Cash advance fees in the spotlight

by Charlotte Lee Last Updated
Credit card gambling ban draws industry?s ire

Credit card cash advance fees have come into spotlight again after a Western Australian woman was charged cash advance fees of 29 and 15 cents for raffle tickets she purchased for the Endeavour Foundation.

WA Today reports that the foundation supported people with Down Syndrome.

The credit card cash advance fees are a measure of restricting problem gambling implemented by banks.

Any spending on credit that is deemed gambling has for several years been subject to the higher cash advance interest rate, with no interest-free days, as a deterrent.

Gambling credit ban could reach Australia

There will soon be a complete ban on all forms of gambling on credit.

It is already prohibited to use credit or to get an actual cash advance at a gambling establishment and most credit card providers allow “customer-directed” blocks on this spending.

A complete credit card gambling ban comes into effect in the United Kingdom in April and the Australian Banking Association is taking public submissions on the ability to gamble on credit cards here.

Already there are institutions that don’t permit gambling on their credit cards such as Macquarie Bank, Citibank, Suncorp, Bank of Queensland, Virgin Money and American Express.

The banking Royal Commission found that ANZ introduced a cap on what proportion of a card’s limit can be used for gambling.

This was set at 85 per cent.

There has been a dramatic increase in online betting, up from just 16 per cent in 2012 to 34 per cent in 2018.

As the ABA says in its review statement: “Online gambling creates an environment in which people can gamble at any time, in any place, and in a ‘cashless’ way which can distance the person gambling from the money which is being spent.”

Of course, if you use your own money, either cash or a debit card, you can spend it as you will.

UK bans credit card gambling from April

The UK Gambling Commission is banning people from using credit cards to place bets in an attempt to curb problem gambling.

The BBC reported in January that the ban, which starts on 14 April, comes after reviews of the industry by the commission and the government.

A total of 24 million adults in Britain gamble, with 10.5 million of those doing so online.

Separate commission research shows that 22 per cent of online gamblers using credit cards are classed as problem gamblers.

Gambling Commission chief executive Neil McArthur said: “Credit card gambling can lead to significant financial harm.

“The ban that we have announced today should minimise the risks of harm to consumers from gambling with money they do not have.

“We also know that there are examples of consumers who have accumulated tens of thousands of pounds of debt through gambling because of credit card availability.

“There is also evidence that the fees charged by credit cards can exacerbate the situation because the consumer can try to chase losses to a greater extent,” Mr McArthur said.

Culture Minister Helen Whately said: “Whilst millions gamble responsibly, I have also met people whose lives have been turned upside down by gambling addiction.

“There is clear evidence of harm from consumers betting with money they do not have, so it is absolutely right that we act decisively to protect them.”

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