With April 15 right around the corner, many Americans have taxes on their minds. And thanks to increased tax breaks that many of us enjoyed throughout the year, some people will soon pay their dues to Uncle Sam. But should a credit card ever being your payment method of choice when it comes to taxes?

The likelihood of owing money to the IRS (versus receiving a refund check) is higher this year than in previous years. Now, this doesn’t mean that Americans are paying more in overall taxes – in fact, the opposite is true for most – but it does mean that paycheck tax withholdings were not properly adjusted throughout 2018.

If you file your taxes only to find that you owe Uncle Sam, you might be wondering what to do… especially if you can’t afford to pay out thousands of dollars unexpectedly. But before you whip out the plastic, consider the impact.

Why People Consider Using a Credit Card

If you finish filing taxes only to discover that you owe the IRS money (especially if we are talking about thousands of dollars), your first thought might be to use a credit card.

Many Americans don’t have emergency savings set aside, and can’t afford such an unexpected expense. Credit cards provide a way to cover that bill before you incur late fees and interest charges from the government.

Even if you are able to pay the bill in full, you might want to use a credit card in order to meet a minimum spend requirement. These thresholds typically stand between you and lucrative sign-up bonuses; if you’re going to be paying that tax bill anyway, it might as well count toward your credit card spending requirement.

By using a cash back credit card, you could also earn rewards on that IRS bill. After all, getting 2% back after paying hundreds (or thousands) of dollars in taxes is an easy way to rack up rewards.

Why a Credit Card Could Be a Bad Idea

No matter how convenient it might be to wipe out your tax bill with a credit card, you might not want to do so. Yes, even if you’d earn rewards on the payment.

The IRS won’t process credit card payments for taxes due; instead, they will send you to a third-party processor. These companies will charge you fees on the total payment processed, which are usually just under 2 percent.

Even with a credit card that offers you 2 percent back on everything you buy – such as the Citi Double Cash Card – you’re essentially breaking even. This allows you to recoup the processing fees, but you probably won’t walk away with much else in terms of rewards.

If you’re putting your tax bill on a credit card because you can’t afford to pay it all right now, a credit card could wind up getting you in a financial bind. Credit card interest rates average about 16%, with some reaching 25% or more. If you aren’t able to pay off the full statement balance, you’ll have to pay hefty finance charges on your tax bill.

Your Options

So, what’s the best route if you’re handed a bill from Uncle Sam this tax season?

If you can pay off the balance in full, writing a check is the cheapest way to do so. Your next-best option would be to use a credit card that offers more in rewards than you’ll pay in processing fees; just be sure to pay off the entire statement balance to avoid racking up interest.

If you aren’t able to pay off your entire tax bill right now, a 0% interest credit card offer could be the solution. This would give you 6-12 months to pay it off without finance charges. You’ll still be charged those processing fees, but you can stretch out the repayment over time.

Full repayment not an option for you? Don’t have a 0% APR card offer to fall back on? Then consider the IRS payment plan.

There are multiple repayment plans to choose from, depending on how long you need. The plan you choose may involve a setup fee, and your balance owed will accrue interest (at a 3% APR). However, this is still much better than credit card interest rates.

No one wants to be caught off-guard by a big tax bill in the spring. If you are, though, take steps to ensure that the payment method you choose is the most affordable and fits your needs.

And thinking ahead to next year: be sure to adjust your paycheck withholdings for 2019!