Consumer Payment Card News

Tax Via Cards

American Express reported yesterday its ‘Everyday Spending Index’ shows 22% of Americans want to pay their annual tax bill with a credit or charge card. AmEx says last year its cardholders charged 49% more than 1996 for federal, state and local government services. The ‘Index’ also revealed the amount of taxes due had a strong influence on consumers’ willingness to use cards for taxes. Only 10% of those owing an average of $2,704 were inclined to use a payment card.

The American Express “Everyday Spending” Index found that while the U.S. Government and the credit card industry discuss the possibility of accepting credit or charge cards for income taxes, taxpayers would welcome the opportunity to pay their tax bill with a credit or charge card. April 15th is on the horizon, and this may be one way to make tax payments more convenient.

According to the American Express study(A), 72% of consumers feel government agencies should offer as wide a range of payment options as possible for services. With regard to income taxes, 22 percent of those surveyed are interested in paying their annual tax bill with a credit or charge card. “This is an impressive number of positive responses given the large number of potential users it reflects. It shows that many Americans would like to pay their tax bill by credit or charge card, which could be a great benefit to governments on many levels,” said Yvonne DeCicco, vice president of Government Services, American Express Travel Related Services Company, Inc. (TRS). “Payment of taxes by charge or credit card would be easier and more convenient for the taxpayer, while helping to speed up collections and improve customer satisfaction.”

Credit and charge card spending for federal, state and local government services continues to increase. American Express Cardmember spending on these services increased 49% from 1996 to 1997.

The study also found that the top 6 reasons why consumers want to use credit and charge cards to pay their income taxes are: convenience (87%), can float for 30 days (64%), prefer to write less checks (61%), can better track their spending/manage their finances(58%), low on cash at the time payment is due (51%), and can accrue reward program points (45%).

The Index revealed that the amount of taxes due had a strong influence on consumers’ willingness to use credit or charge cards. For example, those with an average tax bill of $208 were very interested in using cards, with 29 percent saying they would if given the choice. In comparison, 10% of the group owing an average of $2,704 on tax day indicated they would be inclined to use credit cards.

A similar split was seen between age groups, with 26% of 18- to 44-year-olds reporting they would like to use charge or credit cards to pay their tax bill, compared with 17% of those age 45 and over. The survey, which polled 402 consumers, revealed that the average amount of income taxes Americans paid last year on April 15 was $789.

Nine percent of Americans report having taken an extension on their taxes because they did not have the cash on hand. If credit or charge cards were welcome this year, 18% said they would likely use plastic to make their tax payment.

The American Express study also found that as society continues to move away from cash and checks, consumers seek the convenience of using charge or credit cards for more of their everyday expenditures including fast food meals, doctor visits, groceries and monthly utilities. According to the survey, 35% of consumers already use plastic to pay for at least some or all of these expenses, and another 14% said they would if given the choice.

American Express is welcome at more of the stores, restaurants, hotels and service providers where Cardmembers spend on everything from health and beauty aids to computers to a weekend away. Current American Express research shows that based on the way American Express Cardmembers use their American Express Cards, Cardmembers can put 93 percent of their plastic spending on American Express. Presently, a fast growing number of merchants worldwide welcome American Express, with a new establishment accepting the Card every two minutes.

American Express Travel Related Services Co. Inc., is a wholly owned subsidiary of the American Express Company — a diversified worldwide travel and financial services company founded in 1850. It is a leader in charge and credit cards, Travelers Cheques, travel, financial planning, investment products, insurance, and international banking.

(A) The American Express Everyday Spending Index was conducted to determine consumer spending habits across a variety of industries which have introduced credit card and other plastic payment options within the last several years. The industries surveyed are: supermarket, fast food restaurants, charities, healthcare, government services, telecommunications, and recurring services such as cable, utilities and local and long distance telephone.

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