From mutual funds to lap dances, there are some things your credit card company just won’t let you put on your plastic
You can use your credit card to buy just about everything these days, from candy in a vending machine to goods at a garage sale. But there are still a few types of transactions you can’t use your credit card for, either because they’re high-risk, they attract a lot of fraud or they simply tend to give customers a bad case of buyer’s remorse, leading to disputes and charge-backs that are expensive for the credit card companies.
Here are 10 things you can’t buy (or that are difficult to buy) with plastic:
1. Chips in a casino. Even though casinos are legal, make sure you bring cash if you’re planning to play the roulette table. Most states have gaming regulations that prohibit casinos from accepting a credit card for gambling chips, says Gary Thompson, a spokesman for Caesars Entertainment, which owns casino resorts on three continents.
Even without those rules, however, the industry’s own Responsible Gaming Program bars the practice. Of course, you can always use your credit card to get a cash advance, for a sizeable fee, at a casino ATM. Still, Thompson believes that extra step creates a psychological barrier. “If you run out of chips when you’re gambling, this forces you to get up, walk away from the table, apply for the cash advance, and then go the casino cage to get your chips,” he says. “What that does is give you time to think about whether you’re going over your cash-imposed limit. We believe it stops some people from doing something impulsive.”
2. Mutual funds and stocks. While there are reports of a few firms offering their best customers the option to buy shares with a credit card, most brokerage firms, even online ones, won’t allow it. “They want people to have skin in the game, to have real money at risk,” says Michael Thomsett, author of “Getting Started in Stock Investing and Trading. “If you really want to borrow money to buy shares, consider a margin account over a cash advance,” Thomsett says. In that type of account, usually available only to established investors, the securities you hold are collateral for a line of credit from the brokerage that you can use to buy more stock. The interest rate on a margin account is likely lower than the one on your credit card, and there are no ongoing payments to make. However, it does expose you to a higher level of risk, Thomsett says, so it’s an option best used only by experienced investors.
3. Money orders. This is another no-no, basically because you’d be borrowing money to buy cash. Most merchants, including the U.S. Postal Service and check-cashing locations, require you to use cash or a debit card to buy a money order. That restriction cuts down on fraud and makes it more likely that issuers will get their money. The occasional supermarket may allow you to buy a money order with a credit card, but be warned: Your bank will likely process the transaction as a cash advance, subject to a fee, higher interest rates than what you pay for purchases and no interest-free grace period.
4. Lap dances. Heading to a gentleman’s club for a bachelor party? Hit the ATM before you go. While your credit card will certainly be accepted for food and beverages, many adult clubs take only cash for lap dances or other services from the dancers, says Angelina Spencer, a former club owner and executive director of the Association of Club Executives, a trade association for the adult club industry. For one thing, Spencer jokes, it’s not easy to tuck a credit card receipt into a dancer’s G-string. But the real reason, she says, are customers with next-day regrets. “Too often we get someone having a really good time, and then later they say, ‘Oops, I didn’t really mean to do that,'” Spencer says. “When that happens, there’s not a lot of recourse.” A few clubs do take cards for services, but they may require a thumbprint as well as a signature to help prove the customer was actually there and authorized the charge.
5. Donation to WikiLeaks. Visa, Mastercard, Bank of America and PayPal have said that they will not process donations intended for the whistle-blowing website WikiLeaks, citing violations of their terms of service. (American Express and Discover were never accepted by WikiLeaks.) Beth Robertson, director of payments research at Javelin Strategy & Research, says card companies have long had a black list of groups associated with terrorists or other illegal activity. WikiLeaks was added to Visa and Mastercard‘s lists after it released confidential State Department documents in 2010; a series of attacks by WikiLeaks supporters that shut down the Visa and Mastercard websites further damaged its credibility. In 2017, WikiLeaks founder Julian Assange mockingly thanked the U.S. government for the banking blockade, saying it had pushed him into accepting donations by bitcoin, which at the time was skyrocketing in value.
6. Online pornography. While other card companies allow the purchase of legal adult material on the Internet, American Express has made online pornography off-limits to its customers since 2000. American Express spokeswoman Diana Postemsky says that the company has a policy of not doing business with illegal or high-risk industries. “Digital adult content just has unacceptably high levels of customer disputes,” Postemsky says, “and that raises our administrative costs because we have to bear the expense of handling those disputes.”
7. Medical marijuana. Again, American Express is more conservative than the other card networks on this issue. Although medical marijuana is legal in 16 states, you can’t buy it with an AmEx card. “Our decision was to adhere to federal law,” which prohibits any purchase of marijuana, even for medical reasons, Postemsky says. Mastercard, Visa and Discover do allow the purchase of medical marijuana with their cards, but MasterCard spokesman Jim Issokson said that as of 2011, the company was evaluating its policy. “The issue of purchasing medical marijuana is an emerging issue, and we’re continuing to look into it,” he said. In a statement, he noted that “Mastercard does not permit its brand to be associated with anything illegal.”
8. Mortgage payment. Despite all the credit card rewards you could earn by putting your mortgage on your card every month, lenders simply won’t let you do this. That’s partly because they don’t want to pay credit card company merchant fees and partly because it’s risky. “They don’t want people to keep rolling balances and building up debt and never paying it off,” says Robertson of Javelin. American Express launched a program in 2007 to allow its more affluent customers to pay their mortgages with plastic, but the program died after the two lenders offering the service failed as part of the subprime mortgage crisis. Over the past decade, several private companies offering fee-based go-between mortgage payment service have come and gone from the market.
9. Online gambling. Though there is a federal ban on online wagering, hundreds of overseas-based sites are operating and thousands of Americans play, making it a multi-billion-dollar industry. A 2006 law prohibits banks and credit card companies from transferring payments between gambling companies and individuals, so most of the sites don’t allow you to pay with credit cards. Instead, you can send a check or wire money. Efforts are being made at both the federal and the state level to overturn the law banning online gambling, but even if it changes, players may still be barred from using plastic to make payments, simply because of the high-risk nature of the transactions.
10. Lottery tickets. Many states prohibit the sale of lottery tickets with a credit card, but a few, including New York and Louisiana, allow it. Even in those states, however, many retailers do not offer you the option or if they do, your card company may charge you a hefty cash advance fee. If you do live in a state that allows it and want to pay with credit, you won’t be able to use American Express. The company does not allow its cards to be used to play the lottery, Postemsky says. As with other forms of gambling and online pornography, the company considers the practice too susceptible to disputes and other problems.
Update: Since this story was originally published in 2011, an 11th item has emerged as difficult to buy with a credit card: bitcoin. In 2018, major credit-card issuing banks largely banned the use of credit cards to buy bitcoin or other cryptocurrencies.
See related: Internet gambling regulations go into effect, Medical marijuana sellers can’t take their 420 money to the bank