Last Updated on August 1, 2022 by Admin Wells
Though you can purchase crypto with a credit card, doing this exposes you to a number of financial risks. You should analyze your situation carefully to make sure this is the right move for you.
Why Can Crypto Credit Card Purchases Be Complicated?
The growth of crypto has been one of the biggest finance stories of the past decade. Crypto has caused unprecedented excitement among retail investors. A number of commentators have compared the crypto boom to the gold fever of the 1850s. Even if you are intensely eager to buy into this market, you should exercise caution. When buying crypto with a credit card, you’ll generally have to pay fees from both ends of this transaction. In addition, your credit card interest rate will eat into any profits you see.
Not every credit card provider allows you to buy crypto with your card. American Express is the biggest issuer that explicitly allows crypto purchases. However, these purchases are limited by a number of special conditions. Bank of America, Discover and Wells Fargo do not currently allow crypto buying. Contact your issuer to see if your card is crypto-compliant. Read all of the fine print to ensure you can make the kinds of crypto purchases you are interested in.
Dealing With Crypto Exchanges
Of course, you’ll need to make sure your crypto exchange accepts credit cards as well. Many exchanges only facilitate direct bank transfers, currency deposits and debit transactions. Coinbase is one leading exchange that hasn’t implemented credit purchases. Exchanges that work with credit card holders include CEX.io and Paxful. As the crypto exchange industry continues to develop, it is likely that more exchanges will accommodate crypto purchases. Additionally, different exchanges are set up to accept different types of credit cards. At this time, a number of exchanges only accept Visa and Mastercard.
Even if your preferred exchange facilitates crypto credit card transactions, time could be a limiting factor. To limit cases of fraud, your crypto exchange might take a day or two to clear each credit purchase. In the fast-moving world of crypto, two days can be a long time. If you’re looking to make a short-term profit through crypto trading, these time constraints might not work for you. People using longer-term investment strategies won’t be unduly affected by any transaction delays.
The Future of Cryptocurrency
Though Bitcoin prices can be volatile, quite a few legacy financial institutions have now invested in crypto. SoFi is one of the newer companies engaging with crypto. According to the experts at SoFi, their “credit card now lets you redeem points straight into crypto.” Commentators see this type of thing as an indication that crypto will remain viable for the long term. Certainly, many people have previously lost credibility by predicting the end of crypto. By this point, it seems clear that crypto is a well-established part of the retail investing culture. Crypto has already earned a powerful reputation as an instrument for storing value.
It’s not always easy or convenient to buy crypto with your credit card. Still, this remains a viable option if your other choices are limited.