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Buying Bitcoin With Credit Cards: How Does it Work and Should You Do it?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any credit card issuer.

Buying Bitcoin, Ethereum, or Litecoin with a credit card can be as easy as setting up a wallet, picking an exchange and then making the purchase with your credit card. However, not all card issuers or cryptocurrency exchanges accept credit cards and—though it may be possible—it's not recommended. Some exchanges charge exorbitant fees for purchases made with credit cards, and card issuers might classify these purchases as cash advances–which would result in high interest rates and additional fees.

Should You Buy Bitcoin and Other Cryptocurrency With a Credit Card?

It's not a good idea to purchase Bitcoin or other cryptocurrency with a credit card. This is because of the increased processing fees, cash advance fees and interest charges that will most likely exceed any reward value that a credit card can offer. These currencies have proven to be volatile, making them a risky investment. A good rule of thumb is not to invest more than you're willing to lose.

Don't use a credit card to buy Bitcoin or another cryptocurrency if you don't have the cash. You will be charged increased fees from the exchange, and will also pay interest on any balance that is carried over from one billing cycle to the next. If you cannot make your minimum payment, you'll face penalty fees.

When You Should Use a Credit Card to Buy Cryptocurrency?

While it's not recommended, the only time you should ever use a credit card to buy cryptocurrency is when you stand to gain more in rewards than paid in fees.

For example, Coinbase has a credit card fee is 3.99%. Unless your card can offer a rewards rate of over 3.99% on this transaction—which is not offered by most cards—you are losing money by paying with your credit card.

Cardholders might be tempted to purchase Bitcoin or other cryptocurrencies in order to meet an introductory spending bonus. In these situations, the amount earned in the bonus would likely exceed whatever additional fees are charged by using a credit card, making it a net gain for the person making the purchase.

Most credit card spending bonuses can only be earned through transactions that are classified as purchases. If you buy cryptocurrency and your card issuer classifies the transaction as a cash advance, it will not count towards your bonus. Check with your card issuer on how they classify cryptocurrency purchases.

Since cryptocurrencies are a risky investment, be careful of how much you spend on your purchase. For example, if you buy $500 in Bitcoin through Coinbase to receive a $150 spending bonus, the almost $20 you pay in fees for the transaction is offset by the $150 you earned through the bonus. However, if the value of Bitcoin drops and you cannot sell your Bitcoin for at least $330, all of the money you received from your bonus will be lost.

How to Buy Bitcoin and Other Cryptocurrency With a Credit Card

If you choose to use your credit card to purchase cryptocurrency, here is a brief summary of how to do so:

Choose a Wallet: This is essentially where your cryptocurrency is stored. There are several different types of wallets—online, mobile, hardware etc.—that have different levels of convenience and security. Some exchanges will set up a wallet for you when you make a purchase, or register for an account.

Choose an Exchange: Exchanges are what people use to buy and sell digital currency. Some of the most popular exchanges are Coinbase, Coinmama, and Bitstamp. These sites vary based on the limits on buying and selling cryptocurrency and on what fees they charge on exchanges.

Link Your Credit Card and Make a Purchase: Exchanges will often let you make a purchase with a credit card, debit card, or by linking your bank account. Fees and limits on buying and selling cryptocurrency may vary based on your payment method.

Which Credit Cards Can I Use?

If you plan to purchase cryptocurrency with a credit card, your options will be limited because some card issuers have decided to ban these transactions. Card issuers are worried that people who charge cryptocurrency purchases to their credit card won't be able to pay it off due to the risk—resulting in losses for the card issuer.

Allow Cryptocurrency

Ban Cryptocurrency
American ExpressBank of America
Credit OneChase
US BankCitibank
Capital One
Wells Fargo

Some card issuers will classify cryptocurrency purchases as cash advances, which means that you'll be charged a fee and the purchase will start accruing interest immediately, sometimes with a increased APR. To avoid these unexpected charges, call your card issuer and ask whether or not it classifies cryptocurrency purchases as cash advances.

Which Exchange Should I Choose?

