Can You Buy Crypto With a Credit Card?
You want to buy cryptocurrency and you wonder "Can I buy crypto with a credit card?". Let 's find out you should or should not!
There is no shortage of excitement in the crypto market in recent months, with a lot of new investors interested in buying.
But taking that first step to buying a small amount of bitcoin or ethereum requires a lot of research first: the cryptocurrency you want to buy, the safest exchanges to use, and even how you will make the transaction. buying. Since cryptocurrency transactions happen online, you might even consider using your credit card, like you do for many other online transactions, to keep purchases safe.
It is usually possible to purchase cryptocurrencies with a credit card. But it is expensive and can add to the risk you are taking by adding volatile crypto assets to your portfolio. You'll incur fees from the credit card issuers and cryptocurrency exchanges you use, and incur high-interest debt if you don't pay your balance right away.
Lauren Anastasio, CFP and director of financial advice at Stash, said: “Cryptocurrencies remain highly volatile without any guarantee of return, so when it comes to how much you invest, it should be limited to what you feel you can comfortably lose,” said Lauren Anastasio, CFP and director of financial advice at Stash, an investment, banking and education platform. “I would hate to see anyone charge large deposits to their credit card in hopes of getting a big return on their crypto investment only to be burned by interest and credit card fees. .”
Here are the details on buying crypto with a credit card and what to know before you consider doing it.
Can you buy crypto with a credit card?
It is sometimes possible to buy crypto with a credit card, but ultimately that depends on both the crypto exchange you are using to invest and your credit card issuer.
Several cryptocurrency exchanges, including Coinmama, CEX.io, and Paxful accept credit card payments. However, many exchanges, including those like Coinbase and Gemini, which Nextvisor includes among the best crypto exchanges, do not. Among exchanges that accept credit cards, the terms and fees required to do so can vary widely. For example, crypto exchange Coinmama charges an additional 5% credit card fee on top of the transaction fees it charges to buy or sell cryptocurrencies. At Binance, the credit card usage fee is 2% higher than the additional fees your credit card has to pay.
Typically, fees are also higher than with other forms of payment, including ACH bank transfers.
Tips
Transferring funds to a crypto exchange from your bank account using an ACH transfer can be a faster and less expensive way to buy crypto.
The other thing to consider is whether your credit card issuer allows cryptocurrency purchases with your card. Most commonly, your purchase will be treated as a cash advance.
Credit card issuers like American Express, Chase, Capital One, and Citi all allow the purchase of cryptocurrencies and treat them as a cash advance. “There is no known bank that doesn’t charge a cash advance fee when buying crypto with a credit card,” said John Taylor Garner, founder of credit card app Card Curator.
Most credit cards have a cash advance fee, usually around 5% of the advance amount, with a minimum fee of $10. Furthermore, cash advances are subject to higher interest rates and do not come with a grace period, meaning your crypto fees will start accruing interest from the day you charge them - even if you plan to pay your credit card balance in full by the due date.
So, while it is possible to buy crypto with a credit card, you will be more likely to pay expensive fees from both the crypto exchange and your credit card company if you choose to pay this way.
How to buy cryptocurrency with a credit card?
If you want to buy cryptocurrency with a credit card, you should be aware of any and all fees that apply to a previous purchase and be prepared to add that fee to the cost of exchanging dollars for coins. This includes fees from both your cryptocurrency exchange and your credit card issuer.
If you decide you don't care about the cost and want to buy crypto with a credit card, here are some steps to take to make it clear to you about the additional costs you will have to pay to do so. this way:
- Step 1: Ask your credit card company about cash advance fees and charges: Consult your card agreement or call the number on the back of your card to ask the representative how much you will pay in Cash advance fee to buy crypto with your cash. card, as well as the cash advance APR will be charged to your balance.
