Top 4 things to remember while buying cryptocurrency with credit card
The crypto industry has been predicted to recover and rally up by the end of 2022 and the beginning of 2023. Though unfortunate, yet, the latest crypto crash has shrunk the crypto prices drastically, thereby enabling investors to take advantage of “buy the dip”. Did you know that Ethereum is predicted to grow by 400% after the Merge upgrade by the end of the year? Bitcoin has been estimated to touch $100,000 by the final lap of 2022. Several other coins, such as Cardano, Avalanche, Ripple, Dogecoin, Shiba Inu, etc.- are projected to rise in the coming 6-8 months. You can buy crypto by credit card easily as there are various platforms that accept credit cards as a major payment system. The post below offers a brief on the top things to remember when you use a credit card to buy crypto.
- Does your credit card allow crypto purchases?
The first thing to know while you plan to buy crypto by credit card is whether your specific credit card company allows crypto purchase. For those uninitiated, not all credit card providers allow usage of credit cards to buy crypto. So, it’s better to ask your credit card provider beforehand whether the company is flexible to allow users to buy crypto by credit card. If your specific card issuer permits credit cards to buy crypto, inform the firm beforehand that you have plans to purchase crypto with the card. It’s not an absolute necessity but since crypto is an extremely high risk sector, credit card companies are generally averse to it. Thus, it’s smarter to inform your card issuer beforehand that you might use a credit card to buy crypto.
- Where can you use a credit card to buy crypto?
There are two most important places where you can use a credit card to buy crypto- crypto exchange and P2P exchange or marketplace. There are other platforms to buy crypto such as crypto ATM or payment processing platforms- but they don’t allow you to buy crypto by credit card.
Both centralized and decentralized crypto exchanges allow users to buy crypto by credit card. But then again, not all exchanges enable purchases with credit cards to buy crypto.
Rather than combing through every other crypto exchange to see whether the platform allows you to buy crypto by credit card– look for credit card compatible exchanges online. Just go to your favorite search engine and type- “crypto exchanges that accept credit cards”- and the search engine will present a whole list of exchanges that allow users to use credit cards to buy crypto.
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Now, all you have to do is to shortlist 4-5 top exchanges and take a market survey on them before signing up and using a credit card to buy crypto. Your chosen exchange must be able to assure the following attributes-
- Strong reputation in the market
- High ratings
- Highly advanced security measures
- Long list of assets
- 24/7 customer support
- Competitive fees
- And of course, permission for credit card to buy crypto
Steps to follow to buy crypto by credit card from a crypto exchange
- Go to your chosen crypto exchange and sign up to buy crypto by credit card
- Provide verification details like government ID, phone number, email id etc.
- Choose credit card to buy crypto in payment option
- Provide credit card details in payment section to deposit fiat
- Click on your preferred coin from the asset option and mention the amount of coins you wish to purchase.
- Click on “Set Order” or “Place Order” to buy crypto by credit card
The verification is usually extremely time-consuming and cumbersome if you buy crypto by credit card from a centralized crypto exchange. However decentralized exchanges do not follow an elaborate verification process and hence it’s easier and faster to buy crypto by credit card from decentralized platforms.
P2P crypto exchanges or marketplaces
P2P crypto exchanges allow direct trade between sellers and buyers of cryptocurrencies. These online marketplaces allow several payment options, including credit card to buy crypto.
- Fees incurred on crypto purchase with credit card
You will incur high fees if you buy crypto by credit card. In fact, crypto investors incur fees from two sides when they choose a credit card to buy crypto.
Here is a brief on the different types of fees you will have to pay when you buy crypto by credit card.
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Crypto exchanges can charge somewhere around 1% to 4% commission if you use a credit card to buy crypto.
However, remember, the fees incurred if you buy crypto by credit card might differ from one user to another on the same exchange. You will generally have to pay more if you use a credit card to buy crypto on a foreign exchange. Likewise, if the exchange is located in your country, you will have to comparatively pay less if you buy crypto by credit card.
Credit card issuer fees
Most of the credit card issuers consider usage of credit cards to buy crypto as “cash advance”. As a result, if you buy crypto by credit card, you will incur a higher cash advance charge. The cash advance charge if you buy crypto by credit card will be somewhere like 5 percent or $10, whichever would be greater.
On top of that, you will be charged a high APR, added to the cash advance charge, when you buy crypto by credit card. The APR if you use a credit card to buy crypto is usually a whopping 25%+.
- Tips to save on fees while buying crypto with credit card
Don’t lose hope- there are still ways to save on fees when you buy crypto by credit card.
- Go for decentralized exchanges
Decentralized crypto exchanges cut out the middlemen in between and hence can assure more affordable fees compared to centralized counterparts. So, you will have to encounter comparatively lower fees if you buy crypto by credit card from a decentralized exchange.
- Pro accounts could help
A bunch of leading exchanges usually charge less when users sign up for their “Pro” accounts. So, when you are planning to buy crypto by credit card on an exchange, make sure to create your account in the “Pro” level.