Of the exchanges we examined, Coinbase offered one of the most straightforward and easy to use interfaces with some of the lowest fees for credit card purchases. Coinbase insures all cryptocurrency that is stored in its online storage platform, meaning it will pay out whatever losses you have in the event of a security breach. If you're shopping around for cryptocurrency exchanges, some of the main considerations are its security, fees, and buying options.

The exchanges in the table below deal in Bitcoin and Ethereum. Some of them will allow other cryptocurrencies as well.

Exchange & Type

Requires Verification?Credit Card FeesCredit Card Buying Limits
Bitstamp (Peer-to-peer)Yes
  • 5.00% fee for credit card purchases
  • None
CEX.IO (Peer-to-peer)NoFor VISA:
  • 3.5% + $0.25 for deposits
  • $3.80 for withdrawals
For MasterCard:
  • 3.5% + $0.25 for deposits
  • 1.2% + $3.80 for withdrawals
For unverified credit card accounts:
  • $1,000 per day
  • $3,000 per month
For verified accounts:
  • Unlimited
Changelly (Regular and Peer-to-peer)No
  • 5.00% base fee
  • 5.00% additional credit card processing fee through Simplex
  • $50 for the first transactions
  • $100 for the next purchase, which can be made no sooner than 4 days
  • $500 for a purchase 7 days after first purchase
  • No more than 3 purchases within the first week
  • After that no limits
Coinbase* (Regular)YesThe greater of:
  • a minimum fee
  • 3.99% for credit card or debit card purchases
  • Variable
  • You may be able to increase your buying and selling limits by providing identification.
Coinmama (Regular)Yes
  • 5.50% base fee
  • 5.00% additional fee for credit card purchases
  • Limits can vary
  • Once verification is approved up to $10,000 with a credit or debit card
  • Daily spending limit of $5,000
  • Monthly spending limit of $20,000

* Coinbase on February 13th, 2018, announced that it will no longer let customers link new credit cards to their accounts. However, already linked cards can still be used to make purchases, but users may be charged a cash advance fee by their issuer.

The following popular cryptocurrency exchanges do not accept credit cards: Kraken, itBit, HITBTC, Gemini and Bitfinex.

Regular exchanges are more simple and beginner friendly, but charge higher fees. Peer-to-peer exchanges have smaller transaction fees, but are generally more complicated and lack the same customer support that regular exchanges have. Some peer-to-peer exchanges may also allow its users to trade Bitcoin anonymously, with no verification. However these exchanges may be in violation of KYC (Know Your Customer) laws.

Many exchanges charge increased fees for purchases made with credit cards, while some exchanges may not allow credit card purchases at all. The amount of currency that you can buy with a certain payment method may also be limited, with higher spending limits available to individuals paying with a linked bank account. Linking your bank account is different than paying with your debit card and it may take longer—three to five business days—for funds to be available with this payment method. Other factors, including you account's history with a given exchange, may also affect how much cryptocurrency you can purchase.

Exchanges may require you to verify your identity before they let you make a purchase or may limit the amount that you can buy without verification. They require this in order to be in compliance with U.S. anti-money laundering laws. Often, you're required to submit a picture or scan of a U.S. issued photo ID, and in some cases, you're required to submit a picture of yourself holding your ID. Verification for some exchanges can take several days, so if you're trying to buy Bitcoin instantly, you should choose an exchange that doesn't have a verification requirement.

Comments and Questions

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How We Calculate Rewards: ValuePenguin calculates the value of rewards by estimating the dollar value of any points, miles or bonuses earned using the card less any associated annual fees. These estimates here are ValuePenguin's alone, not those of the card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer.

Example of how we calculate the rewards rates: When redeemed for travel through Ultimate Rewards, Chase Sapphire Preferred points are worth $0.0125 each. The card awards 2 points on travel and dining and 1 point on everything else. Therefore, we say the card has a 2.5% rewards rate on dining and travel (2 x $0.0125) and a 1.25% rewards rate on everything else (1 x $0.0125).