Can You Buy Bitcoin With a Credit Card?
Bitcoin is perhaps the most well-known of the cryptocurrencies, and there are many analysts who expect that over the next few years it will soar in value. Bitcoin is incredibly volatile at the moment, with the price soaring or crashing by thousands of dollars in just a few hours on a regular basis.
Buying Bitcoin Can Be Tricky
The volatility of Bitcoin has created a lot of rags to riches stories, but it has also left some people with no savings, and with funds that are hard to liquidate, especially during periods when Bitcoin's value has crashed. Many banks and credit card companies now block people from buying Bitcoin with their cards, because they are worried that people might get into debt trying to buy the cryptocurrency.
Some sellers also dislike selling cryptocurrency to people who want to pay with a credit card, because they are worried about chargebacks. This is changing, and anti-fraud companies are offering new measures to reduce the risk to the merchant, but it is still something that you should be aware of when shopping for cryptocurrency or tokens online.
These restrictions mean that it can be tricky to buy Bitcoin with a credit card. There are options for doing so, but you will need to do your homework first to make sure that you buy from a reputable source and that you don't end up falling foul of any rules that your bank has in place.
Let's take a look at some of the best options for buying Bitcoin online using a credit card:
Option 1: Coinbase
Coinbase is perhaps the most well-known of the exchanges on the market. They allow you to buy Bitcoin with a credit card and debit, and they are available to users in the United States, Canada, Australia, the UK and the EU. They charge a flat fee of 3.99% for debit card transactions, and they offer some signup bonuses too.
Coinbase is easy to register with, and they sell not just Bitcoin but also Ethereum, Litecoin, Bitcoin Cash and other major coins. It's easy to create an account with Coinbase, and once you have that account set up they will handle the wallet/technology side of things for you, so that you can trade for a relatively affordable fee.
Coinbase accepts a few different payment options, including your bank account, PayPal account, and credit or debit cards. You can buy instantly with a credit card, but you should note that they accept only Visa or Mastercard, no American Express at this time. In addition, the limits for transactions are lower for credit and debit cards than they are for bank accounts. The trade off is that you can buy and sell quickly. When you use a bank account you have to wait four to five days for the payments to be processed.
You will need to prove your identity before you can purchase currency. The most common way of doing this is by uploading a photo of your passport or government-issued ID card. The verification process is usually quite fast, so have a digital camera and your ID ready when you sign up.
Buying is simple, and you aren't limited to whole Bitcoins. You can enter the amount of Bitcoin that you want to buy (including fractions), and you will be told how much that is worth in dollars, with a fee added at the end. Or you can say how much you are willing to spend before fees and buy the amount of Bitcoin that works out to.
You can do one off purchases, or you can set up repeat purchases, such as buying $100 of Bitcoin per month as an investment when you get paid. This is a simple and easy way of building up a portfolio of cryptocurrencies.
Option 2: Binance
Binance is one of the most trusted and fastest growing cryptocurrency exchange available to date. Binance has a fee of 3.5% or 10$ when it comes to purchasing Bitcoin with a credit card. This isnt the cheapest fee out there, but with Binance's reputation and trading capabilities most users have no problem spending the extra little bit of money.
When it comes to trading cryptocurrencies on Binance you do not need to verify your identity in any way. You will in fact have to provide some personal information if you are purchasing crypto with a credit card.
Signing up for Binance is a very simple process, and it also provides you with a great deal of trading tools if you are looking to get into trading your assets. The minimum amount you are required to purchase is $50 USD of your choice of cryptocurrency. If you are thinking of purchasing smaller amounts it might be beneficial to save a bit of money by using the other suggested options because of the cheaper fees.
Binance uses Simplex as their purchasing provider like most other big exchanges do. Simplex is a very reputable company that makes the process of buying Bitcoin and other cryptocurrencies very safe and fast. It usually takes 10-30 minutes for the digital assets to reach your wallets. You are also able to view your payment status and use Simplex's top notch customer service if anything were to go wrong.
Binance is a great place to buy your Bitcoin if you dont mind paying the slightly higher fee. Or you are looking to get into trading the coins right away on one of the most reputable trading platforms available.
Option 3: CEX.io
CEX.io is a longstanding Bitcoin exchange that is open to people in the United States, parts of South America, and Europe. CEX.io offers low trading fees, which is one of the reasons that it has remained popular for so long, however, it is not available in all parts of the United States, so it is a good idea to check the list of available states before you spend too much time investigating the service.
The verification process for CEX.io is a little more arduous than the verification process for Coinbase, and it takes a bit longer for the company to process the documents, however, what you get at the end is low fees and reliable service, so it is worth the wait for most people.
One thing that you should be aware of with CEX.io is that since it is not as big of an exchange as Coinbase, the level of liquidity can be slightly lower. While this is not a problem if you're in it for the long term and don't want to be buying or selling all the time, it is something that you should bear in mind. Don't invest money if you're not willing to potentially lose it, and especially don't invest money if you need access to that money on short notice. Bitcoin is still a relatively immature form of investment, and you should treat it as a form of gambling at this stage.
CEX.io's fees are almost exactly half those of Coinbase for certain payment methods, so if the platform is available in your state or country it is a very good option. It's been operational for a long time as well so it's something that is well worth a look.
Option 4: Small Scale Trading on LocalBitcoins
The major exchanges will not allow you to buy using a prepaid credit card, and they will expect that you complete a full signup and ID check process. This means that you can't buy anonymously, and you will have to wait to get your documents checked before you can buy at all. You will also be subject to the limits of the sites in question, which can sometimes be rather low for new buyers.
