Should you buy Bitcoin with credit cards?

It is now getting much easier to buy Bitcoin with credit cards but there are pros and cons. We explore them below.

It used to be impossible to buy Bitcoin with credit cards or debit cards. But now, with advances in technology and companies redefining their platforms, it is becoming much easier. The issue of chargeback has been reduced through anti-fraud companies, allowing more and more exchanges the ability to offer this type of payment method.

The benefits of buying Bitcoin with credit cards

The option of buying Bitcoin with a credit card allows investors to pay with fiat currencies, something a lot of exchanges don’t allow. This makes it a quick and easy option for first-time buyers or investors who want the transaction to be completed in a short amount of time without the hassle or delay of buying through wire transfers or PayPal.

Because of the easy interface credit cards allow, exchanges and platforms that offer this type of purchase method are often user-friendly. This makes this type of payment an ideal type for beginners who may not necessarily want to deal with the often confusing process of purchasing crypto on more advanced exchange platforms.

Buying with credit and debit cards is now becoming one of the most popular and convenient ways to purchase cryptocurrencies. Bank and wire transfers often take around 3-8 days to complete, meaning the cryptocurrency cannot be moved off the exchange until it is complete. This is not only inconvenient for users but could potentially be a security risk due to the number of hacks happening on exchanges. The speed of purchasing with credit and debit cards therefore gives more security to users.

Why you should proceed with caution

There are many advantages to buying Bitcoin with credit cards, but there are also some disadvantages such as high transaction fees. With every credit card transaction, there is likely to be a fee no lower than 5% when purchasing off an exchange. Because of this, day traders tend to stay away from this type of purchase.

Another disadvantage is the purchase limit put on credit cards when attempting to buy crypto. These limits are in place due to the risks involved when purchasing through an exchange, as banks want to make sure their customers’ money is safe. Again, this means credit and debit purchases aren’t often used by traders, as they will often want to buy large amounts of Bitcoin or similar coins.

Purchasing through credit cards is also not a good option if you want to trade anonymously. This is because a bank account must be linked to the credit card and a photo ID has to be supplied in order to be able to purchase on an exchange that offers credit and debit card payments. Exchanges ask for this to keep security risks down and protect personal information.

Choosing the right platform

Luckily, companies such as Coinbase and Binance have made the process of buying crypto with a credit card smooth and easy for users. There are risks, as always, with giving companies your credit card details, so it is important to choose proven and trustworthy exchanges when deciding where to buy cryptocurrencies.

Binance

Binance announced that it is going to enable the use of debit and credit card payments through a new partnership with payment provider Simplex. Through Simplex, users on Binance can now buy BTC, ETH, LTC, and XRP cryptocurrencies with Visa and MasterCard debit and credit cards. Binance has said payments through credit and debit cards will be faster, with a 10-30 minute transaction time.

Coinbase

Coinbase allows the purchase of $150 worth of Bitcoin per week using a credit card in countries such as the US, Australia, and the UK. The platform charges a flat 3.99% fee on all purchases made with credit or debit cards, making it one of the cheapest places to buy through this type of payment for European and US customers. Their buying limits are also relatively low compared to its competition, making it a popular exchange for customers wanting to purchase with a credit or debit card.

Final thoughts

Currently, if you want to buy Bitcoin with credit cards, the market rate is around 5% for each transaction. Even though this seems like a high transaction fee for regular currency transactions, we have seen the benefits this type of payment option has to offer. This option is also easier to justify given the high security risks exchanges face. Using a bank transfer may indeed be a more cost-effective option, but with the long delays on the transaction going through, it is important that you are educated about different payment options available to you.

For guides on cryptocurrenciesexchanges, and blockchain technology, click here. Make sure you take a look at all the latest crypto and blockchain news.

Related Articles