What's the Monthly Interest on $2.9 Million?
According to a report in The Wall Street Journal, 231,000 U.S. taxpayers took advantage of the new credit card payment program for paying income taxes this spring. This number reflects a 24 percent increase over last year.
The average credit card federal income tax payment was $3,085, but charges ranged from $1 to approximately $2.9 million.
The IRS doesn't assess a fee to taxpayers who use a credit card to pay taxes, but the payment processing companies extract an up-front "convenience fee" of 2.5 percent of the amount being charged.
(And just in case you are wondering, monthly interest on a $2.9 million payment at a normal 18% credit card rate comes to $43,500. The "convenience fee" on the $2.9 million payment amounts to $72,500. Pretty convenient, we think...)