Credit card costs rise for online gambling

Consumers who enjoy a flutter on the web are going to be penalised when using their credit card for online gambling.

The Royal Bank of Scotland (RBS), which owns Natwest and the Mint credit card brand, and Egg are changing the way they define gambling transactions in their policies, to include online gambling.

This means that those using their credit card to play online poker or use the internet to place a bet on the football, will be charged a higher rate of interest – a cash rate – on the transaction and in some cases a fee.

A cash rate is what has traditionally been enforced when a consumer uses their credit card to withdraw money from an ATM or for buying foreign currency, and APR rates can be as high as 29.94 per cent.

Following the changes, those using their Egg card to gamble online will pay a 25.5 per cent APR on any gambling transaction, in addition to a 2.5 per cent handling fee.

This is a far cry from Egg's normal APR of 15.9 per cent.

The Royal Bank of Scotland and Natwest are ramping up the cost of online gambling with a credit card, both from APRs of 16.9 per cent to cash rates of 25.5 per cent.

Mint users will find their APR rising from 14.9 per cent for a flutter to 21.9 per cent.

A spokeswoman for Mint said: "The gambling transactions are to be treated as ‘advances’, as this is felt to be a more accurate means of reflecting that a gambling transaction is effectively a cash equivalent exchange."

Price comparison website uSwitch has warned that the changes could plunge already vulnerable users further into the red, and has advised users to consider their payment options when it comes to online gambling.

Nick White, head of personal finance at uSwitch, said: "It is clear that the credit card companies are trying to cash in on the lucrative online gambling business, and that they have increased the cost to the consumer primarily to improve their own profit margins.

"While we do not advocate the use of credit cards for online gambling, this is unlikely to deter people from gambling, and the likelihood is that it will plunge those already facing financial difficulty further into the red."

uSwitch estimates that the changes in credit card policy could cost the online gambling community an additional £10.9 million for each £100 million that is spent.

He also warned that such shifts in the industry could also move to affect other 'near cash' transactions, such as using a PayPal account for trading on sites such as eBay. XXX