Paying your taxes by credit card - is it worth it?
We recommend using these platforms for two scenarios:
- The cashback or points value you earn exceeds the service fee of Plastiq or PaySimply
- It allows you to unlock a welcome bonus that requires a minimum amount of spending
Be aware that a payment with Plastiq or PaySimply will be categorized as “other expense” by your credit card, which is generally the category that earns the least cash back or points. So, unless your credit card offers more than 2.5% (PaySimply fee) or 2.9% (for Plastiq), you will lose money by using this service to pay your taxes by credit card.
Let’s see the two scenarios where using PaySimply or Plastiq can be an profitable option for you.
Paying taxes by credit card - To get cash back
To maximize the return on your tax payments in the form of cash back, you should choose to pay with a card:
- with no annual fee, at least for the first year,
- and using the welcome bonus to get a higher cash back amount than the Plastiq or PaySimply fees.
The following are credit cards that meet these criteria if used in accordance with the welcome bonus requirements:
Pay your taxes by credit card - Strategy with PaySimply
By taking advantage of the welcome offers of these two cards, I will be able to :
- Earn 15% cash back on a payment of up to $2,000 (or $300 cash back) with the CIBC Dividend CardMD Visa Infinite* within the first 4 statement periods
- Earn 10% cash back on payments up to $2,000 with the Scotia Momentum® VISA Infinite* card within the first 3 months
This will give me a total of $500 cash back on my tax payments.
Since I will have paid a 2.5% fee (or $100) on both payments by going through PaySimply, I will save a net total of $400 by using these welcome offers to pay $4,000 in taxes.
|Total||$4,000||$500||100 $ (2,5 %)||$400|
|Card used||Payment amount||Cash Back||PaySimply Fees||Net Cash Back|
|CIBC Dividend® Visa Infinite* Card||$2,000||$300 (15 %)||$50 (2,5 %)||$250|
|Scotia Momentum® VISA Infinite* Card||$2,000||$200 (10 %)||$50 (2,5 %)||$150|
So in total, I get 10% net cash back on up to $4,000 in tax payments with PaySimply.
Plus, there will be no annual fee on either card for the first year!
Here are the details of each of these cards.
Paying Taxes by Credit Card - CIBC Dividend CardMD Visa Infinite*
The CIBC Dividend® Visa Infinite* Card is one of the best Visa credit cards with cash back in Canada.
With this CIBC Cash Back Credit Card, you get:
- 4% cash back on gas, EV charging, and grocery purchases†
- 2% cash back on eligible transportation, dining purchases and recurring payments†
- 1% cash back on all other purchases†
For example, if you spend $1,000 per month on groceries and/or gas and/or electric vehicle charging, you’ll earn $40 cash back per month or $480 cash back per year with this card for this category of purchases!
And that’s not counting the other purchases you’ll make with this card and the advantages it offers (particularly in terms of insurance).
Earn 10% cash back welcome bonus of up to $200 (first 4 statements)!† And you’ll get a first-year annual fee rebate†!
And this CIBC Cash Back Credit Card offers many insurance coverages:
- Auto Rental Collision/Loss Damage Insurance
- $500,000 Common Carrier Accident Insurance
- Out-of-Province Emergency Travel Medical Insurance
- Purchase Security and Extended Protection Insurance
This is a digital-exclusive offer.† To be eligible for the offer:
- this offer must have been directly communicated to you from CIBC or from a partner/affiliate;
- you must apply for the eligible card through the link provided in the CIBC or partner/affiliate communication to you†.
This offer is reserved for you. Please do not forward it to anyone else. CIBC may approve your application, but you are not eligible to receive this Offer if you have opened, transferred or cancelled another eligible card within the last 12 months.†
Paying Taxes by Credit Card - Scotia Momentum® VISA Infinite* card
The Scotia Momentum® VISA Infinite* card is recognized year after year as one of the best cash-back credit cards in Canada.
Currently, there is no annual fee in the first year, including on additional cards. And you can earn 10% cash back on all purchases for the first three months (up to $2,000 in total purchases).
With the Scotia Momentum® VISA Infinite* card, you get:
- 4% on groceries and recurring payments
- 2% on gas and daily transit
- 1% on all other purchases
For example, if you spend $1,000 per month on groceries and/or recurring payments, you’ll earn $40 cash back per month, or $480 cash back per year with this card for this category of purchases! And that’s not counting the other purchases you’ll make with this card and the advantages it offers (particularly in terms of insurance).
The Scotia Momentum® VISA Infinite* card is an excellent Visa credit card for cash back.
And its insurance benefits are excellent!
Paying taxes by credit card - To unlock welcome bonuses
The other option that can be rewarding to use Plastiq or PaySimply is in order to reach a spending threshold that will unlock a welcome offer on a credit card.
This can be especially useful for premium credit cards that often require a significant level of spending in the first few months to earn the bonus points.
For example, you have to spend $7,500 in three months to get the Platinum Card® and $5,000 in three months for the American ExpressMD Gold Small Business Rewards Card. Since Plastiq no longer accepts payments with American Express, you will have to use PaySimply instead.
Individuals can also apply for American Express business cards. Here’s how:
Here are some other examples of credit cards that require a certain level of spending in the first few months to unlock great welcome bonuses:
- National Bank’s World Elite Mastercard®: $5,000 within the first 3 months
- TDMD AeroplanMD Visa Infinite Preferred* Card: $7,500 in the first 6 months
- AeroplanMD* American ExpressMD Prestige Card: $6,000 within the first 6 months
- TD First Class Travel Visa Infinite* CardMD: $5,000 in the first 6 months
Note that these credit cards include many other benefits such as insurance, travel credits, free checked luggage and much more. Take the time to review them to see which one will be most beneficial to your travel habits and goals.
If you want one of these premium cards, but they seem out of reach because of the spending threshold required to unlock the welcome offer, your tax payments could help unlock this bonus.
You can also combine this strategy with gift cards to successfully reach a spending threshold.
Before you get into the process of making tax payments, do your calculations to see if it’s worth it to sign up for new credit cards, and which one to sign up for based on the amount you’ll have to pay.
Tax season is never the happiest time of year when you owe money. At least by using these strategies with PaySimply and Plastiq, you can take the opportunity to go out and earn cash back or rewards points to help fund some of your upcoming trips!
Ready to try one of these options? Use our tutorials: