Is it possible to buy cryptocurrency using a credit card?

Like gold in the 1850s and dot-com stocks in the 1990s, it seems that everyone is interested in cryptocurrency

Buying bitcoin using a credit card is doable, but it is a risky financial venture. 


Is it possible to buy cryptocurrency using a credit card?


Cardholders should be aware that there will be fees on both ends of a transaction involving cryptocurrency and a credit card. 

They should also be aware that they could lose money quickly due to fluctuating currency prices and high-interest rates.


Is it possible to buy cryptocurrency using a credit card?


In a nutshell, it depends. Here's everything you need to know about using a credit card to purchase bitcoin.


Who Allows You To Buy Cryptocurrency Credit Cards?


Here are the rules on crypto purchases for some major issuers as of April 2022:

  • American Express: Purchases on various exchanges are permitted under certain conditions.
  • Bank of America says that none of its credit cards can be used to buy cryptocurrency.
  • Barclays: No crypto purchases are permitted with any of its credit cards.
  • Chase: No crypto purchases are permitted with any of its credit cards.
  • Discover: No cryptocurrency purchases are permitted with any of its credit cards.
  • Wells Fargo: No cryptocurrency purchases are permitted with any of its credit cards.



Citibank, US Bank, and Credit One did not respond to a Forbes Advisor request about their rules on cryptocurrency purchases. If your issuer isn't mentioned, call the number on the back of your card to speak with a representative.

Check with your credit card company to see whether you can buy any sort of cryptocurrency.


In addition to contacting your credit card issuer, seek a cryptocurrency exchange that accepts credit cards for deposits or purchases. 


Some only allow direct deposits from banks, cash deposits, or debit card transactions. Credit cards are presently accepted by Coinmama, CEX.io, and Paxful.


There are also restrictions on the sorts of credit cards that expatriates may use. Some exchanges may only take Visa or MasterCard credit cards. 

Paxful, for example, has sellers from all around the globe selling on the exchange platform. 

It is one of the few exchanges that now take American Express credit cards, but approval on the exchange is also very dependent on the vendor chosen.


Using a Credit Card to Buy Cryptocurrency Is Not Allowed.

Several major credit card issuers in the United States will not enable cardholders to buy cryptocurrencies using their credit cards. 


According to reports, Citibank, for example, prohibited cardholders from using credit cards to acquire Bitcoin and other cryptocurrencies in 2018, perhaps due to their volatility and the potential for fraud. 

If a cardholder tries to make a crypto transaction, certain credit card issuers may charge cash advance fees.


However, even if you have a credit card that permits you to buy bitcoin, certain cryptocurrency exchanges, such as eToro and Coinbase, will not accept credit cards as payment. 

And, of the exchanges that may enable you to make a credit card purchase, the transaction will most likely take a day or two to check that it is legitimate and not being used fraudulently. 

This type of delay may not be desirable in the volatile realm of cryptocurrency. 


Can you purchase cryptocurrency with a credit card without being verified?

The platform you select will determine whether or not you may purchase bitcoin with a credit card without verification. 


If you are asked to show evidence of identification, you will often be asked to present a copy of a government ID (such as a driver's license or passport). 



This method helps platforms stop fraud and meet their regulatory obligations to the federal government in certain situations.


How to Buy Cryptocurrency with a Credit Card 2022

You will not be able to use a credit card to acquire cryptocurrencies on all sites. If you pick a platform that allows such transactions, be aware that there may be additional costs connected with the purchase. 


Many credit card companies see bitcoin purchases as cash advances, which can lead to high-interest rates and other fees.


Remember that a cash advance usually doesn't come with a grace period and that interest will start to add up right away.


Cardholders can expect to pay a fee of


Cardholders can expect to pay fees to both the currency exchange and the credit card company.

Before using a credit card, you should figure out how much each item really costs and how much money you will make (or lose) from it.


Exchange Fees for Cryptocurrencies


When using a credit card to buy or deposit cryptocurrency, the exchange may charge a commission and/or a service fee. 


