Originally published March 23 2005
Credit card companies are trying to get people to pay taxes with their credit cards
by Mike Adams, the Health Ranger, NaturalNews Editor
Since the IRS allowed people to pay their taxes by credit card, many credit card companies have been working to motivate people to use their credit card for their annual bill. Most of the resistance to using this method of payment has been a result of the 2.49% federal surcharge to all credit card payments, so credit card companies are offering special promotions that will eliminate the surcharge under certain circumstances.
With April 15 around the corner, two major credit-card issuers are waiving a pesky processing fee to woo consumers to charge their taxes.
Morgan Stanley's Discover Financial and MasterCard International, separately, are partnering with H&R Block to waive the 2.49 percent fee that consumers get hit with when they pay federal taxes by credit card.
The limitations to these promotions mean they may not appeal to a large number of customers.
The company notified cardholders in mid-January that they can redeem membership-reward points to offset the third-party processing fee.
Whether these incentives will be enough to lead a significant number of consumers to take the plunge with credit-card tax payments --- and incur high interest rates if balances aren't paid off --- remains to be seen.
The fee --- typically 2.49 percent of federal taxes, or about $88 on the average balance due of $3,523 --- has been in place since the Internal Revenue Service (IRS) first accepted tax payments by credit card in 1999.
Official Payments and Link2Gov, the two companies authorized to accept such payments, charge the fee to authorize and confirm the transaction, then share the funds with issuers such as Discover Financial, Visa USA, MasterCard International and American Express.
In fiscal 2004, more than 950,000 people whipped out plastic to pay federal taxes --- representing a small fraction of the 20.79 million returns that owed a balance --- but up 70 percent from the year before, according to the IRS.
A key reason for the rise is the rewards programs that credit-card issuers have created, allowing consumers to get points that can be redeemed for airline tickets, electronics and a slew of other items.
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