They're two things you might think aren't related at all, but it's not the case. In fact, there's two ways that your credit cards can play a role in your tax planning and response plan, depending on whether you owe or are the recipient of a big, fat refund check. Listen in to get the scoop on the importance that your credit cards can have around tax time whether you owe or not.
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Welcome to Credit 101: simple answers to the most common credit questions, like: "How can my taxes impact my overall debt picture?" There are actually two ways: we'll tell you more.
Once you file your taxes, if you learn that you owe while you're short on cash, you might need to pay Uncle Sam with the help of a credit card or dipping into your emergency fund. While it helps you take care of the tax balance you owe right now, if your account balances are already running high, it could push you over the recommended 30% credit usage. If that's the case, you'll want to make paying down your balances a priority to get closer to zero in the months ahead (it'll help you save on interest, too).
On the other side of the coin, if you end up with a refund after filing, there are all kinds of offers looking to help you maximize the impact of some tax return cash. Instead of running off with your return check in hand to start a shopping spree, you might think about using it to jump-start a debt repayment plan of your own. Putting that amount to work trimming down your debt can be a big help in a few months, and help keep you credit usage low for whatever comes next.
Have more questions about your credit? Check out Experian-dot-com-slash-Credit-101 for more answers and help. Thanks for listening, and we'll catch you next time on another episode of Credit 101, brought to you by Experian.