Research carried out by credit fintech startup TotallyMoney revealed that an expected £16m will be spent solely on interest and transaction fees from using credit cards to gamble on the 2019 Grand National Festival.
Gambling payments made via credit cards are treated by lenders as a cash advance, which means each time a customer makes a credit card cash transaction, they are charged a withdrawal fee and higher interest rate applies.
Furthermore, interest-free grace periods do not apply when a credit card is used to gamble; interest on regular transactions is incurred when the borrower’s statement arrives, whereas with cash transactions interest applies instantly.
TotallyMoney ran a survey of 1,000 people and discovered that only 10% of people asked were aware that lenders treat these transactions as a cash advance.
James McCaffrey, a spokesperson for TotallyMoney, 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.
Punters gambled an estimated £250m across Aintree weekend last year. TotallyMoney stated that it used data from Defaqto to calculate an average cash transaction fee of 3.19%, plus an average cash advance interest rate of 28.22%.
Approximately 10-20% of all bets placed are made up of credit card payments.
From these figures, TotallyMoney calculated an estimated £15.7m will be spent on interest and transaction fees during this year’s Grand National Festival.
McCaffrey continued: “Cash transactions may also act as a flag on your credit report and lenders may be concerned that you’re not financially stable.”