Using a credit card for gambling

Know exactly what it will cost you when you use your credit card for a gambling transaction.

Since 14 April 2020, gambling using credit cards has been banned in the UK, but this guide has been preserved for historical reference. While you may technically still be able to gamble with your credit card by using cash advances, this is highly inadvisable and may lead to serious financial stress.

Credit cards are convenient, but if you wanted to place a bet on the Grand National, pay for scratch cards or lotto tickets, or play poker online, they suddenly became quite expensive. Most credit card providers categorized gambling transactions differently from everyday purchases and charged high rates (up to 34.95% p.a.) and fees for them. Others might not have allowed you to use your card to gamble at all.

First and foremost, it should be noted that gambling with the bank’s money is a pretty terrible idea, and one which could lead to significant financial difficulties.

How card issuers classified gambling transactions

When gambling with a credit card was allowed, the charge will typically be categorised as a cash advance. This is because gambling charges are often “cash equivalents” or “cash substitutes” (i.e. where you spend money to get another form of money).

Although it can vary from card to card, cash advances are almost always bad news. There are four main reasons for this:

  1. They attract a fee. Card issuers typically charged a percentage-based fee with a strict minimum, for example, “3% of the transaction, minimum £3”.
  2. Interest is usually charged from the day the funds leave your account. If you clear your balance in full each month, almost all credit cards will give you a grace period of up to around 55 days 0% interest on purchases. However, cash advances are usually exempt from this significant benefit. They’re also usually exempt from any longer-term introductory 0% purchase offers.
  3. They are usually exempt from any rewards. As you might expect, you can’t earn cashback on cash withdrawals, for example. The same goes for rewards points and air miles. Additionally, if you need to hit a minimum spend to enjoy a particular benefit, cash advances may not count towards this.
  4. They are usually visible on your credit file. For mortgages and larger loans, lenders may conduct a thorough assessment of your credit report and your financial accounts before making a decision on your application. Credit card cash withdrawals could be interpreted as irresponsible financial behaviour.

Using a credit card at gambling establishments

If you were at a gambling establishment, using your credit card for non-gambling activities – such as buying drinks or meals – could also have attracted the cash advance fee and interest rate. When this happened, it was because the establishment’s merchant category code was preset to process gambling transactions. So, when the charge went through to your credit card company, it most likely was processed as a gambling transaction or cash advance.

Example: How much did a gambling transaction cost?

Say you decided to use your credit card to place a total of £200 worth of bets on a sporting event. On a credit card with a 3% (minimum £3) cash advance fee and a cash advance rate of 21.9% p.a., 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 could pay around £206 in interest in total over 8 years and 5 months.
  • If you pay the full amount after 1 month. Assuming again that this is the only transaction on your card, you would have to pay around £3.65 in interest plus £6 for the cash advance fee.

The bottom line

Gambling with your credit card is no longer allowed. However, this guide has been preserved to show you the fees that a gambling transaction could incur on your credit card,

Alternatively, you could research and explore workaround e-wallet solutions like PayPal, although PayPal has its own stringent rules around gambling transactions and prohibits some forms altogether. Whatever you decide, always remember to gamble responsibly.

Finder survey: Do you understand all the features that credit cards can have?

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Source: Finder survey by Censuswide of 1032 Brits, December 2023
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