- Step 2: Determine how much you will pay for the exchange fee. If you decide to invest in cryptocurrencies, it is important to choose the exchange you will buy (and possibly store) your funds with based on factors such as fees, investor tools, availability accessibility and most importantly security. If you choose an exchange that also accepts credit card payments, look for a page on the exchange's website that clearly outlines the fees you'll incur for using the card.
- Step 3: Add funds to your account with your credit card, then use it to buy crypto. Once your exchange account has funds equal to the amount you intend to use for crypto, you can research crypto and invest when you are ready.
- Step 4: Pay your card balance instantly. Since your advance will start accruing interest as you make a purchase, you should plan to pay off the balance as quickly as possible, to avoid being charged additional interest.
Benefits of buying crypto with a credit card
The biggest benefit of buying crypto with a credit card is convenience. Making an ACH transfer from your bank account can be tedious, as you'll need information like your routing and account number. If you usually carry credit cards in your wallet, this may be easier than authorizing a bank transfer.
Security could be another reason to consider using a card over a wire transfer, Anastasio says. “Whenever your information is compromised, you can easily get your card reissued with a new number, which is much easier and less time consuming than trying to update your bank account information. your".
Rewards can also be a potential benefit, but few credit card companies allow you to earn points or cash back on cash advances. Also, all the transaction fees associated with funding crypto with a credit card will quickly wipe out any gains you get.
Risks of buying cryptocurrencies with a credit card
In general, cryptocurrencies are very risky. You can easily lose money, and people often do.
If you're looking to buy crypto with a credit card because there's cash available to buy it outright, it can turn out to be riskier. We strongly recommend that you only invest in cryptocurrencies with an amount that you are not afraid to lose. If you don't have the funds in your bank account to fund your crypto investment, you may want to reconsider buying it.
If you decide to invest in cryptocurrencies, you should do so with the full knowledge that you can easily lose your investment in the short or long term. That's because cryptocurrencies are volatile. No one knows what will happen to crypto assets and their value over any period of time. It all depends on when you buy and when you sell, and adding credit card fees to the mix only reduces your chances of profit.
As an example, a bitcoin that was priced at over $7,200 in January 2020, rose to a new all-time high of over $68,000 in November 2021, then fell back below $30,000 per each. VND in May 2022.
Imagine if you buy a large amount of crypto with your credit card in November 2021, pay all required fees and interest, then watch the price of your investment drop by 50% in the next few days. the next six months. You'll still owe huge credit card bills, but the value of your crypto won't be close enough to cover the entire cost.
Other ways to buy cryptocurrency
Fortunately, you don't have to buy crypto with a credit card, and if you want to invest, there are less expensive and less risky ways to fund your exchange account. Generally, the lowest cost option is a bank transfer, which means you'll fund your crypto investment with the cash you already have.
You can usually buy crypto this way through an ACH transfer or by connecting a debit card to your account. Just be aware, these methods can also carry a deposit fee to your account and you will have to pay a transaction fee when you finally buy the cryptocurrency.
These fees vary widely depending on the cryptocurrency exchange you use.
Make sure you compare all the best crypto exchanges before deciding to invest. From there, you'll also want to make sure you use a cryptocurrency storage method (like a crypto wallet) to keep your digital investment safe from hackers and thieves.
Investing in cryptocurrencies is risky enough without using a credit card and we don't recommend it. Minimize your risk as much as possible by doing your research before investing, don't put any money you can't lose, and find the most cost effective - and safe - method - to exchange your research dollars for cryptocurrency.
To be eligible for the $200 bitcoin welcome bonus, you must open and fund a new Rewards Checking Account and make 3 debit card transactions within 60 days of opening your Upgrade Card account. friend. The value of the $200 bonus will be based on the value of bitcoins at the time it was purchased (within 1-2 statement periods from the date of the bonus being earned) and subject to change in price at the time of purchase. you choose to sell it. Refer to the Program Terms. Your Upgrade Card must be in good standing to receive the bonus.
Aug 28, 2022
