February is a month of hearts and… tax forms. While romance might be on your mind, it’s also a smart time to think about your finances. Here at RewardSmart, we want to help you navigate both, maximizing your credit card rewards along the way.

Love is in the Air (and on Your Credit Card)

Valentine's Day is a prime opportunity to rack up rewards. Before you swipe, consider these strategies:

  • Dining Out: If you're planning a romantic dinner, use a credit card that offers bonus rewards on dining. Many cards offer 2x, 3x, or even 4x points or miles on restaurant purchases. Check your RewardSmart app to see which card in your wallet offers the best return for dining.
  • Gifts: Are you buying flowers, chocolates, or jewelry? Some credit cards offer bonus rewards at department stores or online retailers. Again, RewardSmart can help you identify the best card for these specific purchases. Consider using a card with a purchase protection benefit in case that diamond isn't quite as dazzling as you expected!
  • Travel Rewards: Planning a romantic getaway? Use a travel rewards credit card to book flights and hotels. You'll earn points or miles that can be redeemed for future travel, making your next vacation even more affordable.
  • Don't Overspend: The most important tip of all: stick to your budget! Don't let the pressure of Valentine's Day lead to debt you can't handle. Earning rewards isn't worth it if you're paying high interest charges later.

Tax Time: A Rewards Opportunity?

While paying taxes isn't exactly romantic, it can be rewarding. The IRS offers several ways to pay your taxes, including credit card payments through third-party processors. While these processors typically charge a fee (around 1.8% to 2.5%), you can often offset this fee with credit card rewards.

Here's how to determine if paying taxes with a credit card makes sense:

  1. Calculate Your Rewards: Estimate the rewards you'll earn by paying your taxes with a specific credit card. For example, if you're paying $5,000 in taxes and your card earns 1.5% cash back, you'd earn $75 in rewards.
  2. Calculate the Fee: Determine the processing fee charged by the third-party payment processor. For $5,000, a 2% fee would be $100.
  3. Compare: In this example, the fee ($100) is higher than the rewards ($75), so paying taxes with a credit card wouldn't be beneficial. However, if you have a card with a higher rewards rate, or are trying to meet a minimum spending requirement for a welcome bonus, it might be worthwhile.
  4. Consider a 0% APR Card: If you can't pay your taxes in full right away, consider using a 0% APR credit card to spread out the payments over time. Just be sure to pay off the balance before the promotional period ends to avoid accruing interest.

Credit Check Considerations

Whether you're applying for a new credit card to maximize rewards or taking out a loan for a major purchase, your credit score matters. Before applying for any new credit, check your credit report for errors and take steps to improve your score if necessary. RewardSmart partners with credit monitoring services to provide you with personalized recommendations for boosting your creditworthiness.

Actionable Takeaway: Use RewardSmart to identify the best credit card for your Valentine's Day spending and to calculate whether paying your taxes with a credit card is a smart move. Remember to always prioritize responsible spending habits and avoid carrying a balance to maximize the value of your rewards.