02/18/2015 10:00 pm ET Updated Apr 20, 2015

Top 3 Credit Cards for Paying Taxes

By Jonathan Roisman,

The deadline to file your taxes is quickly approaching, and for those who owe the IRS money, this can be a very stressful time. To make matters worse, anxiety levels might rise if you don't think you have the money to pay your tax bill on time. For most, setting up an installment plan with the IRS is a good option because you will be able to spread out your payments to the government and avoid paying late fees. For some, however, paying your tax bill all at once with a credit card might be the way to go, even with the 1.87% credit card processing fee.

When to consider paying your tax bill with a credit card

If you know you won't be able to pay your taxes off in full to the IRS within 120 days, a 0% intro APR credit card might be a better choice, as long as you can pay it off within 12 to 18 months. This is because the IRS charges a one-time $120 fee to set up a standard installment plan if you want it taken directly from your paycheck each month, or a one-time fee of $52 if you pay directly from your bank account. While the fees are relatively reasonable, it doesn't include any late charges you can incur if you don't pay your debt each month. On the other hand, with a 0% intro APR credit card, you won't pay any interest charges as long as you pay your bill in full before the interest rate kicks in. This is a viable option for many people, even with the small credit card processing fee you'll have to pay the IRS.

Best credit cards for paying taxes

With so many credit cards available, you may find it difficult deciding which card is best for paying your taxes. We've detailed the top three cards to help you save money as you pay your balance and possibly even earn some rewards in the process.

Best Intro APR: Citi Simplicity

There are a lot of reasons why Citi Simplicity is one of our top-rated credit cards. First, it comes with a generous 18-month 0% intro APR. This will allow you to pay off your IRS bill without paying any interest as long as you do it within 18 months. To top it off, there are no late fees, annual fee or penalty rates -- what you see is what you get.

Best Rewards: Barclaycard Arrival Plus World Elite Mastercard

Although the Barclaycard Arrival Plus World Elite Mastercard doesn't offer a 0% intro APR like the card detailed above, you may find that the generous rewards and intro bonus points offset the IRS credit card charge and installment plan fees, depending how much your total balance is. This card gives you 2% on all purchases when redeemed for travel expenses, which is equivalent to 2.2% cash back when you factor in the 10% redemption bonus you get when you redeem your points for travel. Not only that, but it also gives you 40,000 bonus miles -- a $400 value -- after you spend $3,000 within the first three months of opening your account. The Barclaycard Arrival Plus World Elite Mastercard does have an annual fee of $89, however that fee is waived for the first year.

Best Combination of Intro APR and Rewards: Citi Double Cash Card

Introduced in 2014, the Citi Double Cash Card combines 0% intro APR with an effective 2% cash back rate. To start, you'll get 15-month 0% intro APR, which will give you some time to pay your taxes off without incurring any interest charges. To sweeten the deal, you'll get 1% cash back for each dollar you spend, plus another 1% cash back for each dollar you pay on your bill. Assuming you pay your tax debt in full before the 0% intro APR deal ends, you won't pay any interest and you might even make a little bit of money back, even with the 1.87% credit card processing fee with the IRS.

Although paying the IRS with a credit card may not be ideal, it can be useful for some people in certain situations. This is especially true for those who are afraid they'll be late making their payments each month. Read up on our credit card reviews to learn more about the cards detailed above and see other options for paying your taxes. If you haven't filed yet, it's not too late. Check out the best online tax preparation services to save you time and money.

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