Using all of the hype surrounding cryptocurrency these days, you may have considered to buy crypto with a credit card while whipping out the old credit card and hoping to cash in on the crypto boom. Unfortunately, purchasing digital money using credit card accounts might be difficult. However, the complexity isn’t the only reason to think twice about swiping for Bitcoin. Continue reading to learn what you should think about before using your credit card to invest in cryptocurrencies, as well as how to buy bitcoin using a credit card.
CAN YOU BUY CRYPTOCURRENCY WITH A CREDIT CARD?
If you think you can buy crypto with a credit card, the answer is yes – but not easily. For starters, you’ll need to locate a bitcoin exchange. This is a company that enables the purchase and sale of cryptocurrencies, similar to a stock exchange. You’ll also need an exchange that accepts credit cards. Many prominent exchanges do not accept credit card transactions at all. The crypto exchanges that accept credit cards will charge a fee for the service, which can amount to 3% or more of your purchase.
Of course, even if you’re ready to pay the exchange’s fees to use your card, your credit card company may still be a problem. The majority of major credit card providers have outright banned the purchase of cryptocurrencies. Why? There are several significant reasons why card providers will not enable crypto purchases:
If you’ve spent any time investigating cryptocurrency, you’ve indeed witnessed Bitcoin’s tremendous highs and lows over the previous few years. Many other virtual currencies have similar (albeit less well-known) backgrounds. Because of this volatility, cryptocurrency equities are incredibly hazardous, and banks are notoriously risk-averse. They will not allow you to utilise your credit line, sometimes known as “their money,” to make risky purchases.
- INADEQUATE REGULATION:
Unlike most other financial products, there is relatively no regulation when it comes to cryptocurrencies. The absence of regulation creates even more uncertainty to a commodity that is already extremely dangerous. It may also result in legal difficulties down the road, which financial institutions despise.
- EQUIVALENT IN CASH:
Another reason card companies are scared of cryptocurrencies is because they may be exchange for real money. This can raise concerns about potential money laundering, tax evasion, and other legal problems. This is also why many credit card companies will not permit you to buy money orders. All of this implies that you’ll have to seek hard for a credit card provider that doesn’t wholly prohibit cryptocurrency purchases. And if you’re fortunate enough to locate an institution that can be use for purchase cryptocurrency, then be prepare to pay for it again.
Remember the third point? Purchases of cryptocurrency are classified as cash-equivalent transactions, which come under the umbrella of a credit card cash advance. So, in addition to the exchange’s credit card cost, you’ll almost certainly be charged a cash advance fee, which can vary from 3% to 5% of each transaction. Furthermore, cash advances begin charging interest as soon as they arrive in your account, frequently at a higher-than-average APR.
STEP-BY-STEP PROCESS TO BUY CRYPTO WITH A CREDIT CARD:
The procedure for purchasing cryptocurrency using a credit card is straightforward:
- Look for an exchange that accepts credit cards. The first step is registering for a cryptocurrency exchange that accepts credit cards. Based on which one you select; sometimes you require to submit some personal details to prove your identity. (It’s almost guaranteed that you’ll be able to use a credit card if the exchange accepts them.)
- Check to see whether your card issuer accepts crypto purchases. Before proceeding, check with your credit card company to ensure that it permits crypto purchases. Inquire if the transactions would be considered standard purchases or cash advances.
- Fill in your payment information. Next, enter your credit card information and store it as a preferred payment method.
- Create your transaction. Choose which virtual currency you want to purchase, the currency you want to use, and the quantity you want to buy. Proceed with the transaction once you’ve verified all of the details.
- As quickly as possible, pay off your amount. It’s critical to avoid allowing interest to accumulate on your credit card debt, mainly because you’ve already paid substantial fees for the transactions and will most likely be charged the higher cash advance annual percentage rate. Make a serious effort to pay off your balance as soon as possible.
You can absolutely buy crypto with a credit card, but doing so pretty much means incurring debt for a highly uncertain investment. If that investment fails, you’ll still be liable for your credit card debt. Furthermore, you may wind up with interest or other costs that make your original investment all the more expensive to pay off. So, think twice before getting deep into how to buy bitcoin with credit card.