Can you buy cryptocurrencies with a credit card?

Can you buy cryptocurrencies with a credit card? Buying Bitcoin or other cryptocurrencies with a credit card is possible, but can be difficu...

buy cryptocurrencies with a credit card?

Can you buy cryptocurrencies with a credit card?

Buying Bitcoin or other cryptocurrencies with a credit card is possible, but can be difficult and is not recommended.

If you are used to paying for all your purchases by credit card, you may be surprised to learn that buying Bitcoin and other cryptocurrencies can be a difficult task. If you do try, you can be restricted by two restrictions: by the exchange, you are trying to buy the cryptocurrency from, or by your credit card issuer.

Some of the major cryptocurrency exchanges, such as Coinbase, do not accept credit cards. Coinmama and say they accept credit cards, but only Visa and Mastercard. And even then, that doesn't mean your credit card company allows it.

Most major US credit card issuers do not allow the purchase of cryptocurrencies, while others penalize cardholders with fees.

Although you can use your credit card, for example from a small bank, to exchange dollars for bitcoin, you should not.

Here's why:

Commissions charged by the exchange

In addition to the fee the exchange charges for its service, there may be an additional fee for using a credit card. For example, the exchange house may charge you a percentage of the transaction amount to exchange dollars for bitcoin or another cryptocurrency.

Coinmama, for example, trades eight cryptocurrencies, including bitcoin. Coinmama requires a minimum purchase of $60 and charges a 5.9% transaction fee and an additional 5% for credit card purchases. Thus, for every $100 of cryptocurrency you buy, you will pay $10.90 if you buy it with a credit card, leaving you with only $89.10. If you consider the purchase as an investment, you would need to obtain a 12% return to break even.

Card Issuer Cash Penalties

Your credit card issuer will likely treat your purchase of cryptocurrency as a cash withdrawal, just like withdrawing money from an ATM with your credit card.

This is bad for you because it likely comes with these drawbacks:

  • Cash fee withdrawalIt is a single commission that is charged when withdrawing the advance and is usually between 3% and 5% of the amount. For example, if you withdraw a $200 cash advance, a fee of $6 to $10 will be added to your account balance.
  • At a higher interest rateMany cards charge a higher APR for cash withdrawals or advances than for normal purchases.
  • There is no 'grace period'If you pay your balance in full each month, your credit card usually gives you a "grace period" of at least 20 days to pay off your purchase before the interest is charged. In contrast, cash advances earn interest from day one.
  • Lower credit limitSome credit cards have a separate line of credit for cash advances that is lower than the general line of credit.
  • There is no premium credit cardIf your credit card issuer considers cryptocurrency purchases to be equivalent to cash, your spending may not qualify for rewards like cashback, travel points, or miles. They also do not count toward the required spend for a sign-up bonus.

Once again, whether a cryptocurrency purchase is considered a cash advance depends on the card issuerBefore making a purchase, you should call the number on the back of the card and ask.

other considerations

  • Currency rateIf the exchange is made abroad, there may be an exchange fee if your credit card charges it. A typical rate is 3%.
  • ScamsIf you're not careful when choosing a trusted exchange, your personal information, including your credit card number, can be stolen.
  • DebtIf you use a credit card to get into debt and buy cryptocurrencies, you are taking a high riskYou will be paying exorbitant interest rates for a volatile investment.
  • Use of creditLarge cryptocurrency purchases consume your available credit, which has a negative impact on your credit score (credit bureau).

Cryptocurrencies as rewards on credit cards

Some credit cards offer cryptocurrencies as a reward or redemption option. The offer is growing rapidly. For example, some of the first providers of this market in the United States are:

  • SoFi credit card.
  • The Brex card.
  • The Venmo credit card.
  • The BlockFi Rewards Visa® Signature Credit Card.
  • Gemini credit card.
  • The Upgrade Bitcoin Rewards card.

Indirectly, these products could be a way to earn Bitcoin with a credit card.

Alternatively, you could simply get a cashback credit card and use that money to buy crypto on your own terms and on your own schedule.



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Can you buy cryptocurrencies with a credit card?
Urdu Soft Books: Well-researched and Best Quality Trending Articles | Famous Urdu Books and Novels
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