Cash advance credit card costs can get out of control. It's time to stop using your card to make cash transactions.
Even if you never withdraw cash from your credit card account you might still see those expensive fees and charges on your statement. This is because credit card companies categorise transactions to maximise profit, and the most profitable transactions are cash-equivalent ones, including gambling.
The problem here is that you might not realise how much your gambling really costs because you may not be aware of these credit card cash advance rates. Before you decide to use your plastic to gamble, online or otherwise, you should double check to see how those charges will be classed. If not you may wind up paying much more then you expected for that round of bets.
Cash advance credit card charges:
- Higher interest rates. The cash advance interest rate on a credit card is typically higher than the purchase interest rate. On an average these charges are two to five percent more, but can be more than 25% p.a. in some cases.
- Cash advance fees. Once you make a cash-equivalent transaction, you will immediately be charged a cash advance fee. This is usually conveyed as 'the greater of 2% of the transaction amount or $4.00' and is not capped. So, if you were to take out $500 to bet at the track, you will be charged a $10 fee right off the bat.
- No interest-free period. In addition to the excessive interest charges, you do not get to take advantage of the interest-free period for anything deemed a cash advance. This means you will begin paying interest on the transaction the moment your card is swiped. Even if you pay your balance off completely every month you will still have been charged interest on that transaction.
- Other "gambling" transactions. Credit card companies often determine that any purchases made in a gambling establishment are cash advances. Even if you do not spend one dollar at the tables you could be charged the cash advance fee and higher rate for the purchase of food or beverages.
Gambling is an expensive habit and should be avoided entirely when it comes to your credit card. For those who decide to gamble on credit cards you should find one that has the lowest rates for cash advances. If you are trying to get out of the gambling with borrowed money habit, there are plenty of credit card issuers that will not allow you to use them for gambling. It might be a good way to curb your appetite for betting and save you wads of cash.