Research by credit experts TotallyMoney suggests £16m will be spent solely on interest and transaction fees from using credit cards to gamble on the 2019 Grand National Festival.
Credit card payments used for gambling are treated by lenders as a cash advance. Every time a customer makes a credit card cash transaction, they’re charged a withdrawal fee and higher interest rate applies.
A TotallyMoney survey of 1,000 people discovered that only one in ten are aware that lenders treat these transactions as a cash advance.
Interest-free grace periods don’t apply when a credit card is used to gamble. In addition, interest on regular transactions is incurred when the borrower’s statement arrives, whereas with cash transactions, interest applies the moment the activity takes place.
With punters gambling an estimated £250m over Aintree weekend last year, TotallyMoney used data from Defaqto to calculate an average cash transaction fee of 3.19%, and an average cash advance interest rate of 28.22%. It’s thought that of all gambling deposits, 10-20% are made up of credit card payments. Using these figures, TotallyMoney calculated that an estimated £15.7m will be spent on interest and transaction fees during this year’s Grand National Festival.
James McCaffrey, a spokesperson for credit experts TotallyMoney said: “Customers who aren’t aware that gambling is counted as a cash transaction might be left with a long face. This lack of awareness can be a real handicap, especially if you’re an inexperienced gambler and it’s a spur-of-the-moment decision.
“It’s worth noting it’s not just gambling that’s counted as a cash transaction. Requesting cashback when shopping, purchasing foreign currency and even paying a utility bill will all incur withdrawal fees and higher interest rates.
“Cash transactions may also act as a flag on your credit report and lenders may be concerned that you’re not financially stable. It’s worth checking your free credit report to help get back in the saddle and take control of your finances.”