You’ve been using debit cards and credit cards your whole life. But can you buy bitcoin with these popular and familiar payment methods? Will your bank block transactions when you’re buying bitcoin? Are there any drawbacks to buying bitcoin with a credit card or debit card?
Keep reading. We’re going to answer all the questions you have about buying bitcoin with a credit card or debit card.
Most Exchanges Do Not Support Credit Cards
First, let’s make one thing clear. The majority of cryptocurrency exchanges do not support credit card payments. This is deliberate: exchanges worry about chargeback fraud. Credit card companies typically side with the credit card holder in the event of a dispute. That means someone could deposit $5,000 with a credit card into an exchange, buy bitcoin and withdraw it, then issue a chargeback through their credit card company, leaving the exchange with no bitcoin or money.
Chargeback fraud is a major issue in the cryptocurrency industry. The main problem is that there’s no proof of a party receiving bitcoin payments. This makes it difficult for your bank or credit card company to verify a transaction took place. If a credit card holder claims they never received their bitcoins, and there’s no way to prove it, then the bank will side with the credit card holder.
The end result is that a few fraudulent actors ruin it for the rest of the world. Most exchanges do not support credit cards. You may, however, be able to find certain online platforms that let you instantly buy bitcoin using credit or debit cards.
How to Buy Bitcoin Using a Credit Card or Debit Card on Coinbase
Coinbase tends to be the most popular way to buy bitcoin using a credit card or debit card. With Coinbase, you pay a fee of around 4% to 5%. You’ll also have a limit of $10,000 per day. However, you can legitimately purchase bitcoin using your credit card. It’s as easy as buying anything online with a credit card.
Coinbase was one of the first major payment platforms to accept credit card payments. Buying bitcoin with credit cards through the platform continues to be fairly easy:
- Register an account on Coinbase.com
- Go to Settings > Payment Methods > Add Payment Method
- Choose Credit/Debit Card from the list
- Enter your credit card details; Coinbase accepts all VISA and MasterCard cards
- Go to the buy/sell section to purchase bitcoin using your credit or debit card
It’s important to note that Coinbase’s high fees are only an issue on credit card: the company charges a fee of around 4% on credit card purchases, although debit card purchases have 0% transaction fees.
Coinbase supports 30+ countries worldwide. It’s not available internationally, but it’s available in most major countries.
How to Buy Bitcoin Using a Credit Card or Debit Card on Other Exchanges
Other exchanges and online platforms accept credit card and debit card payments. Some of the notable options include:
Coinmama: Coinmama is another longstanding cryptocurrency exchange. With Coinmama, even unverified accounts can buy bitcoin using credit cards or debit cards. However, unverified accounts are restricted to buying $150 of bitcoin, while verified accounts can buy up to $5,000 worth of bitcoin per day (or $20,000 per month). In exchange for this convenience, Coinmama charges relatively high fees. You can expect to pay about 5% fees on all transactions.
CEX.io: CEX.io is one of the highest-volume cryptocurrency exchanges in the world today. CEX is one of the few major exchanges that widely supports buying bitcoin using credit cards and debit cards. Open an account on CEX.io, verify your identity, then go to “Fund”. You should be able to add money to your wallet using your credit card. You can also withdraw funds directly to your cards.
Bitstamp: Bitstamp recently added support for credit cards and debit cards. Along with CEX.io, it’s one of the only major exchanges that officially supports credit cards and debit cards. Bitstamp will charge fees of 5% to 8% for using credit cards and debit cards. The exchange only supports credit card holders from the United States and Europe. The verification process can also be relatively slow.
Bitcoin.com: Bitcoin.com makes it easy to buy bitcoin using credit cards. It’s not an exchange; instead, it’s an online payment platform and informational resources for the bitcoin community. At Bitcoin.com, you’ll see fees of 5% to 7.5% or higher, making it one of the most expensive options on this list. However, you can legitimately use Bitcoin.com to buy bitcoin using credit cards or debit cards.
How to Buy Bitcoin Using Credit Cards or Debit Cards with P2P Transfers
You might be able to find traders on LocalBitcoins.com and similar resources that accept credit cards and debit cards. It’s not unusual for an independent trader to accept card transfers.
Typically, these sellers will charge fees similar to what we see above. You can expect to pay fees of 5% to 7% on all debit card or credit card purchases.
To search for bitcoin sellers that accept credit card or debit card payments on LocalBitcoins, just sign up for the platform and customize your search based on payment method.
A Word of Warning When Buying Bitcoin with Credit Cards or Debit Cards
Your bank tracks every transaction you make using credit cards or debit cards. Some banks have flagged bitcoin transactions the same way they flag transactions related to gambling or drugs: they’re high-risk transactions associated with illegal activity.
Typically, your bank isn’t going to freeze your accounts overnight without warning. However, you might receive a phone call asking to explain your recent transaction history. Typically, it’s your bank’s fraud department wanting to make sure the transaction was legitimate.
It’s generally a bad idea to lie to your bank. However, you may wish to “obfuscate the truth” if your bank asks if you’re buying cryptocurrencies. Sometimes, it can lead to big penalties and total account cancelation.
Buying bitcoin with credit cards and debit cards is very easy – it’s just expensive. You can find plenty of online platforms and exchanges that accept credit cards and debit cards in exchange for bitcoin. However, you can expect to pay high fees of at least 5% on most online platforms. Some of these fees are paid by the retailer to the credit card company. Most credit card companies charge fees of around 3% to retailers. The extra 2 to 3%, however, is profit for the online platform.
You may also encounter buying limits when buying bitcoin with credit cards and debit cards online. Some platforms restrict you to just $200 with an unverified account, for example. Other platforms let you buy up to $20,000 of bitcoin in a month – but you need to be verified.
As long as you understand the high fees and withdrawal limits, you’ll have no trouble buying bitcoin online using credit cards and debit cards.