Cryptocurrency has been one of the trendiest investments of 2021. From Bitcoin to Ethereum to Dogecoin, there are hundreds of coins on the market, and celebrities like Elon Musk and Mark Cuban have been touting their benefits. If you don’t own any crypto, it can feel like you’re missing out.
However, getting in on the action could be as simple as charging your credit card – much to the chagrin of some financial professionals. “Crypto exchanges have made it alarmingly simple to purchase cryptocurrency with a credit card,” says Steve Larsen, co-founder of PlannerDAO, a cryptocurrency education community for financial planners, and adjunct professor of finance at Gonzaga University, where he teaches classes in cryptocurrency and financial planning. “If you wouldn’t buy shares of Apple stock on your credit card, you shouldn’t be putting Bitcoin on your card, either.”
Yet many people do so every day. Maybe you’re thinking about it, too. Before you do, learn how the process works and the potential risks.
Can You Buy Crypto With a Credit Card?
The short answer is yes, you can buy cryptocurrency with a credit card. However, it largely depends on your credit card issuer and cryptocurrency exchange platform, says Maxim Manturov, head of investment research at Freedom Finance Europe, an international investment company.
To buy and sell cryptocurrency, you first need to join an exchange. This is a platform that facilitates crypto transactions, much like a stock exchange. Many of the most popular exchanges don’t allow credit card transactions. For instance, one of the largest crypto exchange platforms, Coinbase, allows credit card purchases in Europe and the United Kingdom but not in the U.S., Manturov says. On the other hand, exchanges such as CEX.IO, eToro and Coinmama do accept credit cards in the U.S., but only Visa and Mastercard.
The real problem, however, is not the availability of credit cards as a form of payment, but a credit card purchase fee, “says Manturov. Charges%%, up to 3.9% commission and an additional 5% fee if you choose to purchase with a credit card. So for an investment of $ 1,000, you will have to pay $ 109 in fees.
How to Buy Crypto With a Credit Card
- Find an exchange that allows credit card transactions. Your first step is signing up for a crypto exchange that allows you to use a credit card. Depending on which one you choose, you may have to share some personal information and verify your identity. (If the exchange allows credit card transactions, it’s almost certain you will.)
- Double-check that your card issuer allows crypto purchases. Before you go any further, contact your credit card company to verify that it allows crypto purchases. Also ask whether those transactions will be treated as regular purchases or cash advances.
- Enter your payment method. Next, you’ll need to input your card information and save it as a preferred payment method.
- Set up your transaction. Select which cryptocurrency you wish to purchase, in what currency and the amount you want to buy. Once you’ve confirmed all the details, go ahead and purchase.
- Pay off your balance as soon as possible. It’s important to avoid letting interest rack up on your credit card balance, especially because you’ve already had to pay hefty fees for the transaction and you’re likely getting charged the higher cash advance annual percentage rate. Make it a priority to pay off your balance as soon as you have the funds.
One way to do this is to buy cryptocurrencies with credit card rewards. A handful of credit cards, such as those offered by BlockFi and Gemini, issue prizes in the form of cryptocurrencies. This allows cardholders to avoid fees associated with corrupt purchases. Venmo Credit Card has also recently given cardholders the option to use the proceeds from their cashback to purchase the cryptocurrency of their choice, which can be selected ahead of time and automatically for each billing cycle. Occurs at the end. Is purchased. Once again, auto purchase transaction fees are waived.