Convenience is king. We pay for our coffee with an app and swipe our plastic to buy a pack of gum or to book a trip to Rio. But there's a reason why wads of greenbacks are still exchanged for goods or services. Do you really want your credit card issuer to leave a paper trail on that stuff you did in Vegas? (Don't worry, it stays in Vegas.)
Card issuers agree, but for their own reasons, usually having to do with risk and federal law. This week brought "10 Things You Can't Buy with a Credit Card" from MarketWatch.
Sure, marijuana is now legal in Colorado — and other states might soon follow — but you're going to need green to purchase this green. The government is hinting that federal law is catching up to legal marijuana purchases, but you'd better bet that credit card issuers are not going to step into the middle of this one until the rules are clear.
Legality on other credit card no-no's is more grey; when it comes to gambling or paying for lotto tickets, much depends on state laws.
Online gambling with cards is clearly illegal in the U.S. — hence Swiss accounts and Bitcoin — but after avoiding trouble with the law, card issuers then turn on, or off, the spigot of credit much more on the basis of risk. For example, you probably can't pay for your mortgage, your student loans, your auto loan or even in some cases your college tuition, with a credit card (though, imagine those reward points!). It's simply not good business practice to enable paying one debt with another form of debt.
Then again, those balance transfer checks you receive in the mail aren't necessarily considered credit. The biggest dangers with these card-linked checks are the high interest rate, fees from the card issuer and turning an asset-backed loan (like a car loan) into unsecured debt.
My favorite star of this list however, is good ol' outlier American Express. They refuse to process payments for online pornography, lotto tickets (no matter the state law), and contributions to Wikileaks. This swipe-for-this-not-that has a long history. Twenty years ago when I worked at Christie's auction house, I remember a kerfuffle at the highest level when a high-rolling buyer tried to pay for a painting with his American Express card. His winning bid was over $1 million. AmEx's reward-points system was already in place and their charging limits were (and still can be) undefined.
Can you blame the guy?