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.
www.myfinances.co.uk
