$187 as a service fee to use a credit card to pay Federal
$187 as a service fee to use a credit card to pay Federal
TaxAct almost charged me $187 as a service fee to use a credit card to pay Federal taxes of $7960. This seem outragiously expensive.
Re: $187 as a service fee to use a credit card to pay Federa
have them take from account for free
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley
Re: $187 as a service fee to use a credit card to pay Federa
That's not even 2.5%. Hardly "outrageous." Credit cards aren't free, so someone is going to take the hit.
Re: $187 as a service fee to use a credit card to pay Federa
Why?rocket wrote:TaxAct almost charged me $187 as a service fee to use a credit card to pay Federal taxes of $7960. This seem outragiously expensive.
The CC charges the merchant a fee based on the size of the charge. I'd suspect that given that the fee is under 2.5% that TaxAct is simply passing the fee along to you and not having their other customers subsidize it (and you) as this is within the range of common transaction fees.
Re: $187 as a service fee to use a credit card to pay Federa
Do the math. What do you think the merchant fees are on credit card purchases?
Merchants suck it up and swallow the fee because they want shoppers to come back.
Do you think TaxAct should be willing to pay a fee because Uncle Sam won't take your credit card, so that you'll come back and provide them with future business?
My town lets me use my credit card to pay property taxes and water/sewer bills - if I pay a 3% surcharge.
Eric
Merchants suck it up and swallow the fee because they want shoppers to come back.
Do you think TaxAct should be willing to pay a fee because Uncle Sam won't take your credit card, so that you'll come back and provide them with future business?
My town lets me use my credit card to pay property taxes and water/sewer bills - if I pay a 3% surcharge.
http://www.cardfellow.com/blog/average- ... rocessing/If you're looking for quick numbers, here you go: the average credit card processing cost for a retail business where cards are swiped is roughly 1.95% - 2%. The average cost for card-not-present businesses, such as online shops, is roughly 2.30% - 2.50%.
Eric
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Re: $187 as a service fee to use a credit card to pay Federa
ALL tax companies charge a fee. Its costs them an average of 2.7%.
Try looking here: http://www.irs.gov/uac/Pay-Taxes-by-Cre ... Debit-Card
There are 5 companies listed that charge different amounts. I went with PayUSAtax.com because they were one of the lowest rates and they accept Amex. For 1.89% I hit some promotional spending goals and earned over a hundred thousand MR points.
Try looking here: http://www.irs.gov/uac/Pay-Taxes-by-Cre ... Debit-Card
There are 5 companies listed that charge different amounts. I went with PayUSAtax.com because they were one of the lowest rates and they accept Amex. For 1.89% I hit some promotional spending goals and earned over a hundred thousand MR points.
Today's high is tomorrow's low.
Re: $187 as a service fee to use a credit card to pay Federa
Also, there is a small flat fee of only 3 to 4 dollars for using a debit card. Finally, an advantage for a debit card over a credit card?
I used to be registered for EFTPS, the Electronic Federal Tax Payment System, which debits estimated taxes directly from your bank account. I live overseas and I lost/forgot all my login information (my own fault). Signing up again is a big hassle and requires snail mail and a certain span of time. But I didn't bother to sign up again once I realized that I could pay any amount of estimated taxes for a flat fee of less than 4 dollars with my debit card.
I used to be registered for EFTPS, the Electronic Federal Tax Payment System, which debits estimated taxes directly from your bank account. I live overseas and I lost/forgot all my login information (my own fault). Signing up again is a big hassle and requires snail mail and a certain span of time. But I didn't bother to sign up again once I realized that I could pay any amount of estimated taxes for a flat fee of less than 4 dollars with my debit card.
Re: $187 as a service fee to use a credit card to pay Federa
As others have noted, this is the fee, more or less, that would ding the feds for your using a credit card.rocket wrote:TaxAct almost charged me $187 as a service fee to use a credit card to pay Federal taxes of $7960. This seem outragiously expensive.
My town has a similar thing for paying property taxes. I was all set to use my credit card and get 1% cash back when I saw a sizeable fee.
The good news is, if you have flood insurance, you can pay it online with a credit card with no extra fee, and collect the reward points.
Re: $187 as a service fee to use a credit card to pay Federa
And that's the problem. The cost to the credit card company is not a function of the size of the charge, so it's gouging. Just like brokerage commissions used to be a function of the size of the trade, but since the market got more competitive after deregulation, eventually investors no longer tolerate such gouging.Khanmots wrote:
The CC charges the merchant a fee based on the size of the charge.
The space for retail transaction processing is now changing rapidly. There are some alternatives now and will be more later. Whenever possible, such as sending or receiving money from a friend, I use dwolla.com. They charge each party 25 cents no matter how large the amount is. Since dwolla uses ACH such transactions take a few days to complete. They also support retail transactions, but not the IRS, so far.
