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Time is very short to get a new credit card to pay for taxes

Using a credit card to pay taxes is not ideal.  On IRS.gov, the IRS lists three companies to use when you to make credit card payments.  The top two companies, Official Payments Corporation and Link2Gov Corporation listed charge 2.35% transactions fees.  The third company, RBS WorldPay, Inc, charges a 1.95% fee. 

These fees, while a nuisance, are much less harsh than the penalties the IRS slaps on late filers and late payers.  On a $1000 payment, the cost is about $20.  However, on a $10,000 payment, the costs become pretty substantial: $190 to $270.  If these fees aren't enough to make you reconsider filing your taxes with a credit card, then you might want to find a way to avoid paying interest on the loan. 

The key to avoiding the double punch of credit card fees and interest is finding a credit card offer that provides a 0% interest rate on purchases.  This can buy you time to pay off your tax charges without accruing interest. 

If, for example, you needed 6 months to pay off $5,000 used to pay taxes online with a credit card that has a 15% interest rate, you will likely spend an additional $300 in interest.  That's on top of the $100 credit card fee charged by Official Payments Corporation and its ilk.

To avoid accumulating interest when you pay your taxes with a credit card, you should act fast.  Credit card applications take much longer to process today they did a year ago, so if you fail to apply by April 8th, there's a good chance you won't get a new 0% card in time to pay your taxes on time.

Tax season is hectic.  IRS form 4868 can provide you a six month extension to file your taxes, but it doesn't extend the time you have to pay your bill.  So if you're going to use a credit card that you won't repay immediately, getting one with a 0% interest rate can help reduce the costs of paying your taxes with a credit card substantially.

For more info: For more information on the costs of paying taxes online, please see the IRS website.  For information on credit cards that offer 0% interest rates, please see the author's website, www.credit-card-depot.com.

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