Credit card purchases of cryptocurrency are feasible. However, it is costly and can increase the risk you are already taking by including a volatile crypto asset in your portfolio. You will be charged fees by both your credit card company and the cryptocurrency exchange you use. You will also incur high-interest debt if you do not pay off your balance immediately.
In addition, lots of credit card issuers in the United States do not permit credit card purchases of crypto. Some major cryptocurrency exchanges don’t allow for this as well. An electronic transfer from a bank is a better and more popular method of paying for cryptocurrency purchases in dollars.
This can be accomplished by connecting a bank account to the exchange or by initiating a wire transfer. Several exchanges also allow you to pay for cryptocurrency purchases with other cryptocurrencies.
Can Crypto Purchase Impact Your Credit Score?
I bet you want to retain the best credit score possible. You may wonder if using your credit card for crypto purchases will affect your great credit scores.
Credit utilisation has a notable effect on your credit score – it is the amount of used credit. Your credit score rises as you use more credit. If you take out too much credit, your credit score will suffer. In the worst-case scenario, this damage accumulates as you fall behind on your monthly credit card bills.
If you already have a poor credit score, buying crypto with your credit card may make things worse. In this case, you should focus on hiring affordable credit repair services. These credit repair professionals will help ascertain what is wrong with your score. They’ll also enlighten you on how to fix it.
Steps to Buy Crypto With Your Credit Card
You may decide that you don’t mind the cost and want to purchase cryptocurrency with a credit card. Below are a few steps to follow to understand the additional costs of doing it this way.
- Examine your credit card to see if it supports cryptocurrency purchases in the first place.
- Inquire about cash advance fees and charges with your credit card company. Consult your card agreement or contact the number on the card’s reverse side for assistance. Inquire with a representative about the cash advance fees you’ll incur if you use your card to buy cryptocurrency. Find out what the cash advance APR will be on your balance.
- Determine the amount of exchange fees you will pay if you have decided to invest in cryptocurrency. It is critical to select the exchange where you will buy your coins. Your selection should be based on factors such as fees, investor tools, accessibility, and security. If you choose an exchange that recognises credit card payments, search for a page on the exchange’s website that clearly states the fees you’ll be charged for using a card.
- Use your credit card to fund your account, then use it to buy cryptocurrency. Once you’ve funded your exchange account with the funds you intend to use for cryptocurrency, you can research coins and invest when you’re ready.
- Pay off your card balance as soon as possible, seeing as your cash advance will start to accrue interest the moment you make the purchase. To avoid additional interest charges, you should make a plan to pay off the balance as soon as possible.
Why You Should Consider Buying Crypto with Credit Card
Although crypto purchase with a credit card may be risky, it has some benefits. Here are reasons why crypto purchase with a credit card isn’t all that bad.
1. Investment Without Cash
Every cryptocurrency user is aware that the market moves quickly. A few days can make the difference between buying a coin at its low or at its high. Perhaps your pay check will arrive next week. You won’t have to be concerned if you’ve got adequate cash on hand. At the end of the month, pay your bills to avoid interest charges from your credit card company.
2. Easy Navigation for Newbies
Credit cards are an excellent means of payment for newbies. Beginners may not want to deal with the complicated payment methods on more advanced cryptocurrency exchanges. Credit card payment is especially familiar to cryptocurrency newcomers. Simply enter your card number, expiration date, and CVV code, and you’re done. Furthermore, credit-card-accepting crypto exchanges and platforms are frequently very intuitive and user-friendly.
3. Swift Service
Transactions with credit cards are completed in a matter of seconds. Because of the speed of credit cards, it is simple for first-time buyers or investors to purchase cryptocurrency with fiat currency.
Bank and wire transfers, on the other hand, frequently take three to eight days. As a result, until the transaction is completed, the cryptocurrency cannot be removed from the exchange. With its instant speed, a credit card is an ideal choice for investors looking to buy quickly.
The downside of Buying Crypto With a Credit Card
Before proceeding with a crypto purchase on your credit card, note that besides charges, there are other downsides.
1. Your credit card information may be compromised
Today’s crypto landscape is flooded with exchanges promoting their distinct advantages. Some of these exchanges are for-profit enterprises. However, several of these exchanges are fraud. They are designed to take advantage of novices or users looking to make a quick buck. While credit cards have solid fraud protection, you should be able to recognise and avoid a scam. You must always conduct your own research before making any cryptocurrency purchase.
2. High investment risk
Investing in cryptocurrency with a credit card can result in significant debt. You can quickly accumulate fees and interest that you may be unable to repay. This will significantly increase your credit utilisation rate. You could also lose the value of your investment due to the uncertain nature of the crypto market.
If you decide on utilising a credit card, contact the credit card company. Discuss the implications with a specific credit card issuer, and look for a cryptocurrency exchange that provides the best credit card rates.
Credit card payments of cryptocurrency are frequently subject to high fees. This can significantly reduce the value of a good investment or decrease returns. Cardholders are also likely to fall into deep debt, which can be difficult to recover from.