Why You Shouldn’t Buy A Lottery Ticket With A Credit Card

While it might be appealing to snag a lottery game ticket today as the Powerball Jackpot spikes to $1.73 billion– the 2nd biggest in history– purchasing your ticket with a charge card might cost you.

A lottery game ticket bought with a charge card is most likely to be processed as a cash loan, which leaves you with high costs and no benefits.

CNBC Select discusses the disadvantages of purchasing a lottery game ticket with a charge card and what to do rather.

A charge card cash loan is when you withdraw cash from your charge card, basically obtaining money versus your card’s credit line. You can generally get a cash loan in different methods, consisting of at an ATM, face to face or with a benefit check.

While a cash loan might be practical when you, state, do not have enough funds easily offered in your bank account, it will cost you an extra set of fees, such as ATM, bank and cash advance fees. Cash advance fees typically amount to 3% or 5% of the total cash advance withdrawn. For example, a $500 cash advance with a 3% fee will cost you $15.

Cash advances also come with higher interest rates compared to purchases or balance transfers and lack of grace periods. This means you’ll start accruing interest from the date of the cash withdrawal.

Most credit card issuers classify lottery ticket purchases as cash-equivalent transactions (despite the terrible odds of you actually winning any money). Capital One, for instance, states on their website that other “money transfers, gambling and quasi-cash transactions” such as lottery tickets or gaming chips may also be classified as cash advances by your credit card issuer. “If you use your credit card for these transactions, you may be charged a cash advance fee and a potentially higher cash advance interest rate.”

If you still want to use a credit card to purchase a lottery ticket, it may not even be possible. In a number of states, including Massachusetts and Georgia, buying a lottery ticket with a credit card is illegal.

So, your best bet is to use cash which can also help you avoid any extra fees. However, because carrying cash can sometimes be a hassle, you can opt for a debit card. Some debit cards work like credit cards in that they allow you to build credit and earn rewards for your purchases. The Axos Bank CashBack Checking, for example, offers no fees and up to 1% cash back on signature-based transaction purchases.

Before you purchase your lottery ticket, make sure to do so with cash or a debit card instead of a credit card. Purchasing a lottery ticket with a credit card means it’ll likely be processed as a cash advance, meaning more fees for you. But you can still benefit from your purchase with a credit card-like debit card that helps you build your credit and earn rewards, like with the Axos Bank CashBack Checking.

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