Credit Cards in Casinos - A Bad Decision?

In a world where convenience means virtually everything, credit cards are a necessity. After all, there is nothing to date that can top swiping a little plastic card to purchase items and services. Seeing as how credit cards scream convenience, it is no wonder why so many gamblers bring them into the casino.

But few people are aware of how dangerous it is to even consider carrying your credit card into a casino. If you are one of these people, then you’ll definitely be interested in learning why credit cards and live casinos don’t mix.

When you use a credit card at the casino, you are essentially lending money from a large company in order to place bets. Now this might not be so bad if you are merely using a credit card due to the aforementioned convenience factor. However, if you are using a credit card solely because you don’t currently have the money to pay for your gambling expenses, then you’ll find that this is a huge mistake!

Most casinos require you to get a cash advance on a credit card so you can play games at their establishment. Unfortunately, this service isn’t provided for free, and you are usually charged around a 5% fee for the cash advance. Add to this amount to the standard 3% fee that credit card companies charge, and you’re already losing 8% of the money on the cash advance. Assuming you were able to get a cash advance of $1,000 in the casino, you have already paid $80.

After arriving home from your casino visit, you’ll receive a nice $1,080 bill from your credit card company. Now this won’t be such a burden if you already have the money to pay this statement in full. However, the average person doesn’t have $1,080 lying around so they’ll be forced to go with a payment plan.

The major problem with this is that credit card companies raise the interest rates on cash advances so you’re going to have an even tougher time paying off your debt. Assuming that your normal interest rate is a standard 16%, your new interest rate for the cash advance could be 5% higher, thus making it 21%. 

Since credit card companies make their money off of interest, they are more than willing to let you pay your casino statement month by month – especially at 21%. Adding further “generosity” to the equation, credit card companies also allow you to make minimum monthly payments too. 

So, assuming your minimum monthly payment on the $1,080 bill is $90, you would be re-paying a lot more than $1,080 at a 21% interest rate. If you chose to stick with minimum payments, it’s safe to assume that you would at least be paying over $1,500 for the cash advance you got. And this is a pretty big price tag to pay for some extra entertainment in the casino!

Over the years, casinos have perfected the house edge they need in order to make profits. With this being the case, casinos hold an edge in pretty much every game except for video poker and poker (and you can only win at these if you’re really skilled). Now you can certainly get lucky and win major money with a jackpot, but chances are that you’ll fall into the range of people who don’t get extremely rich through gambling.

So it would definitely make sense not to take cash advances with your credit card in order to gamble at a casino. A good rule of thumb to follow is to never gamble with money you don’t have. Of course this is easier said than done, but if you decide to keep using your credit card to obtain money in a casino, then you will certainly be hurting financially in the long run.