Credit Card Crypto: Where To Invest And Buy

Cryptocurrency is a digital currency that has gained popularity in recent years. Bitcoin is the first and most well-known cryptocurrency, while Ethereum is a more recent addition that has gained traction due to its smart contract functionality. With the rise in popularity, you may be considering investing in cryptocurrency. While it is possible to buy cryptocurrencies with a credit card, there are several drawbacks and risks associated with this payment method. Credit card companies may block cryptocurrency purchases due to the volatile nature of the investment and poor regulation, and they may also charge high fees and interest rates for these transactions. Cryptocurrency exchanges that allow credit card purchases may also charge additional fees, and there is a high risk of fraud when providing your credit card information. Therefore, it is important to carefully consider the risks and fees associated with using a credit card to invest in cryptocurrency and explore other payment methods such as bank transfers or debit cards.

Where to buy cryptocurrency with a credit card

There are several options for buying cryptocurrency with a credit card, although it's worth noting that this is generally considered a poor financial decision due to the high fees and interest rates often involved. However, if you are still interested in purchasing cryptocurrency with a credit card, here are some platforms and exchanges that allow it:

Crypto Exchanges

• Binance: Accepts Visa or Mastercard credit cards.
• Coinbase: Accepts credit cards as long as they support "3D Secure", an online security protocol for identity verification.
• EToro: Accepts Visa, Mastercard, or Maestro credit cards.
• Crypto.com: Allows the purchase of specific cryptocurrencies with a Visa or Mastercard credit card through the Crypto.com gateway.
• Kraken: Accepts Visa or Mastercard only.

Other Platforms

• BitPay: A well-known platform that allows users to buy crypto with a credit card, debit card, Apple Pay, or Google Pay. It offers a simple, safe, and quick way to buy cryptocurrency with no hidden fees.
• MoonPay: Rated by over 90,000 people.
• Bitcoin.com: Accepts credit cards, payment apps, or bank accounts. It offers a fast, easy, and low-risk way to buy cryptocurrency.
• CoinGate: Accepts VISA and Mastercard. It offers a straightforward and secure way to buy Bitcoin, Ether, Litecoin, and more, with fast delivery to your preferred wallet.

The risks of buying cryptocurrency with a credit card

Using a credit card to buy cryptocurrency can be a risky move. Here are some of the key dangers you should be aware of:

High Fees and Interest Charges

One of the biggest risks of buying cryptocurrency with a credit card is the high fees and interest charges you may incur. Many crypto exchanges charge additional fees for credit card purchases, which can range from 3% to 5% or more of the transaction amount. These fees are on top of the standard exchange fees for buying crypto. Additionally, credit card companies often treat crypto purchases as cash advances, which come with their own set of fees and high-interest rates that start accruing immediately. These fees and charges can quickly eat into any potential profits from your crypto investment.

Credit Score Impact

Using a credit card to buy cryptocurrency can also impact your credit score. If you're unable to pay off the balance or make timely payments, your credit score may suffer. The high credit utilization associated with large crypto purchases can also negatively affect your score.

Fraud and Scams

The cryptocurrency space is prone to fraud and scams. If you're not careful in choosing a reputable exchange, you may risk having your personal information and credit card details stolen. Crypto scams are also common, with scammers pressuring victims into making credit card purchases before wiping out their accounts.

Volatility and Investment Risk

Cryptocurrency is a highly volatile and risky investment. The value of crypto can fluctuate significantly, and there is no guarantee that your investment will pay off. If the value of your crypto decreases, you will still be left with the debt from your credit card purchase, along with any associated fees and interest.

Limited Options

Not all credit card companies and crypto exchanges allow crypto purchases with credit cards. Major card issuers like Bank of America, Capital One, Citi, and Wells Fargo have banned cryptocurrency purchases via their credit cards. You may have limited options in finding a credit card company and exchange that allow such transactions.

Loss of Rewards and Protections

When credit card companies treat crypto purchases as cash advances, you may lose out on the rewards and protections typically associated with credit card purchases. You may not earn rewards points or cash back on your crypto purchase, and it may not count towards sign-up bonuses or other benefits. Additionally, the purchase may not be covered by the same fraud and dispute protections offered by your credit card company.

The pros and cons of buying cryptocurrency with a credit card

Pros

• You can invest regardless of how much cash you have on hand.
• You can take advantage of the rewards you earn through your spending.
• You may enjoy more protections than with ACH transactions.
• It may be more convenient than other payment methods.

