Charging lottery tickets dumb even if legal
It’s a bad idea to use credit cards, experts warn.
Many Americans who hoped to fund their dream of winning the $1.537 billion Mega Millions jackpot by buying a six-number lottery ticket with their credit card had to pay with cash instead.
And that includes the unidentified newly minted megamillionaire from South Carolina who held the single winning ticket in this week’s drawing.
The reason: Buying lottery tickets using plastic – the go-to form of payment for most Americans – is banned by roughly two dozen U.S. states, according to an analysis from CreditCards.com.
The rules and laws pertaining to lotteries are determined at the state level. And 23 states plus Washington, D.C., forbid the use of credit cards, says Ted Rossman, industry analyst at CreditCards.com.
Adding to the confusion, he says, is that 10 states – including Indiana, Maine and New York – leave the decision up to the retail outlets or stores that sell lottery tickets.
The main reason some states prohibit lottery players from using their credit cards is they fear some people could get themselves into financial trouble by gambling on the lottery with money they may not have, Rossman explains.
Lawmakers in these states are trying to minimize the risk of Americans running up credit-card debt and paying exorbitant interest rates if they carry a balance at the end of the month. The bans are also a way to minimize the number of people that develop gambling addictions.
“States don’t want consumers to rack up credit-card debt buying lottery tickets, especially when the odds of winning the Mega Millions jackpot is slim to none,” says Kimberly Palmer, credit-card expert at NerdWallet, a personal finance site. “In California, lotto tickets have a disclaimer at the top that says, ‘Remember, keep it fun. Play responsibly,’ which is something that all consumers should keep top of mind.”
Playing the lottery is a vice for many Americans, with the most frequent players and biggest spenders coming from U.S. households in the lowest income brackets, a Bankrate.com survey found. Twenty-eight percent of U.S. households with annual incomes below
$30,000 play the lottery at least once a week, vs. 18 percent of American households that earn $75,000 or more.
Financially strapped households, the Bankrate survey found, spend $412 per year, on average, on lottery tickets – nearly four times the amount that the highest-earning households admit to spending.
An American with low income and a low credit score could pay as much as 25 percent in interest on a credit card, Rossman says. And if that person carried that $412 lottery ticket balance for a full year, he or she would pay more than
$100 in interest. “Unless you are someone that makes an occasional purchase of lottery tickets with a credit card that you pay off at the end month, it’s a bad idea to pay for your lottery tickets with plastic,” Rossman says. Here’s a list of states that CreditCards.com says do not allow credit card purchases of individual lottery tickets, either due to laws in place or because they don’t have in-state lotteries: