Cryptocurrency is hot once again. With Bitcoin approaching all-time highs and the entire crypto market’s total value closing in on about $3 trillion, everybody is getting into investing in the space. So one has to wonder: Can you buy crypto directly via your credit card? Why not—since you buy everything else on your credit card, why not that?
But funding a purchase of cryptocurrency with your credit card, assuming you can find a major crypto exchange willing to take the transaction—most tack on high fees for the service—is not a good financial decision. You can also expect high interest rates and possible cash-advance fees from your card company. Add to that the high risk of investing in crypto in the first place we do not recommend buying crypto on credit.
Can You Buy Crypto With Credit Card?
There are some credit card companies and cryptocurrency exchanges that allow you to buy crypto with credit card, but not many. Of course, there are third-party services that enable you to do so, but then again, the fees are much higher compared to using crypto exchanges.
Here are the details on how to use your credit card to purchase cryptocurrencies.
Best Crypto Exchanges for Buying Cryptocurrency with a Credit Card
A cryptocurrency exchange where people can purchase crypto using their credit card.
As of March 2024, among the primary places where you can buy cryptocurrencies with a credit card are:
- Binance. Cryptocurrency is available for purchase with a Visa or Mastercard bank card.
- Coinbase. Surely, it accepts credit card payments if and only if the bank card supports “3D secure”—the protocol for protected online transactions related to verifying identity.
- eToro. Allows buying of cryptos with a Visa, Mastercard, or Maestro credit card.
- Crypto.com. Lets users buy specific cryptocurrencies on Crypto.com using a Visa or Mastercard.
- Kraken. Only accepts Visa and MasterCard for payment
Deposits can be directly from a bank, cash-deposited, or even purchased with a debit card. The requirements for many crypto exchanges are such that they may accept a credit card- you purchase the cryptocurrency restrictions allow only that particular type of credit card. Quite a few simply link to a “fiat gateway,” a partner app that processes the transaction.
Third-Party Gateways for Crypto Purchases
Almost all other crypto services, for the most part, will allow you to buy crypto with credit card until March 2024.
Keep in mind that this fiat-to-crypto gateway is a third-party partner for the cryptocurrency exchange and, therefore, charges far higher fees.
Credit Cards You Can Use to Buy Crypto
After you find an exchange where you can buy crypto with credit card, the next thing you have to do is inquire with your credit card issuer to see if they allow their card to be used for purchasing cryptocurrency. Some of them don’t, and many have just started to permit it, although mostly with very strict conditions.
Credit card companies might have specific rules regarding cryptocurrency and might be disallowed in too-risky transaction cases. The policies vary from company to company, and the transactions are tagged as cash advances. That can result in a high fee and rates of interest paid via many credit card companies. Together with a cap on cash advances, your credit card company might also impose a daily purchase limit on cryptocurrencies.
Is It Possible to Buy Crypto with Credit Card Without Verification?
Depending on the platform you use, you may or may not be able to purchase cryptocurrency with a credit card without verification. In most cases, if you are asked to show identification, a copy of a government-issued document (like a passport or driver’s license) is needed. This feature aids platforms in preventing fraud and, in certain situations, complies with federal regulatory standards.
How To Buy Crypto With Credit Card
Buying cryptocurrency with a credit card involves different processes depending on the platform. The majority of cryptocurrency exchanges that accept credit cards have the following requirements:
- Sign up for an account. To open an account, you must use a cryptocurrency exchange that accepts credit cards. It might be necessary to complete identity verification when signing up, like sending in a photo of your ID or snapping a selfie to prove who you are.
- Add your credit card information. You must link your credit card to your exchange account to make payments. You may need to go to the “Buy Crypto” page on the exchange website or mobile app, but most exchanges let you do this as a part of the purchase process.
- Deposit funds. Some cryptocurrency exchanges require you to make an initial deposit in US dollars. Even though the transaction will probably be recorded as a cash advance, you might be able to complete this with a credit card.
- Purchase crypto. After connecting your card and making any necessary deposits, you can select the cryptocurrency you want to buy. A hold on card purchases may be necessary for certain exchanges, which could cause a 72-hour delay in the time of your purchase.
Not every platform enables credit card purchases for cryptocurrency. If you decide to use a platform that permits these kinds of transactions, be aware that there might be additional costs involved in the purchase. Credit card companies will typically consider purchases made with a credit card using cryptocurrencies to be cash advances. It is never recommended by FinanceProsper’s Advisor to use a credit card for cash advances. They come with extra cash advance fees and exorbitant interest rates.
Remember: A cash advance usually has no grace period and starts charging interest right away.
Expected Fees and Charges
If you do buy crypto with your credit card, expect to pay multiple fees and charges. Instead of just guessing at what the cost is likely to be, I would strongly urge you to estimate the total cost of cash advance fees and interest and crypto exchange fees upfront.
Cryptocurrency Exchange Fees
Most crypto exchanges have commission fees and/or service charges for using a credit card to purchase or deposit crypto. Additional fees may apply, depending on the exchange, as some vendors have configured charges for the buyer based on the vendor’s location, the amount being purchased, and the type of credit card used.
Here are some crypto exchange fees to look out for:
- Transaction fee. Usually, the transaction fee is a fixed amount to buy the cryptocurrency: ranging from 0.10% to 3% or more, depending on the exchange.
- Debit and credit card fees. Most crypto exchanges have an extra charge for buying from debit or credit cards. The fees usually account for three to five percent of the total purchase price.
- Spread fee. A “spread” is an additional margin that most cryptocurrency exchanges request for the purchase price of a particular cryptocurrency. The charge is in addition to other transactional fees.
Credit Card Company Fees
Besides that, chosen cryptocurrency exchanges would also charge a fee on your purchase, aside from the charged fees from the credit card companies.
