Mr. youngandthrifty kindly bought me a scratch and win lottery ticket a few months back. It was one of those expensive $20 scratch and win tickets that has a 1/3 chance of winning (I didn’t win by the way).
He paid for it with his credit card at one of the British Columbia Lottery Corporation booths. He paid for it with the credit card so in hopes of accumulating more travel reward points with the now defunct MBNA Starwood Preferred Guest Mastercard. You can get the same scratch-and-win tickets at a gas station, convenience store, etc.
He was diligently reading his online statement (I trained him well) to make sure there weren’t any weird charges on his card, when he saw this:
CASH EQUIVALENT TRANSACTION FEE:……………………………………………………………………….$7.50
He ended up calling the credit card company to inquire about this charge.
The credit card company said that it’s charged automatically when you purchase any lottery ticket at a lottery booth with your credit card. They charge you this so it protects them with the “potential” winnings of the ticket you bought cost them money when you redeem your winnings.
From the Financial Consumer Agency of Canada Website, it says that credit card companies will ask you to:
“pay charges or fees for some other types of transactions that are like cash advances. These are sometimes called “cash-like transactions”, “cash-equivalent transactions” or “quasi-cash transactions”. These include wire transfers, money orders, travellers’ cheques and gaming transactions (including betting, off-track betting, racetrack wagers, casino gaming chips and lottery tickets).”
The FCAC also has a handy chart that shows which credit card companies/ banks charge service fees for these transactions, and how much. I was surprised to see that different banks have different charges. Some don’t charge anything and some have no maximums(GASP!)!
If you purchased this at a convenience store or at the gas station, the transaction will only read: CONVENIENCE STORE or GAS STATION so the credit car companies can’t tell that you’re secretly buying a lottery ticket with your credit card.
That $20 lottery ticket became a $27.50 lottery ticket that got me just a fleeting moment of excitement as I scratched the windows feverishly in hopes of winning.
Not worth it IMO. Gambling with lottery tickets isn’t worth it either!
Did you know about this? Or should I have known this and was just living under a rock?
That’s one expensive lottery ticket. I didn’t know about this credit card clause. Thanks for the information!
.-= Paul@Quantisan´s last blog ..April is Earnings Season One Year After the Bottom =-.
Wow, that sucks. I once tried to pay for some stuff and add a lottery ticket onto my order (at a grocery or convenience store) and they wouldn’t let me buy the lottery ticket on a card. I had to give them cash for that. Maybe that was the reason?
.-= Money Beagle´s last blog ..I’ve Been Watching Too Much Property Ladder =-.
@Paul Yeah, it was the most expensive scratch and win EVER. I didn’t know about this clause either until my boyfriend did some sleuthing =) Those sneaky CC companies!
@Money Beagle That probably was the reason! Are you in Canada or in the US? I wonder if the same rules apply in the US?
Ha! That’s crazy!
You’re not living under a rock. In fact, if you did a poll of 100 people, I’ll bet you’d be lucky to find 1 that knew about that. Do others agree with me on that one?
.-= Andrew Hallam ´s last blog ..Seven Years of Beating the S&P 500 =-.
Weird! I’d be really ticked if I had to pay 7.50 for a purchase!
.-= Simple in France´s last blog ..Confessions of a Coffee Addict =-.
@Money Reasons I know! That’s what my boyfriend (not husband lol) said to the credit card company… why didn’t the BC lottery corporation tell him? I don’t think the CC company gave a straight answer.
@Mrs. Accountability Hmm yeah, I wonder if credit card companies have the same rules in the US. Do you have booths/ kiosks just selling lottery tickets too?
@Andrew Hallam haha thanks for validating my feelings =) Well, now 5/100 people know lol =)
That’s pretty sneaky! I would have been nice if the person selling the lottery ticket would have told your husband!
Interesting article, I’ll make sure to never buy lottery tickets when I’m in Canada! At least with a credit card anyway…
.-= Money Reasons´s last blog ..MoneyReasons Weekly Cache 2010, Mar 28 =-.
That’s horrible! I too wonder if this would happen in the US. OUCH!
Definitely something I’ve never heard of, thanks for the heads up. Going to look more into this, you definitely have me interested in this now.
.-= Bank Guru´s last blog ..BankNerd.ca acquired by RBC =-.
Sounds like a new version of a Sin Tax…
@InsureCan Yeah, I can’t believe it was a $27.50 scratch ticket- never buying that one again- darn enticing commercials on TV!
@AnnieA haha, our government taxes everything from cigarettes, to alcohol, except the ones behind the lottery corporation is our own government =) so ironic!
I read the title and thought, “Well, no kidding!” But when I read why it’s not a good idea, it just confirmed that credit companies stink! They have so many little inexplicable fees and hidden costs, I wonder how the executives sleep at night?
.-= Little House´s last blog ..Why Don’t I Qualify for a Roth IRA? =-.
@Bank Guru Hey thanks for stopping by!
@Financial Cents LOL, thanks- yes, I think it was like the size of a meteor. Good luck on your 6/49! We have a lottery pool at work where we chip in for the really big jackpots. You can’t help but be hopeful with all those commercials! (Have you seen the ones for Lotto Max?)
@Little House I think the executives sleep preeettty well. These are banks (It was an MBNA card) that are imposing this charge. Whatt’s funny that the fees they charge vary between institutions.
Ouch! Sorry to hear. I didn’t know about that…so it must be a big rock you’re under!
I play 6/49 every week, bad I know, but I’m hopeful. I’ve always paid cash for those tickets; $2 here and there.
.-= Financial Cents´s last blog ..Here Comes the Sun! (Life) =-.
WTF!?! I’ve never heard of that in my life; what a crock! That just doesn’t sound right; I’m astounded that a charge like that can happen. Sorry to hear you were victimized like that – what a shame.
.-= The Rat´s last blog ..What I Utterly Despise About Traveling =-.
Bizarre – I’ve never heard of this. Seems pretty unfair since a lottery ticket isn’t anything close to a “cash equivalent”.
.-= Four Pillars´s last blog ..Best Stock Picks For 2010 Competition Q1 Update – I Demand A Recount! =-.
Ouch! A head’s up from the store would have been nice.
.-= Mrs. Frugal´s last blog ..Net Worth and Goals: March 2010 – Up 5.8% and making great progress! =-.
@The Rat-I know eh? Who knew?? I guess it’s kind of silly to pay for EVERYTHING with your credit card, but still..
@Four Pillars- LOL yeah, agree!
@Mrs. Frugal-Especially since the store was the BC LOTTERY CORPORATION!! (aka the government!)
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Wow, I had no idea. I have friends who buy lottery tickets a lot and this will definitely help them out.
Thanks!
Austin @ Foreigner’s Finances
.-= Austin´s last blog ..Interview with a Location Independent Family Man in China =-.
Hey Austin, Thanks! Not sure if they have the same rules in the US with the credit card companies though. =) What about Pachinko in Japan? Do they accept ‘cards’? =)
HUH? How sneaky! I’ve never heard of anything like that.
On somewhat a related note, retailers here can now charge extra fees to cover the costs of accepting CCs. Boo.
.-= eemusings´s last blog ..Lessons learned from living alone =-.
@eemusings I vaguely heard about that! Did it pass? That would suck!! Getting charged an extra 2% would ameliorate the credit card rewards business!! =(
Since you’ve looked into this one, have you heard the one about if you win BIG on a lottery ticket paid for by credit card, the credit card could claim the winnings since it was their money paying for it? Please, confirm or deny this one for me, so I don’t look like a jerk at my workplace denying someone a lottery ticket because of something unconfirmed.
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