How One Night of Gambling Can Grow to Five Years of Debt
by: Fabiola Cervantes, Insight News reporter
Photo by Fabiola Cervantes
A credit card is something most of us use on a regular basis. We buy groceries, gas, and other necessities. But in the hands of a gambler, a credit card can turn into a quick ticket to financial ruin.
Jack Hogan, Director of Education at Consumer Credit Counseling Services in Memphis, says credit cards get gamblers in trouble when they start using cash advances.
Hogan says a $500 cash advance can nearly double if it is not paid within a given time. How can that happen? First, it starts with the casinos. Many gamblers may not realize it, but casinos charge $21.99 for each cash advance. The additional fees don’t stop there. Cash advances also carry a penalty from the credit card company. Hogan says companies add a 3% charge for the cash advance, and on a $500 dollar advance that would tack on another $15.66. So far, that $500 is costing $537.65. All of this before you even hit the craps table.
It’s at this point that some people turn to credit agencies for help. In fact, some casinos in Tunica, Mississippi often refer gamblers with debt problems to Consumer Credit Counseling in Midtown Memphis. Hogan says that Harrah’s and the Horseshoe regularly refer people to their agency.
“Human services refer them to us and they sign a written agreement to receive counseling and not step on the casino property for two years,” added Hogan.
A 1% issue with a big impact
While gambling can cause financial problems, credit counselors say gamblers make up just a fragment of their clients.
“Less than one percent of the people we see at the agency come because of gambling problems,” said Consumer Credit Counseling director, Wanda Cohns.
“Sometimes they don’t mention that they were referred by the casino,” said Hogan.
Cohns acknowledges that although statistics show just a small number of clients are problem gamblers, the agency may have more gamblers than it realizes. She says that initial screening doesn’t require clients to indicate whether gambling is behind their financial difficulties and counselors often find out after visits that the referral came from a casino.
Counseling, management, education
There are three steps in this financial recovery process: budget counseling, debt management plans (DMP) and consumer education.
Budget counseling helps individuals work out a budget to fit their expenses and offers money management information.
DMP lets people deposit monthly payments to the agency, which distributes it to creditors. Cohns said individuals in the program can benefit from reduced or even waived finance charges. When all payments are made, the agency helps individuals reestablish his or her credit.
When both steps are completed, there are workshops the person can enroll in to learn values and attitudes on money issues, budgeting, and debt, among others.
Jack Hogan, Director of Education at Consumer Credit Counseling Services in Memphis, says credit cards get gamblers in trouble when they start using cash advances.
Hogan says a $500 cash advance can nearly double if it is not paid within a given time. How can that happen? First, it starts with the casinos. Many gamblers may not realize it, but casinos charge $21.99 for each cash advance. The additional fees don’t stop there. Cash advances also carry a penalty from the credit card company. Hogan says companies add a 3% charge for the cash advance, and on a $500 dollar advance that would tack on another $15.66. So far, that $500 is costing $537.65. All of this before you even hit the craps table.
It’s at this point that some people turn to credit agencies for help. In fact, some casinos in Tunica, Mississippi often refer gamblers with debt problems to Consumer Credit Counseling in Midtown Memphis. Hogan says that Harrah’s and the Horseshoe regularly refer people to their agency.
“Human services refer them to us and they sign a written agreement to receive counseling and not step on the casino property for two years,” added Hogan.
A 1% issue with a big impact
While gambling can cause financial problems, credit counselors say gamblers make up just a fragment of their clients.
“Less than one percent of the people we see at the agency come because of gambling problems,” said Consumer Credit Counseling director, Wanda Cohns.
“Sometimes they don’t mention that they were referred by the casino,” said Hogan.
Cohns acknowledges that although statistics show just a small number of clients are problem gamblers, the agency may have more gamblers than it realizes. She says that initial screening doesn’t require clients to indicate whether gambling is behind their financial difficulties and counselors often find out after visits that the referral came from a casino.
Counseling, management, education
There are three steps in this financial recovery process: budget counseling, debt management plans (DMP) and consumer education.
Budget counseling helps individuals work out a budget to fit their expenses and offers money management information.
DMP lets people deposit monthly payments to the agency, which distributes it to creditors. Cohns said individuals in the program can benefit from reduced or even waived finance charges. When all payments are made, the agency helps individuals reestablish his or her credit.
When both steps are completed, there are workshops the person can enroll in to learn values and attitudes on money issues, budgeting, and debt, among others.
Insight News reporter Fabiola Cervantes talks about surprising information she discovered while researching her story about credit cards and gambling.