Following are some of the types of fees a cardholder can incur:
- Cash advance fees. Most of the cards consider buying cryptocurrency as a sort of cash advance. Therefore, one can consider that every crypto purchase entails a fee for a cash advance. The standard applied fee is $10 or 5%, whichever is greater. These are in addition to the fees charged by the seller or exchange on top of the cash advance APR itself.
- Cash advance interest rates. Most cards charge a higher APR against cash advances- often over 25%. It is also subject to market fluctuation. Interest starts accruing on the date of the purchase itself and continues to do so until the account balance has been paid. On the other hand, cardholders are usually afforded the grace period from a credit card’s due date before interest begins to accrue on purchases.
- Foreign transaction fees. With a used credit card, there is always a chance of charging a foreign purchase transaction fee every time the vendor or seller is in another country.
Additional Risks of Buying Crypto with a Credit Card
Apart from the high charges fees and interest, there is some risk in buying cryptocurrency using a credit card:
- No credit toward rewards or bonuses. Credit used to purchase crypto—in other words, taking a cash advance—does not typically earn any purchase rewards, and the charges do not count toward the spending needed to obtain the welcome bonus.
- Lower credit limits. Cash advances typically don’t exceed the overall credit limit that cardholders have. Therefore, this means a cardholder who wants to make large purchases in crypto may find that the maximum they can spend with a cash advance is very limited.
- High risk for fraud. A high probability of fraud is present when vendors are not checked properly and a cardholder provides essential information that includes their name and credit card number.
- High investment risk. It can lead to serious debt because one will be in a position to invest using their credit card. Cardholders often rack up high fees and interest quickly which also makes their repayments more difficult, raising their credit utilization ratio. They can also lose their investment value because of the crypto market volatility.
- Mandatory hold on funds. Most of the exchanges hold money that comes from credit cards. This can indeed affect your timely ability to buy when prices are down, considering how unstable crypto is.
Credit Cards With Crypto Rewards
It’s never recommendable to buy crypto using a credit card; however, certain credit cards offer you rewards in crypto for daily spending. Whether such a card is any good depends on the situation and how much risk you can take. Yes, such a card does provide a cash-back reward in some of the pre-decided cryptocurrencies. A few of these cards provide bonus categories to help you earn more rewards in crypto on particular purchases.
Following is a selection of well-known credit cards that offer crypto rewards:
- Venmo Credit Card*. In the case of a Venmo Credit Card, the Venmo Credit Card provides 3% cash back by a dollar spent in your eligible top spend category, 2% cash back on the following, and 1% cash back on all other purchases. Amounts earned are synchronized with your Venmo account and can be used to make fee-free automatic purchases of Bitcoin, Ethereum, Litecoin, or Bitcoin cash.
- The Gemini Credit Card®*. The Gemini Credit Card is associated with your Gemini crypto exchange account, offering 4% cash back on every dollar spent on gas and EV charging purchases up to $200 in spend per month for the first year and 1% thereafter, 3% cash back on dining, 2% cash back on groceries, and 1% on all other purchases.
These rewards are applied to an account instantly and are used to make automated cryptocurrency purchases via the Gemini exchange.
FinanceProsper’s Tip “You are most likely responsible for paying for all expenses incurred if you buy crypto with credit card. These cards are made for earning crypto rewards through normal spending, not buying crypto directly. You get no rewards for purchasing crypto.”
Buy Crypto with Credit Card: Pros and Cons
Pros
- More protection than ACH transfers
- Easier than some other payment options
Cons
- Few exchanges allow credit card purchases
- High fees from exchanges
- Treated as a cash advance by credit cards
- Extra fees and high interest on cash advances
- No interest-free period
- Low cash advance limits can cause failure
- No rewards due to cash advance
- Extra identity checks may be needed
- Can take longer to process
- Risky to borrow for crypto purchases
Conclusion
Probably the most expensive manner in which you could buy into cryptocurrencies is when you pay for them on your credit card. Of course, many services and cryptocurrency exchanges provide options to purchase cryptocurrencies with a credit card for their customers, but the fees are really quite high. Most of the major credit card companies treat crypto purchases as cash advances. It means you get hit with a fixed cash advance fee and sky-high interest charges from day one.
Putting crypto on a credit card involves a lot more fees and will really lower the value of an investment. Much better is to use ACH or direct deposit because most U.S. exchanges do not charge for either service. We would advise communicating with a representative about using a credit card. They might give you some information on issues that you may face with a specific company regarding issuing your credit card. Look for an exchange charging the lowest fee for purchasing cryptocurrency with a credit card.
FAQs
Is it possible to purchase cryptocurrency with credit card rewards?
You can earn cryptocurrency with crypto rewards cards and use them for regular purchases. Instead of giving you cash back for using the card, some programs give you cryptocurrency as a reward. In other programs, you can exchange the reward points you accrue for cryptocurrency.
Can cryptocurrency be used to pay credit card bills?
You can use cryptocurrency to pay off your credit card bill through certain cryptocurrency services. One cryptocurrency exchange that provides a Bill Pay service is BitPay, which lets you use your balances on the exchange to pay bills, including credit card bills. BitPay essentially serves as a gateway service that allows you to pay your bills directly with fiat money after converting your cryptocurrency.
Is using a credit card to buy cryptocurrency safe?
It is not a wise investment to purchase cryptocurrencies with a credit card because of the fees and high interest rates involved. Direct deposit is typically associated with a lower fee.
If you must use a credit card, we advise getting information about any possible fees by chatting with a representative of the credit card company. To make sure you avoid spending more money than you have available to pay off your credit card balance, look for a cryptocurrency exchange that offers the lowest credit card fees.
