Credit Card Gamblers Lose Again

Gamblers will be forced to pay higher credit card charges after Britain's biggest banks introduce new rules to penalise the growing number of gaming enthusiasts in this country.

The Royal Bank of Scotland (RBS), which has 11 million credit card customers, and Egg, which has more than 3 million cardholders, have made crucial changes to the way that they define "gambling transactions".

The revisions mean that anyone using their credit card to gamble on the internet at online casinos and sportsbooks will be charged a higher interest rate and, in some cases, a fee.

Citibank, the US banking giant, already bars its one million customers in Britain from gambling with its credit cards.

Last year £53 billion was spent on gambling, including the National Lottery, and one million people regularly gamble online. There are an estimated 1,700 gambling internet sites.

A spokeswoman for Mint, part of the RBS group, said: "The step that has been taken by RBS is part of a move taking place across the credit card industry to examine the type of transactions people are making on their accounts. 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."

At present, many credit card companies regard gambling transactions as "purchases". In that way, customers pay a lower interest rate and no fees are levied. Cash advances, such as the withdrawal of money at a cash dispenser using a credit card, attract higher interest rates and a handling fee, typically 2 to 3 per cent.

Under the changes announced by RBS, to be implemented from May 1, customers gambling with their Mint card will be charged 17.9 per cent, up from 14.9 per cent. Interest on drinks and food bought in a casino will also incur the advance rate.

Egg customers who gamble with their credit card will be charged a 2.5 per cent fee and a cash advance rate of 20.9 per cent, up from 15.9 per cent. The changes take place on April 1. MBNA, which has 7 million customers, already levies a 2 per cent fee and 21.9 per cent interest on gambling transactions.

A spokesman for Egg, part of Prudential, said: "The recent explosive growth of online gambling and gambling in casinos has meant that consumers now demand different ways of funding this type of leisure activity. As such, many credit card providers now allow consumers to use their cards to advance them cash for gambling, typically in the form of chips or 'virtual' chips. Our decision to levy a fee on such transactions is simply bringing gambling into line with traditional forms of cash advances, such as obtaining money from an ATM machine, or the purchase of foreign currency, travellers' cheques or postal orders."

Industry insiders expect higher charges for gambling transactions to be common practice by the end of the year.

Geoffrey Godbold, chief executive of GamCare, the treatment agency for gambling addiction, said: "While GamCare cannot be sure what impact will be seen through banks introducing charges for customers using credit cards to pay for gambling, we hope it will help people who may be at risk of compulsive gambling to think twice about making excessive transactions and in doing so help them to stay in control."

Many online gamblers prefer to use a non-card method of depositing. Web wallets such as NETeller have become increasingly popular as a method of gambling online. Recently, Ladbrokes Online Casino introduced the ability to deposit using PayPal.