Using a credit card for gambling

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

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Credit cards are convenient, but if you want to place a bet on the Grand National, pay for scratch cards or lotto tickets, or play poker online, they suddenly become quite expensive. Most credit card providers categorise gambling transactions differently to everyday purchases and charge high rates (up to 34.95% p.a.) and fees for them. Others may not let you 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 serious financial difficulties.

How card issuers classify gambling transactions

If your credit card allows you to make gambling transactions (most do), 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 usually attract a fee. Card issuers typically charge 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.

Some example policies from credit card issuers

Please note that a card issuer’s policy towards gambling transactions can change over time and from product to product. The examples below are intended purely as examples of what we believe to be fairly typical policies.

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 is 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.

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.

Example: How much could a gambling transaction on my credit card cost?

Say you decide 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

Now that you’re aware of the fees that a gambling transaction could incur on your credit card, it may be wise to consider some alternatives. There are fee-free ways to pay for your wagers, such as debit cards or cash.

You could also 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.

Ultimately, gambling with funds from a credit card is just a bad idea that could land you in financial difficulty.

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