TULSA - Those who have to pay taxes this year may want to consider plastic.
Filing taxes is tough enough; having to pay can feel like adding insult to injury.
You may want to consider charging your tax bill to your credit card or setting up a payment plan with the IRS if you cannot pay your entire tax bill at once.
Industry watchdog LowCards.com reveals what you need to take into consideration if you do owe taxes this year:
A significant number of people have opted to pay with a debit or credit card since electronic payments were first authorized by the 1997 Taxpayer Relief Act.
While convenient, paying your taxes by a credit card can have significant drawbacks.
If you charge your taxes and don't pay off your card balance in full, you will be subjected to your card's high interest penalties each month you carry a balance.
In addition, card payments to the IRS are processed by third-party providers. There are five companies that are approved by the IRS. They each charge charge a processing fee, ranging from 1.88 percent to 2.35 percent. No part of the service fee goes to the IRS. While this fee may be deductible, it can still add a significant burden to your tax bill.
If you feel you must pay be credit card, here are a few additional tips:
* Find out your credit limit before you charge your taxes. Debt utilization is a major factor in credit scores. If you use too much of your available credit, you can lower your credit score.
* Make sure your payment is treated as a purchase, not a cash advance. The cash advance APR can be as high as 25 percent with some cards, and the cash advance fee varies from 3 to 5 percent, depending on the issuer.
* Payments can not be canceled.
* You can also pay with a debit card and the fee is much less expensive. Every IRS-approved e-pay service provider charges under $4 to pay by debit card.