Your credit card provider or the exchange selling the cryptocurrency may block the transaction.
Most major U.S. credit card providers forbid cryptocurrency purchases, while others add extra.
Bitcoin exchanges like Coinbase don’t accept credit cards. Coinmama and CEX.io accept visas and Mastercard.
Therefore, in order to purchase cryptocurrency with a credit card, you must first have a credit card company and a crypto exchange that supports the practice, such as Trastra. Pay for bitcoin purchases using cash or send usdc to bank account using your Trastra card.
Commissions from the exchange
When trading dollars for Bitcoin or another cryptocurrency, exchanges usually charge a percentage. The exchange may charge a credit card fee in addition to a service fee.
The bitcoin exchange fees for each purchase, as usual. Credit card payments incur a 5% fee. A $1,000 purchase would cost $50. You’ll need enough returns to break even.
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Cash advance fees charged by the card issuer
Your credit card issuer is likely to see the cryptocurrency transaction as a cash advance, similar to when you withdraw cash from an ATM.
This is unfavorable since it likely comes with the following disadvantages:
- Cash advance charges. This one-time fee is usually 3 to 5% of the cash advance amount. If you withdraw $200 in cash advance, you’ll pay $6 to $10.
- Increased interest rate. Numerous credit cards impose a higher annual rate on cash advances than purchases.
- No grace period. If you pay your credit card in full each month, you usually have 21 days before interest is charged. Cash advances accrue interest immediately.
- Reduce credit limit Some credit cards include a separate credit limit for cash advances that is lower than the overall credit limit.
- No incentives on the credit cards. If your credit card issuer considers crypto purchases monetary equivalents, you won’t get cash back, points, or miles. It won’t count against the welcome bonus spending minimum.
Again, whether a bitcoin transaction is deemed a cash advance depends on the card issuer. Prior to making a transaction, you should phone the number on the back of your card and inquire.
Also, read HOW DO YOU REDEEM POINTS IN CRYPTO USING A CREDIT CARD?
Other factors to consider
- Foreign exchange charge. If the exchange is located outside the United States, you may pay a foreign transaction fee if your credit card imposes one. The average cost is 3%.
- Scams. If you do not use a reliable currency exchange, your personal information, including your credit card number, might be compromised.
- Debt. When using a credit card to incur debt in order to purchase bitcoin, you assume a significant level of risk. You will incur expensive interest on a risky investment.
- Credit utilization. Large crypto purchases deplete your available credit, which is detrimental to your credit ratings.
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How else may I purchase cryptocurrencies?
It’s possible to buy bitcoin using a credit card, but most big U.S. providers and exchanges don’t allow it.
Electronic bank transfers are a better and more common way to pay for bitcoin transactions using dollars. Several exchanges allow paying using crypto. You may Sell Litecoin to IBAN online using a TRASTRA Visa debit card. More: https://trastra.com/coins/sell-ltc-for-iban/.
How to purchase cryptocurrencies with a credit card
- Determine if your credit card supports crypto purchases and the associated costs.
- Find an exchange that accepts credit card purchases for cryptocurrencies. Some important ones do not.
- By entering your credit card details and attaching the card to your exchange account, you may fund your cryptocurrency account. It resembles the procedure of completing the checkout payment form at online retailers when purchasing a product or service.
