IRS Card Bennies (3/5/99)
FULL STORY:
Is charging U.S. personal taxes with a bank credit card a worthwhile
proposition? According to a recent survey by Roper Starch more than three
quarters of consumers surveyed say they would rather pay taxes by check
than cash or credit card. However this month's issue of CardTrak cites
specific examples of how the advantages of charging federal personal income
taxes via bank credit cards can be very rewarding. For example, CardTrak
cites the example of a United Airlines 'Mileage Plus MasterCard' cardholder
who recently charged a $5,000 tax bill. The cardholder, who paid a $125
service charge for the transaction, earned 5,000 United Airlines air miles
for the transaction. While the nominal value for most airline miles is two
cents per mile, under certain scenarios the miles can be worth far more.
The cardholder cited in the above example, booked a round-trip 'Business
Class' seat for late March for $882 and 20,000 United Airline miles. The
normal cost of a United Airlines 'Business Class' round-trip seat to London
is $5,300. Since the cardholder is a frequent flyer, at the United Airlines
'Premier Executive' level, earning double miles, the March trip to London
will earn the cardholder approx. 15,000 UA miles. The net result is the
consumer's $5,000 credit card/income tax transaction was worth a net gain
of $4,293 ($5300 ticket value minus $882 cash and minus an $125 fee for the
income tax transaction.) According to the Wall Street Journal, some
cardholders have inquired as to charging as much as $1 million to $4
million worth of taxes this year. A transaction of this size could have a
net value of more than $300,000 according to CardTrak. For example, someone
charging $4 million of taxes could earn enough air miles to take eleven
friends/relatives around-the-world, first class.