Localbitcoins.com is an option for people who want to buy and sell Bitcoins by trading with private individuals in their local currency. It is aimed at smaller scale buyers and sellers, and it is a 'trust-based' system so you are exposing yourself to some level of risk. However, you don't have to fill out any ID verification forms and you don't need to provide the site with personally identifiable information, so you can trade anonymously if you are willing to be patient.
LocalBitcoins allows you to trade using your credit or debit card and there are other payment options available as well. However, you should remember that some payment methods make it easy for a buyer to do a chargeback, and it is best to avoid those methods as a seller. If you're a buyer who wants to buy some Bitcoin using a credit card then Localbitcoins could well be an option for you.
Coins are usually delivered quite quickly, but you have to remember that you're dealing with individual sellers, not with an automated system, so there may be some delay while they approve the purchase and send the coins to your wallet manually. You will, of course, need a Bitcoin wallet set up to receive the coins. Choose a reliable service, and make sure that you do not lose your login details!
LocalBitcoins can offer some decent opportunities for traders if they are willing to absorb some of the risk of selling Bitcoin via fast payment methods, but this is something that you should not do unless you have enough funds to shoulder the risk and you are confident in your pricing and judgment.
Note that some sellers may require you to provide them with ID before they will sell Bitcoin to you via a credit card, because of the risk of chargebacks. On LocalBitcoins.com this is left to the discretion of the individual sellers, rather than being a matter of site policy.
Buying Large Amounts of Bitcoin With a Credit Card
The limits for buying Bitcoin with a credit card are very low on a lot of the sites, because merchant processing services expect that sellers will have precautions in place to limit fraud, and setting strict limits is one of the easiest things that a merchant can do, beyond requiring photo ID, to show that they are taking the risk of fraud seriously.
If you want to buy more Bitcoin than one merchant will allow you to do with a credit card, you can use multiple exchanges and then withdraw the currency into a central wallet. Note that there may be fees with each provider for doing this, however. In addition, Bitcoin itself charges a transaction fee when you send money, and the sending is not instant, although it is quicker now than it was a year or so ago.
Your best option may be to set up weekly or monthly purchases with a single provider and build up your investment that way if you have the time. Alternatively, look at other payment options such as a bank transfer, which will be seen by most of the exchanges as being more trustworthy.
Some exchanges will raise the limit over time as you prove that you are a reliable customer, and this could be another way of increasing your Bitcoin holdings. Protect your Bitcoin wallet carefully, using either a well-known crypto cloud services provider or cold storage and multiple back ups, with encryption, especially if you are storing a lot of coins in there. Remember that if you forget the details to unlock the wallet, or you lose the wallet file, there is no way of getting your Bitcoin wallet back. Think of it as digital cash in the strictest sense of the word, there is not a simple 'password reset' option like there is for your online banking service.
How to Avoid Fraud
Because Bitcoin is so volatile, and yet seemingly "easy money" int he minds of a lot of people, there are a lot of scammers out there, both outright scammers, and sites that promise 'no fees' but that have unfavourable exchange rates to catch out those who do not do their homework.
Some sites offer easy signup processes and will raise the limits for what you can buy quickly, but will then charge you several percent more per transaction than the mainstream providers such as coinbase. To avoid those scams, stick to one of the most well-known providers and try to be patient. The difference between providers could be hundreds of dollars on a purchase of a single Bitcoin, so it pays to not rush.
Remember, also, that prices can fluctuate massively. Movement on the Bitcoin marketplace is far wider than movement on the FTSE or NASDAQ exchanges, so if you can't get the deal you want right now there's no need to worry, you might still be able to get the same deal, or better, next week. If your plan is to buy and hold, or "HODL", then you should not worry too much about what happens today or tomorrow, as long as your long term holdings move favourably.
In the long term, once you have some holdings you may well decide that you want to do some trading, but you should wait until you can afford the risk and you have a good knowledge of the main exchanges, how they work, and common scams. Jumping straight into day trading or arbitrage is not a good idea for most people.
Which Exchange Suits You Best?
There are a huge number of exchanges out there to choose from, and it can be hard to decide which one suits you best. If you have the funds to do so, you might want to try using each exchange to do a couple of test transactions, then moving on to the exchange that you like the most once you feel comfortable with the process of buying and selling through them. Things to take into account include:
- Scheduled transactions
- Minimum and maximum spend amounts
- Charges per transaction
- Currency options
- Payment methods
- Crypto and token options
- Ease of moving funds between different balance types
- User interface
- The speed with which transactions clear
- Availability in your region
There is a reason that there are multiple exchanges out there, and that is because price is not the only thing that matters. The differences in rates between most exchanges are marginal depending on how much you spend, so other differentiators matter a lot. If you want to use prepaid debit cards or spend a lot of money buying Bitcoin, LocalBitcoin could be the best option for you, for example.
If, on the other hand, you want to be able to trade in a huge range of altcoins as well as Bitcoin, and you want to have the reassurance of working with one of the biggest brands, then you may decide that Coinbase is the best option.
Whatever you do, make sure that you are not running up a huge balance on your credit card and letting it stand from month to month. You're not likely to make a lot of money with Bitcoin if you are borrowing on a high-interest card to pay it off. Make sure that you keep on top of your budget, and that you pay your priority debts before you start 'investing'. If you need financial help or guidance to pay off debts, there are lots of free agencies that can help with that sort of thing.