Don’t Pay Taxes with American Express Points

January 11, 2010 by Jim

a href="http://money.cnn.com/2010/01/11/pf/taxes/amex_points_taxes/">announced today that you could pay your tax bill using Membership Reward points. For every 200 points, you could pay $1 in taxes through Pay1040.com or OfficialPayments.com. You’d be assessed transaction fee but you could pay for that fee with points as well.

While it may sound appealing, 200 points for every $1 values each point at half a cent each. If you remember from my review of the American Express Membership Rewards program, half a cent per point is remarkably low. While there is no cash option for AMEX points, their recent “everyday expenses” program lets you pay everyday expenses using points that value them at 0.60¢ per point.

Official Payments charges a 2.35% fee for federal tax payments with a credit card, with a minimum of $3.95. Debit cards are charged a flat $3.95 fee.

I think this is mostly a PR move, considering the conversion rate is so low, but if you were contemplating this, consider another option.

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