Gambling and credit cards are a dangerous combination

Gambling and credit cards are a dangerous combination

By Marianne Curphey

Published: 23 August 2012

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Credit cards make it easier to spend money you don't have -- and that can be a serious problem when it comes to gambling.

A 2011 survey for the Gambling Commission found that the number of people gambling in the UK is on the rise and that nearly three-quarters of UK adultshave gambled. Although UK licensed gambling halls don't allow consumers to use credit cards to gamble, online betting sites based both here and overseas do.

Here's what to know before using plastic to place a bet.

Use your card, lose even more
When using a credit card to gamble, the money you bet may not be the only money you lose.

Instead of treating gambling transactions as normal purchases, some credit card companies treat them as cash withdrawals. Cash withdrawals involve extra fees -- plus, instead of having the normal grace period to pay the balance, you start accruing interest immediately from the day you withdrew the money.

"Check to see if there is an extra charge or any restrictions in place, as you may have to pay an extra percentage charge if it is classed as a cash advance," says Doriena Koldenhof of the UK Cards Association.

You may also be restricted in how you can use your card -- so check with your provider before using it on a betting website. Some don't allow cards to be used for online gambling.

A "toxic combination"
When you bet with plastic, the money you are spending may not seem "real."

"Anything that distances you from the actual sense of reality of how much you are betting has consequences. It is a different experience from spending cash and feels more distant," says Adrian Scarfe, co-founder and head of clinical training for GamCare, which provides support for those with gambling addictions.

Using a credit card to gamble is "the extreme end of bad money management" and "a massive red flag" that you need help both for financial problems and a possible gambling addiction, says Una Farrell, spokeswoman for the Consumer Credit Counselling Service (CCCS).

Farrell describes credit cards and gambling as "a toxic combination."

"We tell consumers not to use credit cards to repay other credit or to pay for essentials," she says. "If you are using your card to gamble then you are really in trouble, and you need to speak to someone urgently as you are likely to have both a debt and a gambling problem."

One of the biggest problems with using credit cards to gamble is that you may be able to avoid your debts for a substantial period of time by juggling cards, says Richard Kingdon, managing director of London-based addiction counselling service City Beacon.

"The trouble is that credit cards enable you to carry on gambling and to keep getting another card to bridge the cost of paying off other cards,  Kingdon says. "Gambling addiction is as serious and destructive as crack cocaine dependency."

Is it possible to use credit to gamble responsibly?
Despite the risks, online gambling is a pastime for many. So is there any occasion when it might be safe to use credit cards to gamble?

Farrell thinks not.

"The worst thing that could happen is that you could win, and that would encourage you to continue gambling," she says. "You should not be using credit to gamble with money that you don't have."

Moreover, Farrell points out, if a website accepts only credit rather than debit cards, you might ask yourself why the company is doing this.

For occasional betters (such as those who may just have a flutter on the Grand National or the National Lottery), responsible credit card-funded gambling may be possible, Kingdon says.

"It is when it starts to dominate your life that you have a problem," he says. "Plenty of people can safely bet on a football match and it does not consume your life, but some people are wired differently and gambling starts to dominate their lives."

Those with good money management skills might also be able to gamble responsibly with credit cards, Scarfe says. Online gambling sites often keep records that enable you to keep track of what you have spent and include "player protection measures" to ensure that you don't overspend.

"When you log on, there are controls online that track your behaviour, and the betting website can see your patterns of play," Scarfe says. "And if you are spending more than usual, [the site] can ask you if you want to continue."

Those who are "able to control their spend," Scarfe says, may be then be able to make the responsible decision.

How to know if you have a problem
No matter how you fund your gambling, watch out for warning signs that your hobby is becoming an addiction.

One of the biggest red flags?

"When [gambling] is costing you more than money -- when it is affecting other areas of your life like your relationship, family, career, wellbeing," Kingdon says.

If you suspect you have a gambling addiction, tackle both the financial and the gambling aspect of the problem at once, Farrell says.

"Neither can wait, and if you go to a charity for a debt problem, they will refer you to a gambling addiction charity or vice versa," she says.

See related: 3 signs your relationship is headed for financial trouble, Cardholders warned about online gambling