Cons

• You may not be able to earn rewards.
• The purchase may not count toward credit card sign-up bonuses.
• Many credit card protections won't apply.
• You will likely be charged a cash advance fee, which can mean another 3% to 5% charge per transaction.
• Cash advances start accruing interest as soon as they hit your account, often at a higher-than-standard APR.
• The transaction may take longer than other payment methods.
• It is generally a poor financial decision.
• There are only a few major crypto exchanges that allow credit card purchases, and most tack on high fees for the convenience.
• You will likely face high-interest rates and potential cash-advance charges from your credit card company.
• Investing in crypto using your credit card can lead to serious debt.
• Your credit card provider may enforce a daily and total limit on cash advances.
• There is a high risk of fraud.
• The crypto exchange will charge you 3% or more to use your card.
• The credit card issuer will probably charge another 3% or more for the cash advance fee, plus interest.
• You will likely be paying at least 6% in fees just to use your card.
• Your credit score may sink due to high credit utilization.

How to buy cryptocurrency with a credit card

While it is generally not recommended to buy cryptocurrency with a credit card due to high fees and interest rates, it is still possible to do so through some major crypto exchanges and third-party gateways. Here is a step-by-step guide on how to buy cryptocurrency with a credit card:

Step 1: Choose a Crypto Exchange

Select a crypto exchange that allows the purchase of cryptocurrency with a credit card. Examples of such exchanges include Binance, Coinbase, eToro, Crypto.com, and Kraken. It is important to note that these exchanges may have different requirements and supported credit card types.

Step 2: Sign Up for an Account

Create an account with your chosen crypto exchange. This may involve completing identity verification, such as submitting a copy of your photo ID or performing a selfie verification.

Step 3: Add Your Credit Card Information

Once your account is set up, add your credit card as a payment method. This can usually be done during the purchase process or in the "Buy Crypto" section of the exchange platform.

Step 4: Deposit Funds (if required)

Some crypto exchanges may require you to deposit funds, typically in US Dollars, before purchasing cryptocurrency. This can often be done with a credit card, but it may be coded as a cash advance by your credit card company.

Step 5: Purchase Your Desired Cryptocurrency

After connecting your credit card and depositing funds (if necessary), choose the cryptocurrency you wish to purchase. Please note that some exchanges may impose a hold on card purchases, which could delay your transaction by up to 72 hours.

It is important to be aware of the various fees and charges associated with purchasing cryptocurrency using a credit card, including transaction fees, debit and credit card fees, spread fees, cash advance fees, and interest rates. These fees can significantly impact the overall cost of your investment.

Additionally, using a credit card to buy cryptocurrency may be considered a cash advance by your card issuer, resulting in additional fees and high-interest rates. It is always recommended to carefully review the terms and conditions of your credit card and the chosen crypto exchange before proceeding with any transactions.

The fees involved in buying cryptocurrency with a credit card

When buying cryptocurrency with a credit card, there are multiple fees and charges that may be incurred. These fees can be divided into two main categories: those charged by the cryptocurrency exchange and those charged by the credit card company.

Cryptocurrency Exchange Fees

• Transaction fee: This is usually a flat fee for purchasing crypto, ranging from 0.10% up to 3% or more, depending on the exchange.
• Debit and credit card fee: Some crypto exchanges charge an additional fee for debit or credit card purchases, typically ranging from 3% to 5% of the total purchase.
• Spread fee: Many exchanges charge a "spread," which is a markup on the purchase price of a specific cryptocurrency, in addition to other transaction fees.

Credit Card Company Fees

• Cash advance fees: Most credit card companies treat cryptocurrency purchases as cash advances, resulting in a fee. This is typically either a flat fee (around $5 to $10) or a percentage of the transaction amount (usually 3% to 5%), whichever is greater.
• Cash advance interest rates: Cash advances often have higher interest rates than regular purchases, and interest begins accruing immediately without a grace period.
• Foreign transaction fees: If the cryptocurrency exchange is based outside the cardholder's country, a foreign transaction fee may be applied, typically around 3% of the transaction amount.

It is important to carefully consider the fees involved when deciding whether to use a credit card to purchase cryptocurrency, as these fees can quickly add up and significantly impact the overall cost of the investment.

Frequently asked questions