How to buy Bitcoin with credit card
Using your credit card to buy Bitcoin is a relatively simple way to kick off your crypto portfolio. It will almost certainly be more expensive than doing a bank transfer, but that’s the price you pay for convenience.
The problem you’ll find is that some banks and most local Bitcoin exchanges aren’t too keen on you using your credit card.
The Commonwealth Bank, for example, issued a ban on credit card purchases of crypto in early 2018. They are still allowing debit card purchases. So it’s worth checking with your credit card company to find out whether they will allow you to buy Bitcoin and also if they’ll classify it as a regular purchase or a cash advance.
Few Australian crypto exchanges or bitcoin brokers will accept credit card purchases. The main reason why is because of the risk of chargebacks. The consumer tends to have plenty of power in the case of a disputed transaction, so there are times where credit card charges can be cancelled. A fraudulent consumer could attempt to have the credit card charge refunded after receiving their crypto purchase. Since Bitcoin transactions are irreversible (which is an essential feature of Bitcoin, not a bug), this chargeback would mean the merchant is left high, dry and out of pocket.
You have more credit card options if you’re happy to consider overseas Bitcoin exchanges. Consider the following if you’re deciding whether to use your credit card to buy Bitcoin:
(1) Type of card – if you’re not using Mastercard or Visacard you may have very limited options.
(2) Transfer limits – most exchanges will limit the dollar amount you can purchase in any one day and this amount will be lower than other payment methods such as bank transfers. This limit may be increased over time as you develop a good reputation with them.
(3) Ts, Cs and Fees – The exchange you are buying from will have its own terms and conditions regarding paying by credit card. These Ts and Cs will determine how much you can spend, how long it will take to complete the transaction and how much it will cost you in fees.
Dealing with an overseas exchange may lumber you with fees for the credit card use, currency exchange and purchase of Bitcoin. Make sure you do the sums on those fees before committing any cash.
(4) Safety – only deal with reputable Bitcoin exchanges because you are giving them your personal information. Anyone who has had their credit card compromised will know that it’s a a major pain in the you-know-what.
(5) Altcoins – If you want to use your credit card to buy altcoins like Ethereum or Litecoin, one option is to start off by buying Bitcoin and then trade it for your preferred digital currency.
So credit card purchases can be convenient and are OK as an entry level option for Bitcoin. But they’re almost always more expensive than a bank transfer and are not advisable if you’re making substantial investments.
Some options for buying Bitcoin with a credit card:
