Having a flutter on the Grand National? How betting on plastic could cost unwitting punters MILLIONS in fees
- An estimated £250m will be bet on the 172nd running of the famous Aintree race
- Gambling Commission says 10-20% of online gambling is done on credit card
- Using credit card to place a bet can be treated as a cash transaction and comes with a higher interest rate and an instant percentage fee
- If 15% of that £250m was gambled on plastic, users would be stung with £16m
- Majority unaware card providers treat gambling payments as cash advance
Those thinking of putting money on the 5.15 at Aintree on Saturday could be making a mistake far costlier than backing the wrong horse.
Gamblers who use a credit card to place a bet on the Grand National today could spend up to £16million on interest and transaction fees alone, data from Totally Money suggests.
Roughly quarter of a million pounds is expected to be bet on the 172nd running of the famous race on Merseyside, according to bookmakers Ladbrokes, while the Gambling Commission says between 10 and 20 per cent of online gambling deposits come is via credit cards.
It’s the 172nd running of the world famous race at Aintree this Saturday – but those thinking of having a flutter could be in for a mistake far costlier than backing the wrong horse
However, gambling on plastic is treated as a cash transaction, which comes with additional costs.
Credit card holders who use the card to place a bet or withdraw money from a cash machine often incur both a fee and a higher interest rate – with the interest rate applying from the moment the transaction takes place.
Using an average cash transaction fee of 3.19 per cent and an interest rate of 28.22 per cent, the credit comparison website estimated that if 15 per cent of that £250million was bet on the Grand National using credit cards, those having a flutter would incur an extra cost of £15.7million.
That would add nearly six per cent to that total £250million bet on the race.
To put it another way, that’s the same amount of money as you’d earn by putting £800,000 on Rock The Kasbah at 20-1 and see the nine-year-old come in a winner.
In a survey by the same company, nine in 10 were unaware that credit card providers treat payments used for gambling as a cash advance.
Meanwhile, separate research from personal finance website Moneycomms found 36million credit card cash transactions were made between December 2017 and November 2018 – stinging users with £219million in fees and charges.
Altogether, £4.6billion was spent in cash advance transactions last year, with the average amount withdrawn or spent using a credit card sitting at £125.
In January, culture secretary Jeremy Wright said he would meet with bookmakers and banks to discuss the issue of people using their plastic to place bets, potentially opening the door to the Government banning the practice.
The Gambling Commission said it would also consider the consequences of ‘prohibiting or restricting the use of credit cards.’
James McCaffrey, a spokesperson for Totally Money 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.’
THIS IS MONEY’S FIVE OF THE BEST CREDIT CARDS