Earn Miles by Paying Your Taxes with a Credit Card


Link: Discover Card 3% Bonus

Speaking of paying taxes, for years people have asked me about earning Frequent Flyer miles or points by paying your taxes with a credit card. Wouldn’t it be great if you could receive a travel bonus for all that money you have to pay?

Generally speaking, this isn’t usually a great idea, because the companies that process tax payments are smart. They charge a fee, typically 1.87%, in exchange for passing along your money. At 1.87%, you’re paying $467 for every $25,000 in tax payments.

Earning 25,000 miles for $467 isn’t the greatest value most of the time. It could still be worth it if you have a specific award in mind, since you can often book awards worth thousands of dollars for a relatively small number of points.

For my tax payments, I use a debit card from Suntrust Bank that provides Delta SkyMiles. It only has a flat fee (usually $2.59) for payments up to $35,000. This doesn’t help most of you, though, because the card is no longer available to new applicants. If you didn’t get it before it went away, you can’t get it now.

All Is Not Lost: Here’s a New Option

As mentioned, you can’t get the Delta debit card these days. However, the brand-new Discover Miles card I mentioned last week presents an intriguing opportunity. It’s a cash-back card that offers a 1.5% bonus on all spending, with the bonus being doubled in the first year—effectively making it 3%.

Would you pay a 1.87% fee in exchange for a 3% return? If you have significant tax payments to make, including quarterly estimated payments for everyone who is self-employed, it’s certainly worth looking at. Adding the annual bonus and subtracting the processing fee, you’ll earn a 1.13% return on all tax payments.

1.13% isn’t much, of course, but it’s a net-positive return and essentially free money. There is no annual fee ever on this card, so it won’t cost you anything now or in the future.

If you don’t have significant tax payments to make, you may not want to worry about this card—there are better deals for those interested specifically in signup bonuses.

For some of you, though, it can definitely help.

Link: Discover Card 3% Bonus

Disclosure: Some of the links on our partner site Cards for Travel pay a referral bonus to us. We always promote the best available offers, regardless of benefit. Always be responsible with credit and don’t apply for cards you can’t use well.


Image: Justified Sinner

Subscribe now and you’ll get the best posts of all time.