You Can Now Pay the CRA by Credit Card
I just read this news report saying that you can now pay your taxes using a credit card. At first this sounded exciting. Like many people who have their finances under control, I use credit cards for everything possible to get the bonuses that come with it and have a one-month interest-free buffer on payments. However the article mentions that you can’t pay the CRA directly. Instead, a company called Plastiq allows you to make a payment with a credit card and they then send it to the CRA.
That’s where it gets less appealing. The service comes with a 2% fee, which will be more than the rewards most cardholders get (and presumably allows Plastiq to pass the full amount on to recipients that aren’t willing to pay credit card processing fees). I believe you are also required to pronounce “Plastiq” with a French accent and/or Zoolander voice when making a payment.
With a fee like that, the service is turning away from the good uses of credit cards (getting rewards without paying interest) and the marginal uses (keeping your cash for a bit longer) and encouraging the worst uses (paying a lot of interest because you were unprepared).
We have an Aeroplan card with a return that I estimated long ago at 1.8%. The flights we booked last month matched this perfectly even after accounting for the international fuel costs and fees we had to pay (only $700 to get free flights!). That doesn’t count the annual fees which will eat up some of those returns, which could be anywhere from 1/3 to 1/2 depending on the time between trips.
Paying a 2% fee to get those rewards would be a decision nearly as bad as paying interest on a credit card balance. I haven’t shopped for credit cards in a while but if anyone is getting more than 2% back on their card this might be an interesting option.
On an interesting side note, we got a Costco membership today and they were pushing an American Express card with no fees and 1% cash back. I can’t imagine that this saves them money in any way since they already don’t accept other credit cards. The only reason I can see for this is that American Express is paying a commission back to them in hopes that the card will be used for other things. It does have rewards of 2-3% on certain categories of purchases but they are mainly things that we don’t use much like restaurants.