For example, CEX.io is a cryptocurrency exchange where you can purchase a number of cryptocurrencies, including Bitcoin. Users may buy cryptocurrency using a Visa or MasterCard credit card. 


However, there is a 2.99% commission charge with a minimum purchase of $20.


Depending on the exchange, sellers inside the exchange may charge fees to customers based on a variety of criteria, such as where the vendor is situated, the purchase amount, and the kind of credit card used.


Credit Card Companies Charge Fees

Some credit card issuers that enable crypto transactions regard the purchases as a cash advance (cash advances usually involve a cardholder using a credit card to withdraw money from an ATM). 

This has numerous serious drawbacks.


A cardholder may be charged a variety of fees:

  • Cash advance fees: Some credit cards consider bitcoin purchases to be cash advances. This implies that each cryptocurrency purchase will incur a cash advance cost. A standard fee of $10 or 5% (whichever is larger) would be levied. These costs are in addition to the vendor or exchange fees.

  • Interest rates on cash advances: Most cards feature a higher Annual Percentage Rate (APR) for cash advances, typically exceeding 25%. This is a market-based variable interest rate. Interest starts to add up on the day of the purchase and keeps adding up until the credit is paid off. A standard credit card bill can be paid off in up to 25 days before interest starts to add up.

  • No credit toward rewards or bonuses: Credit used to buy cryptocurrency (and get a cash advance) usually doesn't count toward purchase rewards or spending that would normally count toward a welcome bonus.

  • Lower credit limits: Cash advances sometimes have a lower credit limit than the cardholder's total credit limit on the card. Conditions and limits on cash advances could make it hard for cardholders to buy a lot of crypto.


Other credit card dangers include:

  1. Foreign transaction costs: If the merchant is from a different nation and the credit card used levies fees for foreign transactions, a foreign transaction fee may be imposed on each bitcoin purchase.
  2. High risk of fraud: If a vendor is not checked out well enough and the cardholder gives important information like their name and credit card number, there is a high risk of fraud.
  3. High investment risk: Investing in cryptocurrency using a credit card might result in significant debt. Due to the volatile crypto market, cardholders may quickly rack up fees and interest that they may not be able to pay back. They may also drastically increase their credit usage rate or lose the value of their investment. 

Alternatives to Using Credit Cards to Purchase Cryptocurrency

The normal financial market advances in tandem with the cryptocurrency industry. 

A few new credit card companies are offering Bitcoin or other cryptocurrencies as incentives or prizes.

 

The BlockFi Rewards Visa Signature Card, for example, earns 0.25% back in cryptocurrency on all qualified transactions, 1.5% back in cryptocurrency on every purchase, and the opportunity to earn 2% back in cryptocurrency after $30,000 in yearly expenditure. 



Additionally, the organization offers increased incentives from trading and customer referrals. Other cards that offer cryptocurrency rewards include the Crypto.com Visa Card*, the Gemini Credit CardTM*, and the Status Money Credit Card*.


The Benefits and Drawbacks of Using a Credit Card to Purchase Cryptocurrency

Using a credit card to purchase bitcoin has few benefits.

Convenience is one of them. Because cryptocurrency may be a volatile and dangerous investment, borrowing money to create one is a bad idea. 

It may also be rather costly. 



Credit card transactions are often charged extra fees on platforms that accept credit cards, and since credit card issuers sometimes see bitcoin purchases as cash advances, you can expect to be charged a higher interest rate and see interest start to build up right away.


In conclusion

Most people will not be able to buy cryptocurrencies using a credit card. Before purchasing cryptocurrency using a credit card, cardholders should evaluate the key downsides. Direct deposits, debit cards, and wire transfers are often used to purchase cryptocurrency.


Credit card purchases of cryptocurrencies are sometimes subject to significant fees. This may significantly diminish the value of a good investment or reduce profits. 


Cardholders are also in danger of falling into significant debt, which may be difficult to recover from. If you must use a credit card, we suggest talking to a credit card representative about the consequences with a specific credit card provider and looking for a bitcoin exchange with the best credit card rates. 

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