Posted byon March 11, 2014
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However, if you owe taxes, then you might have to look a little harder to find a good deal… but the good news is they do exist!
I’ve outlined in the past how to Pay Taxes with Credit Cards to Earn Cash Back, but what if the processing fees are higher than your cashback? Or if they’re so close it’s not worth the trouble? Here’s a workaround I used this week to earn 3.3% cash back on a tax payment.
Meet Spending Requirements. This strategy is a great way to meet spending requirements on new bonus cards. I needed to hit some spending requirements on various cards from my $1,720 + 267k Point Credit Card Application Spree, including my new British Air and Virgin Atlantic cards.
Maximize Cash Back. If you aren’t working on a spending bonus and you want to maximize the cash back, pick your favorite card with the maximum cash back. Mine highest cashback card for everyday spending is currently the Barclaycard Arrival card.
Here’s how the math broke down for me. I purchased 3 x $3000 gift cards worth $9000:
While I spread my purchases across the various cards (for spending bonuses), to make the calculations more straight forward and easy for you to replicate, let’s assume I put all the charges on the Barclaycard Arrival card, then it would be worth: 18022 miles, which is redeemable for $180 in travel credits to earn an additional $18 in rewards.
Total Cash Back on Tax Payments: 290.40 / 8834.79 = 3.3%
If you aren’t ready to pay your taxes yet, and probably won’t be ready until the tax deadline, you can still take advantage of the deal, but the numbers might be slightly different.
You need to make sure that your credit card won’t be charged a cash advance when buying American Express Gift Cards. In other words, avoid Citi cards and US Bank cards. I used Chase, Bank of America, and Barclays without problems this month. And obviously, Amex will count it as a purchase since they are selling the product. However, to be sure, you can lower your cash advance limit to $0 on any card before making the purchases.