How to Buy Bitcoins with a Credit Card


If you’re eager to invest in Bitcoin, the first step is to create a Bitcoin wallet, or software that stores Bitcoin and other digital currencies. When you’re ready to purchase, find an online exchange that accepts credit cards and trades in your nation’s currency. While purchasing Bitcoin with a credit card is fast and convenient, there are risks involved. You’ll have to pay additional fees, your credit balance will accrue interest immediately, and you’ll still have to pay off your balance if Bitcoin’s value decreases.

Part 1
Creating a Bitcoin Wallet

Creating a Bitcoin Wallet on How to Buy Bitcoins with a Credit Card

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Desktop software wallets such as Bitcoin Core and Blockchain are popular and easy to use. Register to receive a unique wallet address, then download the software onto your computer.[1] You can download these and other wallet options at . Software wallets rely on your computer or electronic device's security. If you store a wallet on a computer that's not connected to the internet, it can't be hacked. For internet-enabled devices, use an antivirus program and update it regularly. Don't click on suspicious links or open emails from unknown sources.

Creating a Bitcoin Wallet on How to Buy Bitcoins with a Credit Card

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BitPanda is one of only a few exchanges that take credit cards and provide a built-in wallet. It and other online wallets are prone to hackers, and can be less secure than a software wallet.[2] Exchanges are online systems where you purchase Bitcoin.

Creating a Bitcoin Wallet on How to Buy Bitcoins with a Credit Card

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Online wallets are prone to hackers, and software wallets rely on your computer’s security and stability. Hardware wallets, which are physical storage devices, are the most secure option. You can buy one from the manufacturer's website or from an online marketplace. Popular choices include:[3] The Trezor Bitcoin Safe, which costs around $100 (USD). The Digital Bitbox, a compact device that costs around $75. The Keepkey, a sleek device that costs around $130.

Creating a Bitcoin Wallet on How to Buy Bitcoins with a Credit Card

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Think of Bitcoin wallets like ordinary wallets and bank accounts. You wouldn’t want to leave the house with several thousand dollars in your pocket. Keep large amounts of currency in multiple wallets to reduce the risk of losing your Bitcoin.[4] For example, store large currency amounts on 1 or more hardware wallets. Keep smaller amounts in a software wallet with a mobile app. That way, you’ll be able to access funds on the go, but your Bitcoin nest egg will be secure.

Creating a Bitcoin Wallet on How to Buy Bitcoins with a Credit Card

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Don’t use your wallet password for any other account. Include a mix of numbers, letters, and symbols, if available. Don’t include your name, date of birth, address, or other obvious information.[5] While your password needs to be secure, you should also be able to remember it. Depending on your wallet service, there might be limited password recovery options.

Creating a Bitcoin Wallet on How to Buy Bitcoins with a Credit Card

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If your wallet is only stored on your computer, your Bitcoin will be lost if your computer crashes. Back up your wallet on at least 1 external storage device (such as a USB storage stick) whenever you make a transaction.[6] You can also search online for secure cloud storage services.

Part 2
Purchasing Bitcoins on an Exchange

Purchasing Bitcoins on an Exchange on How to Buy Bitcoins with a Credit Card

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Since 2017, many popular exchanges, such as Coinbase, have stopped accepting credit cards. However, there are still several reliable, legitimate options available. The most reputable choices include BitPanda, Bitstamp, and Coinmama.[7]

Purchasing Bitcoins on an Exchange on How to Buy Bitcoins with a Credit Card

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Since there’s no universal exchange rate, each exchange charges unique transaction fees. In addition to these charges, you’ll have to pay an additional credit card fee. Your creditor will also charge cash advance, foreign transaction, and other application fees. Bitstamp charges 0.25% on transactions under $20,000 and an additional 5% for credit card transactions. It also accepts bank account transfers, wires, debit cards, and other payment forms. If you want $1,000 in Bitcoin, you'd pay a total of $1,052.50.[8] Coinmama charges 5.5% in transaction and credit fees, and only accepts Visa and Mastercard credit cards. For $1,000 in Bitcoin, you'd pay $1,055.[9] BitPanda only accepts some types of Visa and Mastercard credit cards that are popular in Europe. They don’t report their fee schedule, which fluctuates. They build fees into the purchase price, so you need to subtract Bitcoin’s current trading value from their price to determine their fee.[10]

