Early 2018 was a rough time for speculators who regularly purchased cryptocurrency using their credit cards. In a single two-week period, just about every major credit card issuer banned the purchase of Bitcoin and other alternative currencies using their cards. But a select few of the best credit cards for buying Bitcoin are still available.
American Express remains the lone holdout among major issuers to enable the purchase of cryptocurrencies. The others referenced the lack of mainstream acceptance, high instances of fraud, and large volatility in the market as reasons for banning the purchases.
You can still purchase crypto using a credit card other than an Amex — but it isn’t cheap. The fees and high interest charges associated with the purchases could easily eat away at any potential profits.
Before you use your credit card to purchase cryptocurrency, keep in mind that your transaction will qualify as a cash advance. That means you’ll immediately start accruing interest charges. You’ll also pay a higher cash advance APR (above 23%) and likely pay a cash advance fee that averages either $10 or 3% to 10% of your total transaction amount.
There may be other fees associated with the transaction, but we’ll get to those in a moment. But, for now, here are the top five cards that still allow direct purchasing of cryptocurrency — as a cash advance.
1. Amex EveryDay® Credit Card
With the Amex EveryDay® Credit Card, you can access the crypto-buying power of American Express without paying an annual fee. Just remember that your transaction will qualify as a cash advance — which means you’ll instantly start accruing interest at a rate above 26%.
This card does offer a very competitive rewards structure for your everyday purchases — especially if you use the card regularly enough to earn the 50% points boost when you reach 30 or more purchases in a billing period. Your crypto purchases, however, will not count toward that total, as cryptocurrency purchases do not qualify to earn rewards.
2. Alliant Cashback Visa® Signature Credit Card
The Alliant Cashback Visa® Signature Credit Card is a rare Visa card that allows crypto purchases — but you’ll still find the same cash advance hurdle as the other cards on this list. That means a minimum fee of $10 or 3% of your total transaction, whichever is greater.
This card offers a substantial 3% cash back on all purchases (but not cash advances) in your first year of membership. After that, you’ll still earn cash back at a very respectable 2.5% back. Of course, industry-leading rewards don’t come free — this card has a $99 annual fee.
3. Cash Magnet® Card from American Express
The Cash Magnet® Card from American Express offers a flat and unlimited 1.5% cash back on every purchase you make — but Amex doesn’t consider crypto transactions as purchases. In those cases, you’ll pay a cash advance fee of $10 or 5% of the total transaction, whichever is greater.
You’ll also start immediately accruing interest of over 26%. Although this card offers a nice 0% APR period for your first 15 months with the card, you won’t get the benefit of that interest-free window for cash advances.
You can, however, transfer your balance (that may include previous cash advance transactions) from a current high-interest card to this Amex card and take advantage of the 0% finance charges to pay off that debt.
4. USAA Preferred Cash Rewards Visa Signature
USAA was one of the first banks to invest in crypto exchange Coinbase and was named one of the most Bitcoin-friendly banks in America. Account holders can access their Coinbase accounts through the bank’s mobile app and even make trades directly from their USAA checking accounts.
But the USAA Rewards™ American Express® Card still classifies the purchase of Bitcoin as a cash advance. You’ll pay 3% of your transaction total to initiate a cash advance using this card.
The lone positive is that the card doesn’t have an escalated cash advance APR. You’ll still begin accruing interest as soon as you initiate the transaction, but it will be at the same rate as your regular purchases.
5. Blue Cash Everyday® Card
With the Blue Cash Everyday® Card from American Express, you’ll pay no annual fee and earn as much as 3% cash back on your everyday purchases — but not on cash advance transactions that include cryptocurrency purchases. You’ll have to pay some hefty fees for that convenience.
Cash advance fees on this card include the increased cash advance APR as well as $10 or 5% of the amount of each cash advance, whichever is greater. If you conduct multiple crypto transactions using your card each month, those fees can quickly grow out of control.
If you want to avoid the high upfront costs — and debilitating long-term charges — associated with using a credit card for your cryptocurrency purchase, you should consider a low-cost personal loan that can fund your transaction in as little as 24 hours.
Here are our top choices for online lenders that offer quick approvals and fast funding.
If you earn at least $1,000 per month after taxes, you could qualify for a loan of up to $10,000 from one of CashUSA.com’s partner lenders. Loans have flexible repayment terms, with as long as 72 months to repay your loan with competitive interest rates that start at 5.99%.
But remember that the online lending marketplace hosts many lenders, and each sets its own terms and interest rates.
BadCreditLoans.com doesn’t require applicants to have a minimum credit score, but each lender on the network has unique approval standards. If you don’t have the best credit, don’t despair. Many lenders on the network specialize in bad credit loans and can provide up to $5,000 to qualified applicants in as little as one day.
The lenders featured on the PersonalLoans.com network provide loan options from $500 up to $35,000, based on creditworthiness. Larger loans require a verifiable income source of at least $2,000 per month.
If approved, you could go from application to loan funding within one business day. Your lender will electronically transfer your funds to your linked checking account for near-instant access.
Yes, but it isn’t cheap.
If you’re purchasing Bitcoin or another cryptocurrency solely as an investment, a credit card likely isn’t the way to go. That’s because the fees and charges associated with these transactions can make it very difficult to turn a profit on your investment.
American Express is the only major issuer that still allows cryptocurrency purchases with its cards.
This trend started in February of 2018 when nearly every large U.S. bank banned the purchase of cryptocurrency using credit cards. The lone holdover today remains American Express.
But that doesn’t mean you can easily purchase crypto using your American Express card. Any such transaction qualifies as a cash advance — so it’s no different than using your credit card to withdraw cash from an ATM machine.
Under your credit card terms, you’ll begin accruing interest — at a higher cash advance rate — immediately after the transaction. There is no grace period, and you’ll also pay a cash advance fee. The fees average 5% of your total cash advance, with a $5 minimum.
Even if your non-Amex credit card allows you to make a crypto purchase through your preferred exchange, you’ll still find many fees added to your transaction. The exchange may charge a convenience fee. If the exchange operates overseas, you may be subject to a foreign transaction fee.
Also, some exchanges limit their exposure to fraud by capping a user’s credit card purchases. Every exchange sets different rules, but some may limit how much crypto you can purchase each day or month using your card.
The limitations on these types of transactions and the risks associated with speculative investing using funds that charge high fees make this a less-than-ideal option for purchasing your cryptocurrency.
You can purchase Bitcoin and other popular cryptocurrencies through exchange websites, where you can trade fiat currency for your preferred cryptocurrency.
For example, you can swap U.S. dollars (USD) for Bitcoin (BTC) just like you’d exchange currencies at a bank or airport when traveling overseas.
Most exchanges allow users to trade funds through multiple methods. These can include ACH bank transfers and money transfer services such as PayPal.
The problem with those methods is that they require several days for the transfer to be completed before you can make your purchase. That’s why many of the most popular exchanges allow debit and credit card transactions for instant access to your funds.
You have several options for trading funds through cryptocurrency exchanges, each with its own limitations and fees.
These exchanges allow you to link a credit or debit card to your account for faster purchasing. As with most online services, you’ll be charged a convenience fee that can range from a few dollars to a percentage of your total transaction.
But not every credit card issuer allows you to use your card to make purchases through cryptocurrency exchanges.
Bank of America and Citigroup in the U.S., Virgin Money and Lloyds of London in the U.K., and TD Bank in Canada are among the heavy hitters that all banned cryptocurrency purchases using their credit cards in early 2018. Since then, Discover and Capital One have joined the pack, leaving American Express as one of the few holdovers that will allow cardholders to make crypto purchases.
But thanks to changes in the way credit card issuers code cryptocurrency transactions, you’ll face heavy cash advance fees any time you manage to use your card for a cryptocurrency purchase.
That may change in the future. In late 2018, Mastercard won a patent that could one day see the issuer allowing cardholders to not only pay for cryptocurrency using its cards but also use crypto to make monthly payments.
As with most things in today’s fast-moving tech society, it pays to be patient. You can save heavily on transaction fees and finance charges when buying cryptocurrency if you only buy what you can afford and are willing to wait a couple of days to make your purchases.
Cryptocurrency exchanges recognize the risks and high levels of fraud taking place in their marketplaces. That’s why each exchange requires users to wait until their transferred funds clear before using them to make a purchase.
Funds can be transferred via ACH. You’ll pay less in fees, but it will take a couple of days to complete the transfer.
Many users pay a convenience fee (among other charges) to use a debit or credit card for instant purchasing power. But you can link a checking account or debit card to your account and transfer funds that way.
You may not face any fees using this method, but you may have to wait a few business days for the funds to arrive in your account.
Another key benefit of using your debit or a prepaid card when purchasing cryptocurrency is that you’ll limit your transactions only to the money in your account. Buying cryptocurrency with a credit card may tempt you to spend more than you can afford with the hope of an investment paying big returns.
While the hype surrounding rising crypto values may make the market seem like a never-ending profit grab, the truth is these currencies are incredibly volatile and can lose — or gain — value in a matter of minutes.
Also, every exchange has its own fees and charges that users must pay to access its services. Check with your preferred exchange before placing an order to know exactly how much you’ll pay to buy your crypto.
Speculators have always looked for ways to make a dollar out of 15 cents. That continues today as thousands of investors ride the cryptocurrency wave through the ups and downs in the market.
If you’re going to jump on the bandwagon, you’ll find the ride much smoother if you use a low-fee method of paying for your purchase. Using one of the best credit cards for buying Bitcoin is akin to riding that wave on a piece of plywood — you might get to the shore in one piece, but it will be a bumpy ride.
Using a debit or prepaid card — or even a low-cost personal loan — to make your speculative purchases will lower your costs and increase your profits over the long haul.