Know exactly what it will cost you when you use your credit card for a gambling transaction.
Credit cards are convenient, but if you want to place a bet on the Melbourne Cup, pay for scratchies and lotto tickets or play poker online, they are usually very expensive. Most credit card providers categorise gambling transactions differently to everyday purchases and charge high rates (up to 29.49% p.a.) and fees for them, while some don’t let you use your card to gamble at all.
Credit card companies that charge the cash advance rate for gambling transactions
Card providers typically categorise gambling transactions as cash advances because they are often “cash equivalents” or “cash substitutes” (ie. where you spend money to get another form of money). These transactions attract a cash advance fee and the higher cash advance interest rate. Cash advances are also commonly exempt from any interest-free period, which means interest starts accruing on your gambling transaction from the day it takes place. In this table you can find out which providers allow gambling transactions and the range of cash advance interest rates for personal credit cards.
|Provider||Gambling transactions||Cash advance rate (varies by card)|
|ANZ||Cash advance rate||14.49% p.a. - 21.74% p.a.|
|Bankwest||Cash advance rate||11.99% p.a. - 21.99% p.a.|
|Bank of Melbourne||Cash advance rate||19.49% p.a. - 20.24% p.a.|
|Bank of Queensland||Prohibited||N/A|
|CommBank||Cash advance rate||14.55% p.a. - 21.24% p.a.|
|HSBC||Cash advance rate||21.99% p.a.|
|NAB||Cash advance rate||13.25% p.a. - 21.74% p.a.|
|St.George||Cash advance rate||19.49% p.a. - 20.24% p.a.|
|Westpac||Cash advance rate||19.49% p.a. - 21.29% p.a.|
Using a credit card at gambling establishments
Using your credit card for non-gambling activities at a gambling establishment can also incur the cash advance fee and interest rate. This is because the establishment’s merchant code has often been preset to process gambling transactions, so your credit card company will most likely also process your dinner at the casino as a gambling transaction or cash advance.
Factors to consider when using a credit card for gambling
Make sure you think about 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 transaction rates. This rate can reach as high as 29.49% (at the time of writing).
- Cash advance fee. In addition to the interest charges, you will be charged a cash advance fee, which can be the greater of either a percentage of the transaction amount or a minimum fee. The cash advance fee is usually 3-4%, which means you can expect to pay $15 to $20 in fees for a $500 sporting bet.
- No interest-free days. Cash advances are not eligible for the standard interest-free period on your card. This means that interest begins accruing immediately when you make a gambling transaction.
- Rewards. As with cash withdrawals from an ATM, travellers’ cheque purchases and other similar cash equivalent transactions, you will not usually be able to earn credit card rewards points for gambling transactions.
- Promotional offers. Credit cards that intermittently offer 0% interest or bonus points for new customers will likely exclude gambling purchases from the list of “eligible transactions” required to take advantage of those deals.
Tom uses his credit card to place a bet on a tennis match.
Tom enjoys watching tennis, and part of that pleasure comes from betting on the live tennis matches that he watches. Tom discovers the ease of making bets on TAB online one day, and places several bets on the month’s upcoming matches. He bets a total of $2,000 on four games and, without thinking twice, uses his credit card to pay. His card charges a 3% cash advance fee and a cash advance rate of 21.99% p.a. Here’s what could potentially happen:
- Tom pays the minimum amount each month. Assuming his card balance was $0 prior to that transaction and this remains the only transaction on his card, Tom will pay $5,735 in total over 16 years and nine months.
- Tom pays the full amount after 30 days. Assuming again that this is the only transaction on his card, Tom will have to pay $36.15 for interest (21.99% X $2,000 X 30/365), plus $60 for the cash advance fee (3% of $2,000) on top of his $2,000 principle, which will be $2,096.15 in total.
- Tom pays the total amount later that day. Assuming that this is the only transaction on his card, Tom will have to pay $1.20 in interest (21.99% X $2,000 X 1/365), plus $60 for the cash advance fee (3% of $2,000) on top of his $2,000 principle, which will be $2,061.20 in total.
What if Tom has other debts?
How you pay off your gambling debts will depend on whether your account was opened before the July 2012 credit card reform or after. If it was before, providers could stipulate that repayments are made on outstanding items in designated order, meaning that the most recent gambling transaction will be paid off last. If the account was opened after July 2012, then Tom’s repayments would go to the debt that was accruing the highest amount of interest first. Considering that gambling transactions are usually considered cash advances and therefore accrue more interest, it’s likely that the repayments would go there first. It’s important to remember this and to know how your repayments are allocated if you want to get your debt under control.
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, prepaid cards or cash. If you’d still rather use a credit card, check out these low cash advance rate cards. You could also research and explore workaround E-wallet solutions like Skrill and Neteller, or PayPal, although PayPal has its own stringent rules around gambling transactions and prohibits many forms of them altogether. Whatever you decide, always remember to gamble responsibly.