The time has come once again for me to pay my local property taxes. As always I am given the breakdown of reduced cost if I pay early, something I will most definitely take advantage of. My goal this year is to pay my taxes with my credit card and earn rewards parts for it, of course I will pay off my credit card and this large purchase with freed cash from budgeting and relief cash from my savings nest eggs that I have been slowly building.
I will not be using my credit card as a loan in order to pay my taxes this year as I have done in previous years when my spending and savings habits were poor. From past experience I have learned that if I need a loan I should get a loan, available credit isn't a loan. The interest rate on a loan is much lower than that of a credit card unless it is a pay day loan. I would treat credit card debt and pay day / high interest loans the same and create a plan to pay them off as soon as financially possible no matter what. Any time that you cannot afford to pay for a necessity such as your taxes and you must use a credit card in order to get by I must recommend that you follow what I have learned and before you make the credit card purchase you create a complete repayment plan in order to pay off the debt as fast as possible. I personally use the free website Dueminder.com which is a great tool to help me manage debt and prompt repayment for those times when I just cannot pay cash up front. Depending on the credit card every day past the payment due date or scheduled period end date begins the process of interest compounding against me, which in turn means I end up paying more than I should have for say something I wanted to pay less of, such as taxes. Budgeting a savings plan to meet the yearly goal of your estimated taxes can save you money in credit card interest as well as help you earn cash back on credit card rewards.
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