Can you buy Cryptocurrency with your credit card? Why do some banks ban it and how you can make transactions.
It is possible to buy Bitcoin or other cryptocurrencies using a credit card, but it may be difficult and hazardous. It is possible to buy Bitcoin, Ethereum, stablecoins or other cryptocurrencies using a credit card, but your credit card company may restrict you from doing so.
In the United States, most major credit card issuers restrict the purchase of cryptocurrencies, while others charge cardholders fees. To begin purchasing bitcoin using a credit card, you must first locate a credit card issuer and a cryptocurrency exchange that accepts it.
Where can you buy cryptocurrency with a credit card:
Several services, including Coinmama, Coinbase, Bitpanda, and Wirex, accept Visa and MasterCard for Bitcoin purchases. Connecting a credit or debit card to an account is straightforward and quick on many platforms, and it usually takes less than a day. Once this is done, you may start a transaction.
Depending on the platform, you may either deposit money into your account before starting a buy transaction, or you can start a transaction first and then charge the money to your card.
The bitcoin is delivered to your address once the payment has been completed. The amount is charged to the card and must be reflected on the account before it may be used to make a transaction.
How to Buy Cryptocurrency with a Credit Card:
On certain services, you will not be able to buy bitcoins using a credit card. If you choose a platform that supports such transactions, keep in mind that there may be additional fees associated with the purchase. Many credit card companies consider bitcoin purchases to be cash advances, resulting in high interest rates and other fees. Following are some steps of how you can purchase cryptocurrency via credit card:
- Examine your credit card to determine whether it allows bitcoin purchases and what fees it charges.
- Look for a bitcoin exchange that allows credit card payments. Some important ones do not.
- To fund your bitcoin account, enter your credit card information and link it to your exchange account. It is analogous to the common practice of completing the checkout payment form when purchasing a product or service from an online vendor.
Why do some banks ban Crypto Transactions:
Banks may be concerned about bitcoin usage for a variety of reasons.
It is illegal for some banks:
In many places of the world, cryptocurrencies are simply illegal, making it illegal for banks to process Bitcoin-related transactions. Banks in China and Bolivia, for example, will not process Bitcoin transactions because they are illegal.
Crypto is not worth it for some banks:
Some organizations, like Medici Bank, a challenger bank created by a descendant of an Italian banking family, are enthusiastic about bitcoin. However, many banks believe that the time and money spent resolving cryptocurrency-related client complaints, as well as putting systems in place to prevent cryptocurrency crimes or frauds, is not worth the effort to serve what is now a small market.
The threat of money Laundering:
Banks, on the other hand, do not want the trouble of dealing with crypto-related crime, whether their clients are the culprits or the victims. Some find the absence of regulation in the field appealing.
Other Drawbacks of Buying Cryptocurrency with Credit Card:
Interest rates have risen:
Many credit cards charge a higher annual percentage rate for cash advances than for regular transactions.
Credit limit has been reduced:
Some credit cards have a lower cash advance credit limit than the overall credit limit.
Cash advance fees:
This is a one-time charge due when you get your advance, often ranging from 3% to 5% of the entire amount. A charge of $6 to $10 will be applied to your account balance if you take out a $200 cash advance, for example.
There is no waiting period:
If you pay your credit card bill in full each month, you usually have at least 21 days to pay off the purchase before interest is applied.
What other bitcoin purchase alternatives do I have?
Again, it is possible to purchase bitcoin using a credit card; but, most major credit card issuers in the United States, as well as numerous large cryptocurrency exchanges, do not allow it.
A bank electronic transfer — either linking a bank account to the exchange or setting up a wire transfer — is a better and more common way to pay for bitcoin transactions in dollars. Many exchanges also accept other cryptocurrencies as payment for crypto purchases. You could, for example, exchange Bitcoin for Ether.
Most consumers will be unable to buy bitcoins with a credit card. Before purchasing cryptocurrency with a credit card, cardholders should consider the major drawbacks. To acquire bitcoin, many people utilize direct deposits, debit cards, and wire transfers.
Credit card purchases of bitcoins may incur substantial costs. This might dramatically lower the value of a good investment or profit margins. Cardholders are also at risk of incurring huge debt that may be difficult to recover from.