Yes, you can buy bitcoin with a credit card if the cryptocurrency exchange and your credit card issuer allow it. Over the past few years, bitcoin has become more popular and a mainstream investment commodity. Some investors perceive using their credit cards as a savvy way to join the cryptocurrency sector. Today, credit cards are a primary channel for buying different items and services over the internet. Read on to know more about using this payment option when buying bitcoin (BTC).

Your ability to use your credit card to buy bitcoin depends on whether the exchange you are using agrees. Some exchanges do not allow their customers to use this payment mode. However, others allow it but charge some fees. The cryptocurrency exchanges that allow people to buy BTC with credit card include Binance, Coinbase, Crypto.com, CoinSmart, and Kraken.

The credit card issuer also plays a significant role in determining whether you can purchase this digital asset using your credit card or not. Some issuers allow their customers to make the purchase for a fee, while others do not.

Is Purchasing Bitcoin with a Credit Card a Good Idea?

Many financial advisors do not support the idea of purchasing cryptocurrency with a credit card. This is because its drawbacks outweigh its benefits.

Pros

The primary advantage of using your credit card in this trade is that you can invest even if you do not have cash at hand. This payment option can allow you to purchase the currency if you believe that its value will increase. You can benefit from this investment opportunity as you save for the purchase.

Cons

On the negative side, using your credit card to purchase this digital asset is expensive, risky, lengthy, and highly speculative.

Major Financial Risk

Firstly, BTC is a volatile asset. If its market price drops, you might owe more on your card than the amount you borrowed. Additionally, high interest might consume your returns if you fail to refund the money quickly.

Lengthy Process involved

Secondly, completing the transaction takes several days to complete. This is because it involves multiple parties, such as the credit card issuer, credit card holder, customer bank provider, cryptocurrency exchange, and credit card payment network. Banks also have to check security and ensure that there is no fraud involved.

Low Credit Score

Using this payment option to purchase bitcoin can negatively affect your credit score. Some credit card issuers close the card or lower the credit limit if they discover that the card holder used it to purchase digital tokens.

Credit Card Fraud

Another factor to consider when purchasing bitcoin using your credit card is the crypto exchange you are using. Today, there are many sketchy companies pretending to sell bitcoins, yet they are collecting your credit card information and might use it to make fraudulent transactions with it.

To avoid such issues, ensure that you choose a company that is secure, regulated, and has a good reputation. Using a platform that is prone to hacking might cause credit rad data the.

Higher Fees

If you decide to buy btc with credit card, you should expect several charges, in addition to the cost of the crypto tokens. Knowing the exact cost of the purchase before incurring it will help you determine if it will give you any monetary benefit or not. These fees include:

Cryptocurrency Exchange Fees

The cryptocurrency exchange you are using will charge you a commission if you use your credit card to buy bitcoin. The broker fees charged when using a credit card are usually higher than other payment options. The commission will depend on your purchase amount and the type of credit card you are using. Sometimes, it might be as high as 2.99%.

Credit Card Fees

Credit cards perceive bitcoin purchases as cash advances. This means that the annual percentage rate (APR) might be between 25%-27%, depending on your credit cardʼs type. Remember that this interest will begin to accumulate immediately. The credit card issuer will also charge you a fee for using the cash advance. This commission might be $10 or approximately 3% of your cash advance.

Foreign Transaction Fees

You will incur foreign transaction fees if you buy bitcoin through a crypto exchange outside the USA. This fee ranges between 1% and 3%.

Cash Advance Penalties

Your card issuer will also charge you interest and a cash advance fee.

How to Buy Bitcoin with your Credit Card

Follow the following steps to purchase BTC with your credit card.

Step 1: Create a Trading Account

Firstly, create a cryptocurrency trading account on the exchangeʼs official website. Enter your personal information and upload your selfies and copies of your state ID, driverʼs license, and passport. The exchange will use this information to verify your identity.

Step 2: Add a Payment Option

Next, select the credit card option, enter your credit card details, and indicate your desired deposit amount. Most exchanges allow a minimum of $10. Knowing the type of credit card the crypto exchange accepts is essential.

For example, platforms like Coinbase only accept MasterCard and Visa credit cards. If the details are accurate, you will receive a confirmation indicating that you have successfully linked your credit card to your trading account.

Step 3: Buy Bitcoin

In this step, select bitcoin from the listed cryptocurrencies. Next, enter the amount you want to invest or the number of bitcoins you want to buy. The transaction will complete automatically.

In summary, buying bitcoin with your credit card is possible and easier than ever before. Before using your credit card to pay for the bitcoin, it is vital to know the fees and risks involved. Also, choose a secure and reputable crypto exchange.