How to buy crypto with credit card? Like gold in the 1850s and dot-com stocks in the 1990s, everyone seems to want crypto. It is possible to buy cryptocurrencies with a credit card, but it can be a dangerous financial undertaking. Cardholders can expect fees from both sides of the transaction involving crypto and credit cards, as well as risk losing money rapidly due to fluctuating currency values and high-interest rates.
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How To Buy Crypto With Credit Card?
How to buy crypto with credit card? To buy cryptocurrencies, not all platforms will allow you to use a credit card to make your cryptocurrency purchases. If you choose a platform that allows these types of transactions, please note that there may be additional fees associated with the purchase. Many credit card companies process cryptocurrency purchases via credit cards as cash advances, which, among other fees, can result in higher interest rates.
Remember: a cash advance generally doesn’t have a grace period and will start charging interest right away.
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Types Of Charges Cardholders Can Expect
Cardholders can expect to pay fees for both the exchange in which the currency was purchased and the fee from the credit card issuer. Before making any credit card purchases, find out the exact cost of each purchase and the financial benefits (or not) before incurring charges.
· Cryptocurrency Exchange Fee
The exchange may charge commission fees and/or service fees for using a credit card to purchase or deposit cryptocurrencies. For example, CEX. io is an exchange that offers quite a few cryptocurrencies to buy, including Bitcoin. Users can purchase crypto with a Visa or Mastercard credit card, but US cardholders are subject to a 2.99 with a $20 minimum purchase.
Depending on the exchange, sellers within the exchange may also design fees for buyers based on a few factors, such as where the seller is located, the amount of the purchase, and the type of credit card used.
Credit Card Company Fees
Some credit card companies that allow cardholders to make purchases in cryptocurrency treat the purchase as a cash advance (cash advances generally involve the cardholder using a credit card to withdraw money from an ATM ). This has several critical flaws.
There are several types of charges a cardholder may incur:
Cash Advance Fee
Some cards treat the purchase of cryptocurrency as a cash advance. This means that every cryptocurrency purchase is subject to a cash advance fee. A typical fee will be $10 or 5% (whichever is greater). These fees are in addition to any fees charged by the seller or the exchange.
- Interest Rates For Cash Advances
Most cards have a higher annual percentage rate (APR) for cash advances, often higher than 25%. This is a shifting interest that changes as the market changes. Interest will begin to accrue the day the purchase is made and will continue to accrue until the balance is paid. By comparison, cardholders have up to 25 days to pay the normal credit card fee before interest is charged.
No credit for bonuses or bonuses: Credit used to purchase cryptocurrency (and thus provide a cash advance) does not typically qualify for any purchase bonuses or spending that would normally apply to a welcome bonus.
- Lower Credit Limits
Cash advances often have a lower credit limit than the cardholder’s total credit limit that applies to the card itself. Cardholders hoping to make large cryptocurrency purchases may find themselves restricted by the terms and restrictions of a cash advance.
Other credit card risks may include:
- Foreign Transaction Fees
A foreign transaction fee may apply to each cryptocurrency purchase if the seller is from a different country and the credit card used charges a foreign transaction fee.
- High Risk of Fraud
There is a high potential for fraud if the seller is not properly verified and the cardholder provides valuable information such as their name and credit card number.
- High investment risk
Investing in cryptocurrencies with your credit card can lead to serious debt. Cardholders can quickly accumulate fees and interest that they may not be able to pay later, dramatically increase their credit usage rate, or lose the value of their investment due to crypto market volatility.
Can You Buy Cryptocurrencies With A Credit Card?
In short, it depends. Here’s what you need to know about buying crypto with a credit card.
Who allows you to buy cryptocurrencies with a credit card?
As of April 2022, these are the policies of several major issuers of cryptocurrency purchases:
- Barclays: It is not allowed to buy cryptocurrencies with any of their credit cards
- Chase: does not allow cryptocurrency purchases with any of its credit cards
- American Express: purchases are allowed on some exchanges with few strict conditions
- Bank of America: it is not allowed to buy cryptocurrencies with any of its credit cards
- DISCOVER: Cryptocurrency purchases are not allowed with any of your credit cards
- Wells Fargo: does not allow cryptocurrency purchases with any of its credit cards
Citibank, US Bank, and Credit One did not comment on a Forbes Advisor query about their policies regarding cryptocurrency purchases. If your card issuer is not listed here, please call the number on the back of your card and ask a representative.
