Use American Express points to pay taxes

By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney.com) -- American Express cardmembers can now use rewards points to pay their taxes, the credit card giant said Monday.

AmEx (AXP, Fortune 500) cardholders can use the points toward federal, state and local income tax payments when they use one of two Web sites to file their taxes: Pay1040.com and OfficialPayments.com.

CDs & Money Market
MMA 0.27%
$10K MMA 0.27%
6 month CD 0.52%
1 yr CD 0.86%
5 yr CD 1.55%

Find personalized rates:
 

Rates provided by Bankrate.com.

But to pay off $5,000 in taxes a cardmember would have to charge $1 million.

That's because it takes a whopping 200 points to pay off just $1 in taxes. And, according to an AmEx spokeswoman, cardmembers typically earn about one point for every dollar charged to their credit card.

"In light of the economy, we wanted to give cardmembers a practical use for their rewards points," said spokeswoman Mona Hamouly.

But given the points-to-tax ratio, it's not clear just how helpful this program will be to consumers.

Generally, rewards points are cashed in for airline miles, dining cards or items in a shopping catalog. For instance, according to the company's rewards Web site, an Apple (AAPL, Fortune 500) iPod mini goes for for 33,500 points, while a $100 Bloomingdale's gift card costs 18,000 points.

A company statement claims this is the first points-for-taxes program of its kind. The Internal Revenue Service did not return a request for comment.

AmEx says it chose to work with the Web sites Pay1040.com and OfficialPayments.com because those two merchants were already in their program -- cardmembers can use their points toward the sites' transaction processing fee, Hamouly said.

After registering for an account on one of the tax payment sites, AmEx customers can select the rewards points option from a menu of payment options. To top of page

 
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.30%4.31%
15 yr fixed3.69%3.64%
5/1 ARM4.15%4.02%
30 yr refi4.27%4.26%
15 yr refi3.66%3.60%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 25,219.38 19.01 0.08%
Nasdaq 7,239.46 -16.97 -0.23%
S&P 500 2,732.22 1.02 0.04%
Treasuries 2.88 -0.01 -0.48%
Data as of 1:21am ET
Company Price Change % Change
General Electric Co 15.05 0.20 1.35%
Bank of America Corp... 31.97 -0.24 -0.75%
Micron Technology In... 44.21 0.71 1.63%
Advanced Micro Devic... 11.82 -0.37 -3.04%
Ford Motor Co 10.61 -0.15 -1.39%
Data as of Feb 16

Sections

Adam Rippon, one of the first openly gay U.S. athletes to compete at the Olympics, has turned down a job as a correspondent for NBC at the Winter Games in South Korea. More

Unfortunately, economic expansions don't last forever. Eventually, a recession comes along and ruins the party. More

Big companies like Samsung and Intel are showing off self-driving vehicles, virtual-reality viewing stations and super-fast video streaming. More

The 4% rule has long been the standard as far as retirement plan withdrawals go. But it certainly isn't perfect. More