Can I buy crypto with a credit card? This seems to be a question that everyone keeps questioning especially when all people begin to start investing. Actually, it is always possible to buy crypto using credit card, bitcoin or other crypto-currencies though it is considered complicated and inadvisable.
The key is that buying crypto with a credit card is possible only if you are permitted by your credit card issuer and your crypto exchange. It may be very expensive due to its transaction which is often best described as a cash advance.
As we have mentioned, everyone has possibility and the same opportunity to buy Bitcoin, stablecoins, Ethereum and other crypto-currencies. However, your crypto purchase or trade can be blocked by your own credit card company or even by an exchange that sells the crypto-currency.
In the United States, most large credit card issuers don’t give permission for crypto-currency purchases while other card issuers penalized the cardholders by requiring them to pay fees. There are some big crypto-currency exchange like Coinbase do not accept credit cards while Coinmama and CEX.io accept credit cards especially for Visa and MasterCard only.
Now let’s discuss more about whether you can buy crypto with a credit through our explanation as follows:
Buying Crypto with A Credit Card Using Fees from The Exchange
Can I buy crypto with a credit card? The first idea is to use the fees from the exchange. In this regards, a crypto-currency exchange seems charging you a percentage of the amount of transaction to exchange dollars for Bitcoin or some other crypto-currency. Moreover, the fee charged by the exchange will be utilized for the service. You might be charged for an additional fee when use credit card to fund your account.
For instance, a fee is charged by the exchange Coinmama for every customary purchase. However, if you use credit card for your payment, you will be tacked on additional 5% fee. A $1000 purchase would earn a credit-card fee of $50. This means that you need a decent returns on your investment to get your value back.
Buying Crypto with A Credit Card using Cash Advanced Penalties From The Card Issuer
Your credit card issuer seems considering the crypto purchase using cash advance. This is due to the fact that you will use your credit card to take out money of an ATM. In short, using a cash advance to buy a crypto as your card issuer requires, it will come with the following downsides which means too bad for your investment.
- Cash advance fee
It is a one-time fee charged when you take your own advance. The fee is usually 3% – 5% of the amount. For example, if you withdraw a $200 cash advance, your account balance will be charged a fee of $6 to $10.
- Higher interest rate
You will be charged with the higher interest rate for cash advances than that for the regular purchase.
- No grace period
If you pay your monthly balance fully, your credit card is usually facilitated by a grace period of at least 21 days to enable you to pay off your purchase before you are required to pay the interest charge. This way, the cash advances will start to accumulate the interest from the first day.
- Lower credit limit
Can I buy crypto with a credit card? Yes, you can, but you will have credit limit. In this case, some credit cards usually come with the separate cash advanced credit limit which is noticeably lower than the overall credit limit.
- No credit card rewards
You will get no credit limit if your credit card issuer consider a cash equivalent for a crypto purchase. That’s because your spending doesn’t seem qualifying for rewards like travel points or miles and cash back. Similarly, you will not either earn a sign-up bonus.
Again, using a cash advance to buy a crypto is much depending on the credit card issuer. Thus, before you make a purchase, it would be better to call the number on the back of your credit card and ask about it.
Things To Consider When Buying Crypto with A Credit Card
As buying crypto with a credit card is risky and complicated, there are several things to consider if you insist on buying crypto with your credit cards. Those are the foreign exchange fee, scams, debt and credit utilization.
Here are the explanation for a clear understanding.
Foreign Exchange Fee
Be careful of the foreign exchange fee charging your credit card. The typical fee is usually 3%. If you often go abroad for working or traveling, you may consider using credit cards that charge no foreign exchange fee.
Everyone is always warned to be careful in choosing a reputable currency exchange. If you are not, your personal information including your credit card number will be at risk. It can be stolen or hacked.
Never use your credit card to go into debt in order to buy a crypto-currency. That may put your investment at a high risk. In this case, you will be required to pay exorbitant interest on a volatile investment.
The use of credit card for making a big crypto purchases will means negative for your credit score. This means that the more you use your credit card to by a crypto, the worse your credits scores will be. So, avoid using your credit too much to purchase a crypto.
