With Bitcoin hitting an all-time high in April 2021, it has attracted seasoned and novice investors. But does that mean you can buy cryptocurrencies using a credit card? While you can use your credit card on all purchases, like buying gift cards, acquiring crypto with a credit card can be difficult.
Most cryptocurrency exchanges do not accept it as a method of payment and will charge an extra fee. Besides, major credit card issuers banned the use of credit cards for crypto transactions, and they can penalize you or treat it as a cash advance, which attracts high-interest rates. However, some platforms allow crypto purchases with a credit card. Read on to find out the platforms to use and tips for purchasing digital currency using a credit card.
What Platforms Allow Credit Card Crypto Purchases
Cryptocurrency Brokers
Cryptocurrency brokers usually buy digital currencies at wholesale rates and sell them to you for a profit. They provide a stress-free entry point for new crypto buyers since most brokers support purchasing with a debit or credit card. However, the speed and convenience come with a price since they charge higher fees. In addition, you need to verify that you are dealing with a genuine broker to avoid losing money and exposing your credit card information to fraudsters. Many brokers will allow you to buy bitcoin with credit card and support only a few cards from major issuers.
Crypto Exchanges
Crypto trading platforms allow you to buy bitcoin from other users. You can also use crypto exchanges to buy gift cards with cryptocurrencies. While most crypto exchanges deal on crypto-to-crypto exchanges, some allow new buyers to acquire coins using a credit card. Unlike brokers who provide credit card options for bitcoin and Ethereum, crypto exchanges offer a more comprehensive range of digital currencies, lower trading charges, and favorable exchange rates. However, despite the better rates and favorable terms, buying using a credit card is complicated.
Peer-to-Peer Exchanges
Peer-to-Peer exchanges are platforms that allow free trading among crypto buyers and sellers. The exchange serves as an intermediary for connecting buyers to sellers. That means the sellers can decide on the payment method they prefer. While you can use your credit card to purchase digital currency, it means you will pay a higher price and take a considerable risk.
5 Tips for Buying Crypto with a Credit Card
Buying crypto using a credit card is safe, but you need to transact with legitimate brokers and reputable exchanges. You should research the famous crypto traders to avoid being ripped off your cash. If you don’t want to share your credit card details with a broker, find another platform with escrow services to minimize risk. Once you find a legit broker or exchange, here are tips for using your credit card to purchase crypto.
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Have a Crypto Wallet
Before you start hunting for digital currencies, set up a crypto wallet to store your coins. The wallet acts as a virtual store where you can keep your cash or credit and debit cards. In addition, some crypto exchanges like Coinbase and Ledger offer an online wallet where you can store your coins. Opening an online wallet can be a lengthy procedure, but it is better than an offline wallet.
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Pick a Crypto Exchange or Broker
Pick one of the platforms above that allows ‘Fiat-to-crypto’ trading to ensure you can use the regular currency to buy cryptocurrencies. In addition, reliable exchanges and trusted brokers are willing to give you crypto in their reserves at their set price and service fees.
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Register an Account and Verify Your Email
Visit the website of preferred exchange and register an account by providing your email address and setting a password. You will receive a verification link that you can use for verification. Click the link and add your phone number for the two-factor authentication.
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Provide Proof of Identity
Security checks vary depending on the broker or exchanges. However, most will require you to fulfill the anti-money laundering and provide proof of identity. For example, you can upload your driver’s license or passport, while others ask for a selfie.
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Add Credit Card as a Payment Method
You can only transact after adding your payment method, a bank account, or credit card. Using a credit card is convenient since it does not require any setup instructions. However, you should be ready to pay additional service charges.
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Buy Crypto with Your Card
Once you successfully add a credit card, you can transfer money to the exchange and start buying your crypto. Credit cards in crypto purchases are instantaneous transactions, unlike bank transfers, which require time to reflect.
Buying crypto using a credit card is recommended from small purchases since the service fees may be less. However, for large purchases, bank transfers provide the best service charges. You should compare the credit card fees of different brokers and exchanges before using the service.
