While it may be tempting to snag a lottery ticket right now as the Powerball jackpot spikes to $1.7 billion — the third-largest prize in U.S. lottery history — buying your ticket with a credit card could cost you.
A lottery ticket purchased with a credit card is likely to be processed as a cash advance, which leaves you with additional fees, high interest and, well, no credit card rewards.
Here's more on why exactly this happens, plus how best to pay for your shot at luck.
Why lotto ticket purchases = cash advances
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, identifies on their website that using a credit card to buy lottery tickets, gaming chips or to make other wagers, for example, qualifies as a cash advance.
Remind me: What's a cash advance?
Let's back up: A credit card cash advance is when you withdraw money from your credit card, essentially borrowing cash against your card's line of credit. You can typically get a cash advance in various ways, including at an ATM, in person at a bank/credit union or with a convenience check.
While a cash advance may be convenient when you, say, don't have sufficient funds readily available in your checking 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 Cash advance fees typically amount to 3% to 5% of the total cash advance withdrawn.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 they lack any sort of grace period. This means you'll start accruing interest from the date of the cash withdrawal.
Buy your lottery ticket with cash instead
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, buying a lottery ticket with a credit card is actually illegal. Even in states that don't ban it, specific retailers might. You're basically gambling with borrowed money in this case.
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, such as the two below, work like credit cards in that they allow you to build credit and earn rewards for your purchases.
Oh, and, good luck.
Extra Card (Rewards + Credit Building)
Rewards
Up to 1% rewards points on all purchases
Welcome bonus
None
Annual fee
$25 a month or $199 upfront for the year.
Foreign transaction fee
N/A — cannot be used internationally
Credit needed
None
Pros
- Does not require a security deposit like other credit cards for building credit
- No credit check or minimum credit score required
Cons
- Costs $199 annually
- Only reports to two credit bureaus, Equifax and Experian
American Express® Rewards Checking Account
Monthly maintenance fee
$0
Minimum deposit to open
$0
Minimum balance
Min balance to open = $0
Annual Percentage Yield (APY)
1.00% as of 06/24/2024
Free ATM network
37,000+ MoneyPass® ATMs
ATM fee reimbursement
None
Overdraft fee
N/A
Mobile check deposit
Yes
Terms apply.
Click here to view terms and conditions.
Pros
- Free ATM network
- No monthly fees
- ATM fee reimbursement
- No minimum deposit to open an account
- No overdraft fees
- Can transfer rewards
Cons
- Only available for existing Amex cardholders who've had a card account open for at least three months
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