Cryptocurrency has rapidly grown into one of the most popular investment options for young people today. In fact, CNBC reports that 83% of millennial millionaires own cryptocurrencies and 53% have at least half of their wealth in crypto.¹
While purchasing investments via credit card isn’t especially common, you may be wondering whether it’s possible to do so in order to earn rewards on those transactions.
It is certainly possible to purchase crypto with a credit card, but it’s more difficult than you may think, and there can be significant pitfalls to be aware of.
Let’s take a look at the process of buying crypto with a credit card and some of the downsides you’ll need to consider before doing so.
Are You Able To Buy Crypto with a Credit Card?
A quick disclaimer before we go any further: if you’re considering using a credit card to purchase crypto (or any other investment) because you don’t currently have the disposable income in your checking or savings account, we highly advise against you doing so. In fact, we strongly advise against using a credit card for any purchase if you don’t have the ability to pay off the card in full each month.
Now, to answer our original question: can you buy crypto with a credit card?
Technically you can — but you’ll likely find that it’s not very easy to do so.
For starters, some crypto exchanges, like Coinbase, do not allow credit card payments for U.S. customers. Further, even if you do find an exchange that does allow credit card purchases, your credit issuer may decline the transaction.
How To Buy Crypto With a Credit Card
If you’re interested in purchasing crypto with a credit card, here’s the process you should follow.
- Step 1: Find out if your credit issuer will allow you to use your card to purchase crypto — without it being charged as a cash advance.
- Step 2: Locate an exchange that will allow you to use a credit card for purchases. Most of the major U.S. exchanges, like Coinbase and Gemini, do not allow purchases via credit card. However, smaller exchanges like Coinmama (based in Dublin) allow purchases from a Visa or Mastercard.
- Step 3: This is the easy part, assuming you’ve completed the first 2 steps. All you’ll need to do now is link your card to the exchange, select an amount that you would like to buy, and complete the transaction.
- Step 4: Pay off your balance in full once the statement posts. Again, you should not be purchasing crypto with a credit card if you do not have the funds to cover the purchase when your bill is due.
Pitfalls and Fees
In addition to the difficulty you’re likely to encounter when purchasing crypto with a credit card, there are also a few pitfalls and fees you’ll want to look out for.
One item you’ll want to keep an eye out for is the fee the exchange may charge to process your credit card transaction. These fees can often be upwards of 4% of the transaction, which can really add up if you’re making a large transaction.
Further, when you compare this to the fee you might be charged for a debit card or ACH transaction (these could be 0.5%, 0.35%, or even free depending on the exchange you’re using), making the purchase with your credit card starts to feel like a losing proposition.
Cash Advance Fees
Even if your credit card transaction goes through on an exchange, you’ll need to be wary about how that purchase is coded on the issuer’s end.
Credit issuers could treat a purchase of crypto as a cash-like transaction, and thus charge you a cash advance fee, which is usually $10 or 3% to 5%, whichever is greater.
This cash advance fee is in addition to the fee you may be charged for using a credit card, meaning you could end up owing upwards of 9% of the total transaction in fees — hardly worth it by any measure.
Not Earning Rewards
To make matters worse, if your issuer categorizes crypto purchases as cash-like transactions, then you’re unlikely to earn any rewards for these purchases.
That’s right, not only will you be subject to higher fees, but you also won’t earn rewards for that purchase to help offset the fee you’ll pay.
Getting Your Card Frozen
Finally, if you try to purchase crypto with a credit card, and your issuer thinks it is a fraudulent or unusual charge, it may freeze your card until it’s verified that you are indeed the person trying to make the purchase.
An Alternative Option: Crypto Rewards Cards
Instead of trying to purchase crypto with a credit card, you could earn a bit of crypto each time you make a purchase by way of a credit card that offers crypto rewards instead of cash-back rewards. Here are a few of our favorite options:
BlockFi Rewards Visa® Signature Credit Card
The BlockFi Rewards card offers 1.5% in bitcoin on all purchases made with the card and 2% in bitcoin on every purchase over $50,000 of annual spend.
Plus, this card comes with 0.25% back in bitcoin on all eligible trades made through the BlockFi platform, a 2% APY boost on stablecoin holdings (up to $200 extra per year), no foreign transaction fees, and no annual fee.
Gemini Credit Card
Those with the Gemini card can earn crypto rewards in 1 of the platforms’ 40+ supported assets in real-time as soon as they swipe their card. The card gives you 3% back on dining purchases (on up to $6,000 in spend), 2% crypto-back on grocery purchases, and 1% crypto-back on all other purchases.
Like the BlockFi Rewards card, the Gemini card does not charge an annual fee or any foreign transaction fees.
For those looking for a way to spend their current crypto holdings, the Coinbase card allows you to do just that. It immediately converts your crypto to dollars to complete transactions and allows you to earn up to 4% back in crypto when doing so.
That said, you should keep in mind that Coinbase charges you a 2.49% fee to convert your crypto into cash in order to immediately spend the balance. However, if you choose USDC as your payment method (a stablecoin pegged to the price of the U.S. dollar), you will not be charged the 2.49% fee and will still earn crypto rewards.
As with other cards, there is no annual fee to use the Coinbase card, and it can be used to complete purchases anywhere in the world that Visa is accepted.
Voyager Debit Mastercard
The Voyager Debit card is another excellent option for those looking to earn crypto. Not only can you earn a 9% APY on USDC deposits with Voyager (with no lockup required to earn), but you can instantly spend your USDC anywhere Mastercard is accepted, and earn 1% to 3% back in crypto on purchases.
While the Voyager Debit card hasn’t fully rolled out to all customers yet, those with a Voyager account can pre-register for the card through the mobile app.
Hot Tip: Read all about our favorite credit cards that earn crypto rewards in our complete guide!
Ultimately, while you can technically use a credit card to purchase crypto, it can be difficult to get the transaction to go through, and it rarely makes sense for most people given the fees that can be associated with doing so.
Given that, you’ll most likely be better off purchasing crypto using your debit card or via an ACH transfer. That said, those who are looking to earn additional crypto passively might want to consider adding a crypto-rewards card to their wallet in lieu of a traditional cash-back card.
The information regarding the BlockFi Rewards Visa® Signature Credit Card, Gemini Credit Card, Coinbase Card, and Voyager Debit Mastercard was independently collected by Upgraded Points and not provided nor reviewed by the issuer.