If you want to gamble, paying with plastic makes it easy. Putting a few hands of Internet poker on your credit card does not, however, make it easy to win. If you're a compulsive gambler or careless with credit-card spending, gambling and credit cards can combine to form a toxic mix.
The Convenience Trap
Credit cards make it easy to gamble, because you don't have to carry around a bankroll to play. If you do your gambling online, you can put all your bets on your card. If you visit a casino, the staff will be happy to let you take out a cash advance or two -- or more -- to keep playing. This makes it dangerously easy to spend beyond your means. Even if you stay under budget, the interest rate on a cash advance can run as high as 30 percent.
According to MedicineNet.com, roughly 2 to 5 percent of gamblers are addicts, hooked on the excitement. A gambling addict cannot bring herself to stop: if she doesn't have cash, she'll use her cards as long as she has any credit left. Even after that, she may steal credit cards from family members or friends to keep going.
When your spouse or partner runs up a big credit card bill -- whether due to gambling or not -- your own assets may be at risk. If she uses a card that's in both your names, the credit-card company can hold you liable for the bill if she defaults. If the two of you own assets in common, her creditors may be able to seize them. In a community property state, assets you hold sole title to, such as real estate or a car, may be vulnerable to your spouse's creditors if you bought or maintained them with marital funds.
Entering bankruptcy can wipe out credit card debt or slash the amount you have to pay on your credit card bills. It's not a slam-dunk: if you run up big debts at a casino right before you file, the court may decide your trying to cheat your creditors and throw the case out. The court trustee overseeing your case may decide that gambling debts don't deserve the same treatment as legitimate expenses. Even so, don't hide any of your gambling debts when you file your paperwork. If you're caught concealing financial information, the judge may deny you the debt relief you need.
A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.