March 21, 2006

In an effort to control the explosive rise in online gambling, credit card companies are now forcing consumers who top up their online gambling accounts with their credit card to pay a higher interest charge.

From May 1st 2006 anyone who pays online for gambling by using their credit card will now be charged their cash advance rate instead of their straightforward standard purchase rate.

The difference in the two rates are quite large. The Egg card carries a standard 15.9 pre cent purchase APR, however, the cash advance rate is 20.9 per cent.

What should also be remembered is that cash advances are classed differently from normal transactions as to when interest is actually charged. Most come with an interest free period allowing you up to 59 days (on average) to pay your balance from the point of purchase. If you have made a purchase during this time and clear your balance by the due date, you pay no interest. With a cash advance you pay interest from the moment you make the transaction, therefore, this is a double blow to online gamblers.

The Royal Bank Of Scotland 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.”

Only the Royal Bank Of Scotland have informed consumers of this latest move.