According to a recently published report, credit card companies are wooing customers to pay taxes with their credit cards and offering a host of incentives in lieu. These include, double the number of points one usually earns and higher flying mileage.
However, paying by card has its pro and cons. For one, the fee for paying taxes on the credit card is a staggering 2.49% of the tax paid. Moreover, the outstanding amount on the card account, if not cleared within the billing cycle, attracts an interest rate of 30%.
At the same time, people prefer using cards form a security point of view. The number of users paying taxes through their cards had increased to 1.5 million in 2005 up 54% from 2004.
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