Historically, credit card companies didn’t allow gambling transactions to be processed on their cards but nowadays you can use your credit card for gambling. Pay for lotto tickets, buy casino chips or play poker online and just about every gambling institution accepts credit cards. But beware, most credit card providers will categorize these transactions as cash advances, which is the same as a cash withdrawal, and charge you higher interest and fees.
Credit card companies charge a cash advance rate for gambling transactions
When you make a gambling transaction on your credit card, the charge will typically be categorized as a cash advance. This is because gambling charges are considered cash equivalents where you spend money to get another form of money.
These transactions will cost you a cash advance fee usually between 3% and 5% and a higher cash advance APR which could be up to 22.99%. This means that you will be paying a fee plus a greater amount of interest on the amount that you charged to your card. Cash advances are also commonly exempt from any grace period, which means you’ll be charged interest on gambling transactions immediately from the day they’re made.
Example: How much could a gambling transaction cost on my credit card?
Suppose your credit card issuer and the betting merchant accept gambling transactions. So you decide to place a total of $1,000 worth of bets on a sporting event. On a credit card with a 3% cash advance fee and a cash advance APR of 28%, here’s what could potentially happen:
- If you pay the minimum amount each month.
If your card balance was $0 before the gambling transaction, and this remains the only transaction on the card, you would pay $1,982 in total over five years and five months.
- If you pay the full amount after 30 days.
Assuming this is the only transaction on your card, you would pay $23.33 in interest, plus $30 for the cash advance fee. This is on top of the original $1,000, bringing the total you’ll pay off the card to $1,053.33.
- You pay the total amount later that day.
You would have to pay $0.07 in interest, plus $30 for the cash advance fee on top of your $1,000 bet. This means it would cost $1,030.07 in total.
If you are set on using a credit card for gambling it may be wise to consider using a low rate cash advance credit card to avoid paying higher fees and APR. Just note that these cards usually do not come with any rewards or benefits.
Compare low-rate cash advance credit cards
Using a credit card at gambling establishments
If you’re at a gambling establishment, using your credit card for non-gambling activities — such as buying drinks or meals — could also attract the cash advance fee and interest rate. When this happens, it’s because the establishment’s merchant category code is preset to process gambling transactions. So, when the charge goes through to your credit card company, it will most likely be processed as a gambling transaction or cash advance.
Tip!If you’re planning to use your credit card for dinner, drinks or anything else at a venue that allows gambling, call your credit card company first and ask them if your spending would be considered a purchase or a cash advance. Alternatively, get a receipt for your spending and – if you think it is wrongly processed as a cash advance – contact your issuer and explain the transactions were not for gambling.
What should I think about before using a credit card for gambling?
Make sure you consider these factors before using your credit card for gambling transactions:
- Interest rate.
The cash advance interest rates on most credit cards are usually much higher than your regular purchase APR. This rate can be as high as 22.99%.
- Cash advance fee.
In addition to the interest charges, you will be charged a cash advance fee, typically between 3% and 5% of the transaction. This means it would cost you between $15 and $25 for a $500 bet.
- No grace period.
Cash advances are not eligible for the standard grace period on your card, meaning interest begins accruing immediately when you make a gambling transaction.
- No rewards.
Gambling purchases along with ATM cash withdrawals and are usually not eligible to earn credit card rewards points.
- Promotional offers.
Credit cards that offer bonus points for new customers will likely exclude gambling purchases from the list of eligible transactions required to take advantage of those deals
If you use your credit card for a gambling transaction, know that it will likely be processed as a cash advance. This comes with a cash advance fee and higher APR, which makes using a card to gamble not a wise choice.
However, if used properly for other kinds of eligible purchases, a credit card can be a very rewarding tool. Compare the best rewards credit card options to find one that might fit your needs.