Cash, credit or debit? How to Pay for a $ 1.5 Billion Powerball Jackpot Ticket

Call us suckers, but the FORBES investment channel bought into the Powerball hype that we covered by creating an office pool. Remote workers have spent their $ 4 electronically on Venmo, and a publisher plans to collect the tickets on the way to work, where the rest of us will be coughing up cash. If he stops in New York during his trip, he could charge the tickets to his credit card. But cross the Hudson River to our office in New Jersey and he will only be able to use debit or cash.

While the rules of Powerball are jointly set by the states through a nonprofit called the Multi-State Lottery Association, each of the 44 states participating in the game administers its own lottery program, sets some of its own rules, and maintains its own. share of the bettors’ money. (Six states will not take your money in any form in exchange for a Powerball ticket because they resisted the launch of the lotteries. The poopers are Alabama, Alaska, Hawaii, Mississippi, Nevada and the ‘Utah.)

Of the 44 participating states, some allow only cash purchases, some allow cash and credit, some allow cash and debit cards, and some allow payments with all three. A full chart on shows just how bizarre these rules can be. California, for example, only allows credit card sales to certain gas stations that also sell lottery tickets. Other states leave it up to the retailer to decide whether to obtain credit. Colorado and New Mexico will allow you to pay by check. Virginia doesn’t accept credit cards, but it does allow you to use prepaid Visa and Mastercard gift cards, according to its website. (The FAQs on your state’s lottery website are usually the best source for a definitive answer.)

Of course, using credit for any purchase can cause problems for consumers if they don’t budget responsibly. But going into the red to fund lottery tickets is a particularly questionable financial decision. (This assumes you have a balance and aren’t just using credit cards for convenience or points.)

“The problem is not with credit cards, but with spending habits associated with using credit,” says Bruce McClary, spokesperson for the National Foundation for Credit Counseling. “The main thing is that if you don’t have the money to buy a lottery ticket, you shouldn’t use credit to pay for that ticket , “he said.” You should get help instead. “

Before you venture out to guess what the six magic numbers will be, try your hand at reality checking. Are you using money in your budget for vital things like food, clothing, or transportation? Do you need to put money into an emergency fund?

What you spend on Powerball isn’t an investment, it’s for entertainment. “There should be some leeway to use the money you’ve set aside for entertainment purchases,” McClary says. “But based on the Powerball drawing, you might as well set the dollar on fire.”

In states that prohibit the use of credit cards for lottery purchases, determined individuals can now seek creative ways around the restriction. For example, you may be able to get a cash advance on your credit card at an ATM. Do not do it. You face high fees and interest charges even though you usually don’t have a credit card balance.

“You can have a credit card with a 10% interest rate for purchases, but the interest associated with a cash advance could be double or more,” says McClary. Information about this interest rate can be found in the cardholder’s contract and terms of use. (We know you saved the most recent mail with your updated terms, right?)

Gallery: 10 Steps to Take When Winning a Lottery Jackpot

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Don’t count on a $ 1.5 billion windfall (this is pre-tax and only if you take it over 29 years) to pay off your credit card bill and other debts. With an estimated chance of hitting the jackpot estimated at 1 in 292 million, you are more likely to meet your loss before the credit card bill arrives in the mail than to win the big one.

What if you bought your lottery tickets online? It may seem counterintuitive in an age of digital betting platforms ranging from Texas Hold’em to fantasy sports, but political pressure has prevented governments from moving state-sanctioned online gambling.

Either way, using hard cash to play the lotto can keep hopeful players from overdoing it. “Seeing and physically touching the money you spend has more of a psychological impact,” says Brett Steenbarger, a doctorate in clinical psychology from the University of Kansas. Lottery tickets are often a last minute purchase, posted near “This is why people have problems with credit card purchases and overspending,” says Steenbarger. “It makes it easier to buy impulse.”

Residents of states that allow lottery purchases on credit should not assume that they will get any rewards. Your credit card may restrict cash back or points for loading lottery tickets, McClary explains. Check your terms of service to determine if there are any reward restrictions.

Of course, not everyone who plays the lottery is a gambling addict or a spender.

“You could certainly think of it like playing roulette in a casino,” Steenbarger says. “You don’t have any particular advantage or advantage over ‘the house’ and you know that when you go to Vegas.” (In fact, the house has an even greater advantage in state lotteries than in casinos.)

You wouldn’t (hopefully) hit the Strip and max out your credit cards or drain your bank accounts. “Set X amount of discretionary money you can spend,” says Steenbarger. “This is just a bigger casino. “

On the bright side, maybe the few dollars you lose playing Powerball will help fund schools or other worthy services in your state.

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