Re: $187 as a service fee to use a credit card to pay Federa
These aren't the same thing at all. At banks and online banking places such as PayPal and Dwolla, they aren't taking any risk. You have the money in your account and you are moving it to another person. This is the same thing as using a debit card, in which case you only have the $4.00 charge. However, paying for thing with credit cards means exactly that - it is on credit. You can choose to not pay your credit card bill at the end of the month and the CC company would be stuck with the charge. It you charge $5.00 they aren't taking nearly as much risk as if you charge $8,000.cbeck wrote:And that's the problem. The cost to the credit card company is not a function of the size of the charge, so it's gouging. Just like brokerage commissions used to be a function of the size of the trade, but since the market got more competitive after deregulation, eventually investors no longer tolerate such gouging.Khanmots wrote:
The CC charges the merchant a fee based on the size of the charge.
The space for retail transaction processing is now changing rapidly. There are some alternatives now and will be more later. Whenever possible, such as sending or receiving money from a friend, I use dwolla.com. They charge each party 25 cents no matter how large the amount is. Since dwolla uses ACH such transactions take a few days to complete. They also support retail transactions, but not the IRS, so far.
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Re: $187 as a service fee to use a credit card to pay Federa
The USPS charge $0.46.
Re: $187 as a service fee to use a credit card to pay Federa
The credit risk should be covered by the interest rate as it is in any other kind of loan. Car loans don't come with a "credit risk charge" separate from the interest rate. The CC company is really charging just for the convenience of the transaction initially, until the point the user decides to carry the transaction amount as a balance. For many of us who have never carried a balance the ability to do a cashless transaction is the only reason we have credit cards. For us, dwolla and others like it can replace credit card companies and extend the ability to do electronic transactions beyond retailers.Trikkur wrote:These aren't the same thing at all. At banks and online banking places such as PayPal and Dwolla, they aren't taking any risk. You have the money in your account and you are moving it to another person. This is the same thing as using a debit card, in which case you only have the $4.00 charge. However, paying for thing with credit cards means exactly that - it is on credit. You can choose to not pay your credit card bill at the end of the month and the CC company would be stuck with the charge. It you charge $5.00 they aren't taking nearly as much risk as if you charge $8,000.cbeck wrote:And that's the problem. The cost to the credit card company is not a function of the size of the charge, so it's gouging. Just like brokerage commissions used to be a function of the size of the trade, but since the market got more competitive after deregulation, eventually investors no longer tolerate such gouging.Khanmots wrote:
The CC charges the merchant a fee based on the size of the charge.
The space for retail transaction processing is now changing rapidly. There are some alternatives now and will be more later. Whenever possible, such as sending or receiving money from a friend, I use dwolla.com. They charge each party 25 cents no matter how large the amount is. Since dwolla uses ACH such transactions take a few days to complete. They also support retail transactions, but not the IRS, so far.
My guess the reason that the OP sees such a large and unusual service charge on this transaction though is that the IRS probably refuses to pay the merchant fee to the CC company and the company is recovering some of it from the consumer.
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Re: $187 as a service fee to use a credit card to pay Federa
I'm sorry, did you just suggest that how much someone charges for something should be entirely a function of how much it costs to provide that service or good? Saying that credit risk should be covered entirely by the interest rate is saying that you have an idea for how these guys should run their businesses. Which would be perfectly fine it you were the one running the business. Some of the rest of us find a small percentage-based "swipe fee" reasonable, and we're not gonna go anywhere with this discussion...cbeck wrote:The credit risk should be covered by the interest rate as it is in any other kind of loan. Car loans don't come with a "credit risk charge" separate from the interest rate. The CC company is really charging just for the convenience of the transaction initially, until the point the user decides to carry the transaction amount as a balance. For many of us who have never carried a balance the ability to do a cashless transaction is the only reason we have credit cards. For us, dwolla and others like it can replace credit card companies and extend the ability to do electronic transactions beyond retailers.Trikkur wrote:These aren't the same thing at all. At banks and online banking places such as PayPal and Dwolla, they aren't taking any risk. You have the money in your account and you are moving it to another person. This is the same thing as using a debit card, in which case you only have the $4.00 charge. However, paying for thing with credit cards means exactly that - it is on credit. You can choose to not pay your credit card bill at the end of the month and the CC company would be stuck with the charge. It you charge $5.00 they aren't taking nearly as much risk as if you charge $8,000.cbeck wrote:And that's the problem. The cost to the credit card company is not a function of the size of the charge, so it's gouging. Just like brokerage commissions used to be a function of the size of the trade, but since the market got more competitive after deregulation, eventually investors no longer tolerate such gouging.Khanmots wrote:
The CC charges the merchant a fee based on the size of the charge.
The space for retail transaction processing is now changing rapidly. There are some alternatives now and will be more later. Whenever possible, such as sending or receiving money from a friend, I use dwolla.com. They charge each party 25 cents no matter how large the amount is. Since dwolla uses ACH such transactions take a few days to complete. They also support retail transactions, but not the IRS, so far.
Still, to the OP, thanks for the heads up, even though it is phrased... debatably.
Re: $187 as a service fee to use a credit card to pay Federa
Unless you are using a rewards CC I don't see much reason to do this, other than if one has no other way to pay.