While you can use a credit card to buy cryptocurrency, this payment option carries more fees than other forms of payments (such as bank transfers, debit cards and PayPal) – as well as the risk of having to pay cash-advance charges. Each payment method has its own pros and cons: bank transfers are the cheapest option in town with nearly no fees, but they can take a few business days to reflect in your account; debit cards are as immediate as bank transfers but with slightly higher processing fees when compared with the bank transfer method. Finally, buying crypto with PayPal might come with the risk of your account being debited for policy violations. The payment card method is convenient but also comes with the risk of building up more debt and frauds that you might not be fully protected against when you purchase. Figuring out the exchange you should go for as well as its fees and policies is important.
Crypto purchases can also earn rewards from credit cards and, for many cards, help recoup some of the transaction costs. Some credit cards offer crypto rewards, usually enabling users to accrue cryptocurrencies instead of the standard points or cash-back rewards. Both the Gemini Credit Card and the Venmo Credit Card, for example, provide attractive rewards schemes that convert purchases directly to savings in cryptocurrency. Buyers should bear in mind the high interest rates of credit card purchases, as well as the ability to manage potential high-interest debt from such purchases.
For those who wish to get around these excessive fees, there are other, lower-cost alternatives such as ACH (bank) transfers, wire transfers and also cash transfers via peer-to-peer platforms. There is some middle ground in terms of speed, cost and convenience for different buyer mindsets and transaction amounts. Depending on this assessment of their financial goals, risk tolerance and the card terms and fees, buyers should make an informed decision about whether to use credit cards to buy cryptocurrencies.
Source: Forbes
