Why you shouldn’t use your credit card for sports betting – Forbes Advisor

Are you planning to charge your credit card for your next game day wager? This may be possible, but it’s a risky bet. Credit cards are ubiquitous and convenient for digital transactions, but using your card to fund online gambling can put you in debt, and if you’re not careful, it can hurt your credit. Read ahead to find out when credit cards can’t be used for online sports betting and why credit cards aren’t the best option when they do.

Can I use my credit card for sports betting?

As with many “Can I use my credit card for…” questions, the short answer is: In some cases. It is now commonplace to use credit cards for almost all payments. With online betting, however, things get even more complicated. Sports betting is newly legalized in most of the United States, and regulation of the industry is still in its infancy, with many changes expected over the next few years.

While it is legal to use credit cards for online gambling in most cases, some card issuers, online sportsbooks, and regulatory bodies (both internationally and in the United States) are skeptical of the practice. is showing. Whether a credit card works in the first place depends on a number of factors, including sportsbooks, credit card issuers, card payment networks, and the state in which the consumer is betting.

Why can’t my credit card be used for online sports betting?

Credit cards sometimes work to top up online betting accounts, but they are also often declined. In fact, online gambling credit card deposits are declined more often than any other payment method. Unlike most other card declined situations, this does not always have to do with fraud alerts or credit limit exceeded. Instead, it is usually caused by either the credit card issuer or the sportsbook prohibiting its use.

Many credit card issuers do not consider gambling an acceptable purchase. Because they think it’s too risky. This is primarily out of concern that banks and other credit card issuers may inadvertently facilitate illegal activity and face legal consequences, even when applicable state laws permit online gambling. It’s for At the moment, this stance is not uncommon, but could change as legislation becomes more clear.

In contrast, US sportsbooks may take steps to ban credit cards as a measure against excessive bettor debt rather than debt. Sports betting is considered gambling, but fantasy sports leagues generally are not.

Can I use credit cards for online sports betting in my state?

The federal government has some control over US gambling laws, but it’s largely up to the states to decide what types of sports betting are allowed. At the time of this writing, legal sports betting is active in 31 states and Washington, D.C., and according to the American Gambling Association, five other states are legal but still operating. not. Of the states that allow it, 26 (and DC) allow online or “mobile” betting. In other states, credit card users may hit a wall when trying to open and fund an account, regardless of their intended payment method.

States that allow online gambling reserve the right to further regulate the activity, such as the types of sports that can be wagered on and acceptable payment methods. Some states, along with several other countries, are trying to limit gambling as a result, pointing to the use of credit cards for gambling as a cause of increased debt risk.

Individual state laws regarding the use of credit cards for online gambling are fluid and inconsistently enforced, so it can be difficult to determine exactly what is allowed in any given state. States that ban credit cards include Iowa, Tennessee, and Massachusetts. States can also limit the number of cards and amount of credit that can be used in a single online gambling account. Such government regulations are primarily aimed at changing consumer behavior (rather than mitigating security or money laundering concerns), and as the age of legal online gambling in the United States progresses. may increase.

Disadvantages of using credit cards for sports betting

As tempting as it may be, using a credit card for sports betting is largely a bad idea. There are several reasons, including how issuers impose fees on transactions, the security he risks involved, and the risks of wasting money.

Treated as a cash advance

Among credit card issuers that allow sports betting transactions, it is common to treat gambling payments as cash advances rather than regular credit purchases. This remains a major downside to using credit cards for sports betting. This is because of the added cost of using credit and the risk of causing serious debt build-up.Forbes Advisor recommends against using credit cards for cash advances.

When charging a sports betting transaction to a credit card, issuers consider it a practice comparable to using a credit card to withdraw cash at an ATM. 5% of the transaction amount) as well as individual cash advance APRs that start accruing interest immediately with no grace period.

These high cash advance rates can push up to 30%, making borrowing inefficient even if the debt is paid off relatively quickly. Additionally, cardholders can start to run out of cash advance credit limits, which are often limited to a fraction of their overall credit limits. Cash advance transactions generally do not earn rewards.

security risk

While some consumers are more comfortable sharing their credit card information than others, cardholders are exposed to some degree of risk when making purchases. While everyday purchases from well-known or widely trusted companies are relatively safe, consumers should be extra careful with this sensitive information when it comes to online gaming transactions.

The general concern is the exposure of improperly protected information to unwanted parties after the transaction, not the direct fraud risk on the part of the betting site. These sites store large amounts of sensitive consumer information and have proven to be good targets for hackers. Options such as virtual cards, other prepaid cards and cryptocurrencies can provide a barrier between a bettor’s financial information and an online sportsbook, but credit card information remains a liability after purchase.

deposit fee

Some online sportsbooks may charge a deposit fee for depositing funds into your account. This is sometimes called a processing fee and is usually a percentage of the transfer amount.

There may be no way around these, but some sportsbooks have different deposit fee policies based on the payment method. For example, a sportsbook may choose to waive debit card deposit fees as a means of enticing customers to prepay money they already have instead of gambling on credit.

Given the fees that credit card companies charge vendors (in this case, sportsbooks) each time a customer swipes their card, sportsbooks typically prefer to waive wager deposit fees when credit cards are involved. Do not select. These fees may seem like a small price to pay given the convenience of instant credit, but over time the costs can start to add up, especially when you also factor in other fees such as cash advance fees. I have.

easy to waste

Online sports betting with plastic combines two sensitive areas: credit card debt and gambling. Each invites risky spending patterns on its own, and mixing them can create a toxic cocktail.

For some cardholders, the increased risk of exposure to excessive spending is the top concern of all. Excessive credit card debt can quickly become prohibitively expensive and difficult to manage. This is a more common problem than many people think. The average American had over $5,500 in credit card debt last year.

The only thing worse than spending money you can’t afford to lose is spending money you don’t need in the first place. Even borrowers who are confident of their ability to repay still face problems because carrying on credit card debt, even temporarily, is much more expensive than most other forms of debt such as personal loans. It is possible. Forbes Advisors do not recommend using personal loans to obtain capital for gambling ventures.

Another wrinkle concern is the ease of paying with a credit card. Debit cards, his ACH transfers, prepaid cards and virtual cards are limited to funds the gambler already has. In this way, the money the bettor set aside for gambling is contained and can be easily escaped if the money runs out.

Credit cards do not necessarily have the same finality. The only direct limit on spending at this time is your credit limit. This is far more than the cardholder actually charges the card to maintain good credit. Credit card information is often stored by betting sites so bettors can easily deposit and top up their accounts with a single click.

Gambling sites may further encourage credit card use by offering reward credit cards such as the MGM Rewards Mastercard. Combine these factors and circumstances with 24/7 gambling online sportsbooks (albeit often very useful mobile betting apps) and how easy it is to form risky habits. is easily understood.

Conclusion

There may be some fees involved, but bettors should carefully assess the other downsides of using credit cards when betting. The risks remain real for any financial situation. Sports bettors are at least twice as likely to experience gambling problems as the average gambler, and this rate only rises when betting online.

For many, managing this risk with a credit card in hand only adds to the challenge. At the intersection of newly legalized sports betting and evolving gambling technology, there are always challenges ahead. Therefore, we recommend that you limit your costs and risks by not using credit cards.

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