Tax debts can be overwhelming, especially for those who aren’t expecting them. If you are hit with a huge bill, you might be tempted to charge it all to your credit card. At least that gets the IRS off your back, right?
Even though you may be able to escape the government with your credit card, you could face a slew of other problems that you need to know about. Here are some issues to keep in mind:
- Your credit score could drop because you have a higher debt to available balance ratio.
- You may lose some of your emergency funds because your card is maxed out.
- You might be charged large fees because some credit card companies assess this as a cash advance payment.
- You may face higher interest payments, depending on which card you use.
- You will limit the amount of credit you can apply for in the near future.
- You still will have to pay everything back.
If you can get around these negatives, by all means give it a try. In most cases though, it is easier to work out an installment plan directly with the government. You’ll owe the same money no matter what. You might as well take out the middle man. Before you try to swipe yourself out of debt, consider some of the alternatives.