an option to you would only choose if you cannot -- -- -- large enough to cover the full balance by the eighteenth.
But what you've just done is you've just taken a debt out of the IRS -- purview and -- into the credit card issuers -- what this means there is.
If for some reason you cannot pay it all unfold right out of the gate that you can paid over time because essentially a revolving balance just like if you went -- bottom flat panel television or.
A bedroom -- Also if you know -- the that the floodgates open and you leisure job and all hell breaks list you can actually discharge that debt in a bankruptcy because it's now credit card debt which is statutorily.
Discharged a ball where IRS tax debt it's not statutorily -- Very very sneaky okay you say the cons -- are big too.
Number one you lower your yet score.
Yeah absolutely -- credit scoring systems do not distinguish between debt incurred.
-- paying -- IRS.
-- taxes vs buying something very very expensive otherwise and putting it on the car itself.
If you run up a balance that's too close to the credit limit regardless of whether it's IRS or something else you're gonna lower score solid you're gonna choose a card it.
These strategic about the decision -- choose a credit card that has the highest credit limit because then at the very least.
You're minimizing the possible damage to your credit scores it's that Smart so.
The IRS charges a convenience -- and it's not nothing.
If that's right it's not nothing very very good point the -- you're gonna pay.
To charge the debt is gonna run you anywhere between.
One point 9%.
And about 2.3 5% of the taxes do you.
So look at that point not a free lunch but if you think about it that's less than transferring a balance from one credit card to another -- the end of the day.
-- -- -- you love it more time to pay your taxes and you see in the good graces of the IRS is probably not a bad enough.
Cold comfort I tell you there's also another option which we haven't talked about you can set up your own schedule of payments over time.
You have to report what you make a full report and then tell them -- -- gonna make payments but.
Look on my husband and I first got married we had to do that one year -- worked out fine.
And -- pay interest on your taxes after -- So yeah it actually works ever did this that this is actually just an option for people who cannot.
Right that big fat check or if they want a body grace period -- to blacks to get the grace period of charging a Democratic Party and maybe even earning rewards points or cash.
That's also not a bad thing to think about -- boy you know every which way to play at John thanks for the help today.
-- -- -- --
Filter by section