Recently, there has been so much buzz around cryptocurrencies that it’s stimulating massive interest among investors across the globe. If you are also thinking of joining the crypto craze but wondering if you could buy crypto with credit card, you will be glad to know the answer is yes!
But before you whip out your credit card (view different options at https://mint.intuit.com/
In this post, we will be walking you through all you need to know about buying crypto with credit cards and the risk or challenges involved.
Can You Buy Cryptocurrencies with Credit Card?
Well, the answer to this is yes – you can buy crypto with credit card. Unlike what it used to be in the past when it is pretty difficult to buy cryptocurrencies using this method, some brokers and exchange platforms have committed themselves to bringing convenience to the crypto community by allowing credit card payment on their platforms.
However, buying cryptocurrencies with credit card is not that easy – it comes with some challenges. First, you will need to find a cryptocurrency exchange or broker that allows credit card transactions. The unfortunate part is that most of the popular exchanges we have today won’t allow credit card purchases at all. And some of them that do, will charge about 3-5% transaction fee for it.
It doesn’t end there, even if you are willing to pay the transaction fee to use your credit card, you will need to check if your card issuer allows such a purchase too. Some card companies don’t allow it. Some card issuers like American Express and Chase, however, allow cryptocurrency purchases as they treat it as a cash advance.
So, before you decide to use your credit card to buy cryptocurrency, you need to first find a platform that allows it and also be sure your card issuer permits such a purchase.
Why Do Some Card Companies Don’t Allow It?
There are different reasons some credit card companies don’t allow crypto purchases. Capital One, for example, made the decision to block cryptocurrency purchases to protect cardholders from losses, fraud, and market volatility.
Buying Crypto With A Credit Card; How Does It Work?
This is not different from any other online purchase – it is more or less like shopping groceries online. The process typically looks like this:
find a platform that allows credit card payment, find a credit card issuer that allows such a payment, and purchase your crypto. Once you are sure your credit card company allows it and you have found a platform to use, the process of buying is very easy.
For instance, these are the steps to follow when you want to buy crypto with credit card on a platform like Coingate – an exchange platform that accepts credit card payment in addition to the several forms of payment for buying cryptocurrencies on the platform:
- Go to Coingate’s dedicated page for that
- Choose the type of cryptocurrency you want to buy (Bitcoin or any other altcoins)
- Choose the amount you want to buy
- Input your credit card details
- Complete a quick verification of your identity
- Wait for your cryptocurrency to be sent to your digital wallet
It is as simple as that.
Things to Consider When Buying Crypto with Credit Card
#1: You may have to pay a transaction fee
Every time you use your credit card for a cryptocurrency purchase, the crypto exchange you use may charge a transaction fee – this is usually disclosed at the time of your transaction. So you can decide to go ahead with the transaction if the fee is fair enough for you. The fee could be anywhere from 3% to 5% of the transaction amount.
#2: The purchase may be a cash advance
Most card issuer companies will process cryptocurrency purchases as cash advances. That means you will pay a cash advance fee on top of any transaction fee the crypto exchange platform is already charging you. A typical advance fee is between 5% and 10% of the amount of the transaction.
#3: There could be a foreign transaction fee
Sometimes you may need to pay a foreign transaction fee, especially if the crypto exchange is based outside the U.S. This fee is charged by your credit card issuer and is usually 3% of the transaction amount. That means if you are buying $1,000 worth of cryptocurrency and you are staying outside the U.S., you will be paying a foreign transaction fee of $30.
#4: You may have a daily limit
This is sometimes also one of the challenges of buying cryptocurrencies with credit card. There may be a limit to the amount of crypto you can purchase, depending on the platform. You can check and verify your limits when you log into your cryptocurrency exchange account.