Our 2023 property taxes on our house were due in April. As I’ve written about previously, property taxes in Colorado are actually very low when compared to other states, but that doesn’t mean they aren’t a significant expense (ours were $5571 for 2023). I always used to pay these by electronically paying from my bank account, but in the past couple of years I’ve switched to paying by credit card. On the surface, that seems to be a bad move, because there is a 2.19% “convenience fee” (surcharge) for using a credit card, which amounted to $122.02 this year. Obviously, the “convenience” of using the credit card isn’t worth $122, but let’s dive a bit deeper into why this made sense for us.
First, by putting it on the credit card, we received about 6 weeks of “float” between the time we paid our property taxes and the time we actually have to pay the credit card bill. Using the current interest rate of 4.25% on our Ally Savings account, that works out to about 0.49%, which effectively lowers the surcharge to 1.7% ($94.71). Better, but still not worth it.
The credit card we used (more on this below) gives 1.5% cash back (on the full amount which includes the surcharge), which now effectively reduces the surcharge to 0.17% ($9.31). Much better, but still not worth it.
But we opened up a Chase Business Ink Unlimited Card* (*that’s a referral link, but you could always google it and not use my referral link), which comes with a $750* signup bonus if you spend $6,000 in the first 3 months. (*Those are actually 75,000 points, which we’ll then transfer to our Chase Sapphire Preferred Card, which means they could be worth 1.25 points each in the Chase Travel portal. That would make it worth $937.50, but I’ll just use the $750 in this comparison.) Which now means that instead of a surcharge, we’ll come out $740.69 ahead (which you could think about as a 13.3% discount on our property taxes). Now it’s worth it.
Important Caveat: As always, you should only use credit cards if you can use them responsibly. I define that as only using them for items you would purchase anyway, and setting them to pay off in full each month automatically from your bank account. If having additional credit cards will tempt you to spend more, or you have a history of not paying them off in full each month, then this is a bad idea.
Some of you may wonder about getting a “business” credit card. In order to qualify for a business credit card, you either need to own your own business or have self-employment income. Since I teach financial literacy classes and also make a little bit from selling books, that qualifies. You don’t have to have a “formal” business to get a business credit card, just self-employment income.
And, of course, there are personal cards you can get that typically have lower, but still significant, signup bonuses that would be enough to cover the surcharge. If you’re interested, here are some previous posts about responsibly using credit cards to earn cash back and signup bonuses.
- How to Make $2,000 in 30 Minutes (For Real)
- Turn 30 Minutes into $15,000 (no smoke and mirrors, just math)
- Chase Sapphire Preferred Increases Their Bonus (it’s back to the usual amount, but still great)
- Travel Hacking and Geo Arbitrage Resources
- Read More: Our 2024 Credit Card Rewards and all my credit card posts.
Fisch Financial 