Can you buy crypto with a credit card?
The short answer is: Yes – but only from some crypto exchanges and with certain credit cards. That said, the limited number of exchanges that accept credit cards, as well as the fees imposed by some credit card issuers, may offset any convenience or potential rewards earnings may come with using your card to purchase crypto.
You should also know that even if a crypto platform accepts credit cards, your credit card issuer may deny your purchase of Bitcoin, Ethereum, Tether or other cryptocurrencies. Alternatively, your credit card company may allow it, but tack on a few fees.
To start buying bitcoin with a credit card, you’ll need to find a cryptocurrency exchange that allows credit card purchases and a credit card that allows crypto purchases — and if this seems daunting, it very well may be. You could be better off just buying your preferred coins with cash from your bank account or with crypto that you already own.
However, if you aren’t deterred by a little extra work, read on for more tips on purchasing crypto with credit cards.
Crypto exchanges that accept credit cards
Some of the most commonly used crypto exchanges do allow you to use a credit card:
Crypto exchanges that don’t accept credit cards
Almost all of the top crypto exchanges accept credit cards.However, Coinbase isn’t allowing new credit cards to be added as a payment method, though it may support the use of existing cards for returning customers.
How to buy bitcoin with a credit card
If you’ve decided that you want to buy bitcoin with a credit card, here’s how. Each crypto exchange may vary slightly in the specific details, but these are the basic steps that you can expect to follow:
- Decide which crypto exchange you want to use, then create an account or log in to an existing account. For a new account, you may need to go through a verification process before making purchases.
- Choose which cryptocurrency you want to buy. Find the coin that you want to buy and input the investment amount.
- Select “credit card” as your payment method. If buying cryptocurrency with a credit card is an option, you’ll be able to input your credit card number, expiration date and security code. (Note, you may need to go through a verification process at this step. This could take anywhere from several hours to several days.)
Which credit cards let you buy crypto?
Some credit card issuers allow you to purchase crypto through an exchange platform. But it’s generally up to the individual platform as to whether or not they support a specific credit card payment processor.
You can typically use Visa credit cards to buy crypto currency, provided the crypto exchange allows it. However, Visa notes that the issuing banks and crypto exchanges set the fees for using credit cards to buy cryptocurrency.
Several crypto platforms accept Mastercard. In fact, the credit card processing company has partnered with a few crypto exchanges (including Tap, Nexo and Gemini) to issue crypto-backed credit cards.
While Discover doesn’t currently offer co-branded credit cards with crypto platforms, their cards may be used as a form of payment on various platforms. Remember that, while Discover is widely accepted in the U.S., it isn’t as widely accepted internationally — and you may not be able to use it with non-U.S. based crypto platforms.
You may be able to use an American Express card to buy cryptocurrency on an exchange platform. The American Express website offers information showing that you can link your card to your PayPal account and make direct purchases
Pros and cons of buying crypto with a credit card
Enjoy credit card identity theft protections in cases of fraud
Have the convenience of credit card processing rather than ACH or wire transfers, which may take longer
High APR if your credit card processes the transaction as a cash advance
Potential for multiple fees with each purchase including cash advance fee and currency exchange fee
Your credit limit on your credit card may be too low to complete your purchase
Grace periods typically don’t apply for cash advances
No credit card rewards on cash advance transactions
Things to consider when purchasing Bitcoin with a credit card
While you can buy Bitcoin with a credit card, it’s not a wise financial decision. It can not only cost you more, but it’ll also affect your future return on investment and may even impact your credit score. Consider these possible negative effects of the transaction:
1. May earn a lower rate of return due to fees
For some, crypto is an investment — but for others, it’s the future. If you’re part of the first group, you should consider that by using a credit card, you automatically lower your rate of return. With all the extra fees and interest charges you face when buying Bitcoin with a credit card, you’ll instantly lock in a loss. And while this may seem insignificant at the time, it adds up.
2. Receive cash advance penalties from your credit card issuer
Your credit card issuer may consider your crypto purchase as a cash advance, which won’t be good for you. Most cards charge a cash advance fee in the range of 3% to 5% of the transaction amount — this means a $500 cash advance will cost you between $15 and $25. Some cards also have a different interest rate for cash advances.
To know if yours does, consult your cardholder agreement, which can generally be found in your online account.
Another downside is that cash advances typically accrue interest immediately, unlike regular purchases that come with a grace period of 21 days or more.
Here’s a look at how much a $500 purchase of crypto may cost if you purchase it with a credit card that charges a higher APR for cash advances.
|Cost of $500 crypto bought with a credit card
|Cash Advance APR from credit card (29.99% APR with a daily rate of 0.08216% for 21 days)
|Cash advance fee of 3% from credit card
|Transaction fee of 8% from crypto exchange
3. Raise your credit utilization ratio unnecessarily
Not only does making a crypto purchase lower your available credit until you pay your bill, it can also lower your credit score by raising your credit utilization ratio.
Let’s say that you use your credit card for your regular spending and have a $5,000 limit. You typically spend $2,000 a month in new purchases and decide to buy $1,000 in crypto with your card. You’re now using $3,000 of your $5,000 credit limit (or 60% of your credit limit), until you make a payment. Ideally you should keep your credit utilization under 30% for an optimal FICO credit score.
If your credit card won’t work to buy Bitcoin (or another cryptocurrency) it could be one of two things: either the exchange doesn’t support credit card payments or the credit card doesn’t allow crypto purchases. You’ll have to choose a different exchange or payment method.