Cryptocurrencies have become an essential part of many investors’ portfolios seemingly overnight. While in the beginning, they were only known by a few who were aware of their existence, they have grown in popularity over the years, and now many are convinced that they are one of the assets that will remain relevant well into the future. There are many reasons for this belief, particularly related to the fact that cryptocurrencies have been shown to have the capacity to act as a hedge against inflation. However, 2022 has been a challenging year for the digital asset market, and the events have shaken the beliefs of investors to their core.
Exchanges collapsed overnight, and the price of even the most well-known and best-regarded cryptocurrencies dropped significantly, in some instances, by over 60%. This has been quite dramatic for investors, who had to bear the brunt of losing substantial sums of money quite rapidly. And while things have changed, and the prices are looking up in 2023, most have remained convinced that caution remains the best policy. A re-evaluation of the ways in which trades are conducted and examining all it takes to perform a transaction have become essential topics. Among them, of course, is also the payment method. You can buy Ethereum with a credit card, on investment platforms, mobile payment services, or traditional crypto exchanges.
All of these methods have their positive sides and drawbacks, so it’s important to examine them well before settling on one. Paying with your card is one of the more obscure ways to buy crypto. As such, there are some negative stereotypes surrounding it. Let’s delve into it a little bit more.
Cryptocurrencies are well-known as volatile assets. Although all markets carry price fluctuations that result from a shift in economic patterns, digital money is singular in that its volatility levels are much higher. Moreover, the prices tend to fluctuate quite dramatically over a short period. You can find a price that’s significantly higher or lower than it was only a few hours ago. Sometimes, the change can amount to a few tens or even hundreds of dollars. There’s a reason why you’re advised to become comfortable with risk before you start trading in crypto. Seeing your money essentially fly away sometimes can be pretty daunting.
When you purchase crypto with your credit card, you need to know whether this method incurs any additional fees. It can, and depending on your service provider, you might have other things to deal with. For example, your creditor might block the transaction altogether or process it as a high-interest cash advance loan. To avoid such an uncomfortable situation, make sure to check with your bank in advance. It can save you a lot of trouble down the line, and you’ll also have a better idea of how to proceed in the future.
Is it accessible?
Crypto is well-known for its accessibility. Starting an account is easy, beginning a transaction is more accessible, and the time it takes to complete it can be as short as a few seconds. Most exchanges also allow payments with your credit card. This option is usually directly available when you set up your preferred payment method in your account.
While this type of card-based transaction might seem like the easiest, most straightforward option out there, don’t be fooled, it’s more complex than it appears at first glance. First, you must establish if your card issuer allows crypto purchases. While some do, others only allow transactions on some crypto exchanges or permit only purchasing certain coins and tokens. Many providers don’t allow any kind of crypto transaction, so if you’re determined to buy ETH with your credit card, you’ll have to start an account somewhere else.
Even if you discovered that your credit issuer allows card-based transactions, it’s still important to check directly. Since it isn’t a ubiquitous method of buying, there might be limitations you’re unaware of. And, of course, it’s essential to verify that the exchange you’re using also allows credit cards. Some only allow direct, or cash deposits and are limited to debit solutions when it comes to cards.
Many companies have taken strict measures against cardholders who have used their credit cards to purchase cryptocurrencies. Some have had their accounts suspended or even blocked. There are many reasons for this, the main one being concerns over volatility and potentially fraudulent activities. Some credit card companies can issue card advances if there’s an attempted crypto purchase.
Purchasing crypto is also a notoriously straightforward affair. It typically only takes a few minutes for a transaction to be completed. This is one of the things that has drawn many prospective traders to the digital asset market. In the case of purchasing cyber money with your card, the transaction time will be a little longer. The exchange will take a couple of days before completing the process in order to verify that the transaction isn’t fraudulent. And while that’s generally not a problem for a transaction in fiat currency, it might be a little trickier in the world of crypto. With prices changing so quickly and suddenly, you want to be able to make purchases at specific values. Being unable to do so leaves you vulnerable to poorer transactions and the possibility of losing capital.
There’s also the issue of additional fees that you can incur, such as cash advance fees and their respective interest rates. Interest starts on the days on which the purchase is made and continues to accrue until it is completely paid off. There’s also no welcome bonus and a lower credit limit associated with the purchase. Foreign transaction fees are an additional problem, and a high investment risk is associated with buying cryptocurrency with your card. You can create significant debt levels this way, so you must ensure you keep your finances in check when investing.
Adding crypto to your portfolio is very popular among investors. Before you start, however, it’s important to become familiar with the undersides of the industry and the transaction methods that work best for you.
Is a freelance tech writer based in the East Continent, is quite fascinated by modern-day gadgets, smartphones, and all the hype and buzz about modern technology on the Internet. Besides this a part-time photographer and love to travel and explore. Follow me on. Twitter, Facebook Or Simply Contact Here. Or Email: [email protected]