Purchasing Bitcoins on an Exchange on How to Buy Bitcoins with a Credit Card

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In 2018, most major creditors in the US, UK, and other nations banned customers from purchasing Bitcoin with credit cards. Creditors who ban Bitcoin purchases include Bank of America, Capital One, Chase, Citigroup, Discover, Lloyds Banking Group, and Virgin Money.[11] None of Canada’s largest creditors have banned Bitcoins, and banks in most other nations have yet to restrict Bitcoin purchases. However, more restrictions outside of the US and UK are likely. Check with your creditor if you’re not sure whether it authorizes Bitcoin purchases.[12]

Purchasing Bitcoins on an Exchange on How to Buy Bitcoins with a Credit Card

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Find the “Buy” tab on your exchange’s home page. The exact process varies by exchange, but buying Bitcoin is fairly straightforward across exchanges. Clicking on “Buy” will bring you to a form where you enter the amount (in your currency, such as dollars or euros) that you want to purchase.[13]

Purchasing Bitcoins on an Exchange on How to Buy Bitcoins with a Credit Card

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Some exchanges require identity verification for all purchases. For others, it's only necessary for large transactions and for some locations. You might have to enter your passport or driver’s license number or upload a digital copy of the document.[14] Coinmama requires you to upload a photograph of yourself holding your government-issued photo ID.[15] It could take 24 to 48 hours to verify your identity.

Purchasing Bitcoins on an Exchange on How to Buy Bitcoins with a Credit Card

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The exchange will prompt you to enter your unique wallet ID, which is typically a combination around 26 to 35 letters and numbers. You can find the address on your wallet’s dashboard. Be sure to enter your address precisely.[16] Log into your wallet account or click on its icon on your desktop to see the dashboard.

Purchasing Bitcoins on an Exchange on How to Buy Bitcoins with a Credit Card

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Enter your credit card number, your name as it appears on your card, the card’s expiration date, its billing address, and the security code in the required fields. For most exchanges, your funds should be added to your Bitcoin wallet as soon as the payment is accepted.[17] If you don’t see any changes in your Bitcoin wallet, log into your credit card account and check recent transactions. If see a charge, go to the exchange’s “Contact Us” page and look for a customer service telephone number or email address. While most credit card transactions are immediate, the sudden increase in Bitcoin interest since 2017 has caused problems for some exchanges.

Part 3
Evaluating the Risks of Using Credit

Evaluating the Risks of Using Credit on How to Buy Bitcoins with a Credit Card

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Most creditors charge cash advance fees and impose higher interest rates on cash advances. While Bitcoin purchases used to be coded as ordinary purchases, they’re now almost universally coded as cash advances.[18] The typical cash advance fee is 5% of the transaction or $10 (whichever is greater). For ordinary purchases, you have a grace period to pay off the balance before interest accrues. For cash advances, interest begins accruing immediately. Interest on cash advances can also be double or triple the rate for ordinary purchases.

Evaluating the Risks of Using Credit on How to Buy Bitcoins with a Credit Card

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Make sure the Bitcoin exchange you use is based in your nation and trades in your currency. If you use an exchange that only trades in a foreign currency, you’ll have to pay a currency conversion fee. Your creditor might also charge foreign transaction fees.[19] For example, Bitstamp has US, UK, and EU offices, and accepts purchases in USD, pounds, and euros. You wouldn’t be liable for additional fees if you live in these locations and use these currencies. BitPanda on the other hand, only trades in euros.

Evaluating the Risks of Using Credit on How to Buy Bitcoins with a Credit Card

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Your credit utilization ratio compares your available credit with your debt, and it accounts for 30% of your credit score. If you use all of your available credit to purchase Bitcoin, your credit score will take a big hit.[20] A good credit utilization ratio is under 30%. This means you’re using less than 30% of your available credit. Don't max out your available credit if you're planning on buying a house, car, applying for a job or a lease, or doing anything else that involves a credit check.

Evaluating the Risks of Using Credit on How to Buy Bitcoins with a Credit Card

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Bitcoin prices are volatile, and there’s no guarantee that you’ll earn a profit. Its value could plummet, but you’d still be responsible for your credit balance and accrued interest. You’ll find yourself in a tough situation if you assumed its value would appreciate and generate enough profit to cover your balance.[21] For example, suppose you invested $6,000 in the cryptocurrency when its value was around $9,000 (USD) per Bitcoin. If its value drops to $3,000 per Bitcoin over the next year, you’ll still have to pay off your $5,000 credit balance, but you’ll only have $2,000 worth of Bitcoin. This is the main reason major creditors don’t allow customers to buy cryptocurrencies. They’re concerned that customers won’t be able to pay off their purchases if cryptocurrency values plummet.[22]