Buying Crypto With Credit Cards?
By Space Coast Daily // October 28, 2021
Everyone seems to be attempting to get their hands on crypto, much as they did with gold in the 1850s and.com stocks in the 1990s. Buying cryptocurrency with a credit card is doable, but it’s a risky proposition. Cardholders should expect costs on both sides of a cryptocurrency and credit card transaction, as well as the risk of losing money quickly owing to unpredictable currency prices and high-interest rates.
It’s best to verify with your credit card company to see if you may buy any form of cryptocurrency with your card. Such transactions are currently permitted by American Express, but only under certain conditions.
When a Reddit user published a screenshot of a letter they received from Bank of America in 2020, it indicated that bitcoin purchases would be handled as cash advances. (Note that the terms of Bank of America’s agreement are still unclear.)
Along with double-checking with a credit card company, cryptocurrency investors should look for a cryptocurrency exchange that accepts credit cards for deposits and purchases. Some only accept bank direct deposits, cash deposits, or debit card payments.
Exchanges also have restrictions on the types of credit cards they accept. Some exchangers may only accept credit cards from Visa or Mastercard. Paxful, for example, has a diverse range of Bitcoin sellers from all around the world selling on the exchange platform.
It’s one of the few exchanges that accept American Express credit cards right now, however, acceptance is highly dependent on the merchant.
Exchange Fees for Cryptocurrencies
Using a credit card to purchase or deposit crypto at crypto casinos for example, may incur a commission fee and/or a service fee from the exchange.
CEX.io, for example, is a cryptocurrency exchange that sells a variety of cryptocurrencies, including Bitcoin. Users can buy cryptocurrency with a Visa or Mastercard credit card, however, there is a 2.99% commission fee with a minimum transaction of $20 for US cardholders.
Depending on the exchange, retailers may charge customers fees based on a variety of factors, including the vendor’s location, the purchase amount, and the type of credit card used.
Fees charged by credit card companies
Some credit card providers that allow cardholders to buy crypto regard the transactions as cash advances (cash advances usually refer to when a cardholder uses a credit card to withdraw money from an ATM). This has a number of drawbacks.
For most people, buying cryptocurrency with a credit card isn’t a good idea. Before deciding to buy cryptocurrency with a credit card, cardholders should think about the potential drawbacks. Direct deposits, debit cards, and wire transfers are frequently used to purchase cryptocurrency.
Credit card transactions are frequently accompanied by excessive fees that detract from the value of a good investment or lower returns by a substantial margin. Cardholders also run the risk of sinking into severe debt that is difficult to recover from. For those who insist on using a credit card, we advise contacting a credit card representative to discuss what the repercussions will be.