Check with your credit card issuer to see if they allow cardholders to purchase any type of cryptocurrency.
Some only allow direct bank deposits, cash deposits, or debit card purchases. Coinmama, CEX. Paxful and I are exchanges that currently accept credit cards.
There are also restrictions on the types of credit cards exchanges can accept. Some exchanges only accept Visa or Mastercard credit cards. Paxful, for example, has a variety of sellers from all over the world who sell on the exchange. It is one of the few exchanges that currently accept American Express credit cards, but acceptance of the exchange is also highly dependent on the specific merchant.
When Buying Cryptocurrencies With a Credit Card It Is Not Allowed
Many of the major US credit card companies will not allow cardholders to purchase crypto with a credit card. Reports suggest that Citibank, for example, banned cardholders from using credit cards to purchase Bitcoin and other cryptocurrencies in 2018, possibly fearing their volatility and potential for fraud. Some credit card companies may charge a cash advance fee if the cardholder attempts to make a cryptocurrency purchase.
But you should also be aware that even if you have a credit card that allows you to buy cryptocurrency, some cryptocurrency exchanges will not accept credit cards as a payment method, such as eToro and Coinbase. Among the exchanges that may allow you to make a purchase with a credit card, the purchase will not be as the exchange will likely take a day or two to ensure the transaction is valid and not used fraudulently. In the volatile world of cryptocurrencies, this type of delay may not be ideal.
Can You Buy Cryptocurrencies With A Credit Card Without Verification?
Whether or not you can buy crypto with a credit card depends on the platform you are using. If you are asked to provide proof of identity, this generally consists of providing a copy of a government ID (such as a driver’s license or passport). This action helps platforms prevent fraud and, in some cases, comply with federal regulatory requirements.
Pros and cons of buying cryptocurrencies with a credit card
Few advantages come with using a credit card to buy cryptocurrencies. Among them is comfort. Since cryptocurrency can be a volatile and risky investment, it is not wise to take advantage of it to make such an investment. It can also be expensive. Platforms that accept credit card payments often incur additional fees for credit card transactions, and since credit card companies often treat cryptocurrency purchases as cash advances, you can expect to charge an interest rate.
Using a credit card to buy cryptocurrencies will not make sense to most people. Cardholders should consider the main drawbacks before deciding to buy cryptocurrency using a method that includes a credit card. Purchasing cryptocurrencies is often best accomplished with direct deposit, debit cards, or wire transfers.
Cryptocurrency credit card purchases often come with hefty fees. This can reduce the value of a good investment or reduce returns by a significant margin. Cardholders also face a high risk of being trapped in large debts that are difficult to get out of. For those who insist on using a credit card, we recommend contacting a credit card representative to discuss the ramifications with a particular credit card issuer and research a cryptocurrency exchange with the best credit card rates.
Can You Buy Crypto With Credit Card Rewards?
Crypto rewards cards are a newer form of credit card rewards program. Some programs allow you to earn cryptocurrency as a reward for using the card, while others allow you to exchange the reward points you earn for cryptocurrency.
Can You Pay Credit Card Bills With Cryptocurrencies?
You can use cryptocurrency to make payments if the seller you want to buy from accepts cryptocurrency directly. Some websites allow you to exchange crypto for gift cards, which you can use to pay for purchases. You can also sign up for a cryptocurrency debit card.
Is It Safe To Buy Cryptocurrencies With A Credit Card?
If you must use a credit card, we recommend that you contact a credit card representative with your card issuer to discuss any charges that may apply.
Conclusion – How to Buy Crypto With Credit Card
It is possible to buy cryptocurrencies with a credit card, but it can be a dangerous financial undertaking. Cardholders can expect fees from both sides of the transaction involving crypto and credit cards, as well as risk losing money rapidly due to fluctuating currency values and high-interest rates.
Thank you for reading our post on how to buy crypto with credit card, also see our post on how to use a visa gift card to pay your credit card bill.