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US Amex card holders can pay taxes by redeeming points

American Express has finally come out with a useful way to redeem accumulated points on the credit card – pay government taxes!

AmEx 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.

There is a bit of catch ofcourse – 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. An AmEx cardmember typically earn about one point for every dollar charged to their credit card.

The tax payment via redemption of reward points seems to have lower benefits than other redemptions. However, this the first instance where the card is offering an option to pay a bill (in this case tax) rather than spending further. Could this be a sign of times where card holders are tightening their belts and lowering spending.

I would like to see actual discounts like a cash back for redeeming my credit card points instead of pearl necklaces and leather wallets which credit card companies in India seem to offer