Buying Crypto with Other Way
Can I buy crypto with a credit card? Considering that using credit card is too risky though it is possible and permitted by certain credit card issuers, some other people try to find some other way to buy crpto without using a credit card.
In this regards, a better and more widely used method to by crypto for purchases is through electronic transfer from a bank. You can do it by linking your bank account to the exchange or just setting up a wire transfer.
Many exchange programed by the credit card issuers allow you to pay crypto purchase using other crypto. This way, you can consider selling Bitcoin to buy Ether.
How To Buy Crypto-Currency with Credit Card
Once you know that you can buy crypto with a credit card, here we have the guide for you how to do it. In this regards, there are three easy steps on how to buy crypto with a credit card you can follow carefully.
- First, find out to determine which credit card that allows crypto purchases and what fees it will charge. Don’t forget to check out the cash-advances penalties.
- Second, find an exchange that also allows crypto purchases using a credit card. However, some major credit cards do not allow.
- Third, fund crypto by inputting your credit card information and linking the card to your exchange account. This step is just similar to the process of filling out the checkout payment form at an online merchant when you are purchasing a product or service.
Pros and Cons of Buying Crypto with A Credit Card
Now, you have learned the facts that you can buy crypto with a credit card and you knew how to do it, it is now important to see the pros and cons of using a credit card to but crypto. This is aimed to let you consider whether you decide on making it up or not by checking why people do and don’t do that.
Pros (Why People Buy Crypto with Credit Card)
There are two reasons why people do buy crypto using their credit card. First, it is quite probable that they don’t have a cash, so they use their credit card to buy the crypto. Well, when someone intends to invest in crypto-currency and is required to purchase tokens or bitcoin while he has no cash, using credit card will be a choice.
Second, if a credit card allows for purchasing crypto while others don’t, the purchase you make could earn rewards or count toward a sign-up bonus. According to some people who invest in crypto-currencies, it is beneficial to find each opportunities to earn rewards or bonus.
Cons (Why People Don’t Use Credit Card to Buy Crypto)
Some other people do not like to buy crypto with their credit card. That’s due to some reasons that are also logically acceptable. First, they don’t want to have cash-advance penalties such as fees, higher APR and loss of grace period, as we have mentioned earlier.
Second, there will be extra fees that are charging you from the crypto-currency exchange. Third, you will potentially have debt if you don’t pay off all of your monthly credit bill. Next, buying crypto with a credit card also gives an impact to your credit scores. In the world of credit scores, you must the score in balance and as required that is between 670 and 850.
Later, there is a potential scams or foreign-exchange fees that charge you additionally. This way, if you have a credit card with foreign exchange fees, you will be charged for every single item you buy outside your country. Thus, if you often go abroad for travelling or business, make sure your credit card doesn’t have foreign exchange fees.
Crypto As A Credit Card Reward
It is possible to use a credit card to accumulate a number of crypto. If you want to do that, you are provided with cards options that offer crypto as a reward or an option for rewards redemption. In this regards, the car options are significantly increasing. However, some early cards issued in the market today include:
- The SoFi Credit Card
- The Venmo Credit Card
- The Brex Card
- The BlockFi Rewards Visa*Signature Credit Card
- The Gemini Credit Card
- The Upgrade Bitcoin Rewards Card
In the ambiguous way, these cards are the options that offer possibility to use a credit card to earn Bitcoin.
Can I buy crypto with a credit card? The answer is definitely yes. Now even if you want to start buying crypto with a credit card, you’ll still need a credit card company or issuer along with a crypto exchange that provide permissions.
And though you may not want to due to the fess, you can purchase crypto with cash using your bank account or through the wire transfer. For example, purchase using the other crypto you have already own. Or this is called crypto selling and purchasing.
Finally, choose or use a credit card that allows you to buy crypto. As we have mentioned, there are already some options of credit card that offers permission for you to buy a crypt with credit card. Thus, be selective in choosing and using a credit card. Make sure you know well what a credit card offers.