Long gone are those days when you had only but a few options you could use to buy Bitcoins. Instead of going straight to miners or arranging a public meeting with a trader willing to sell you Bitcoin in-person, you can now just as easily buy cryptocurrencies from the comfort of your home by using only your credit cards.
Credit cards are one of the easiest payment channels you can use to buy your first Bitcoins. They are only accepted by exchanges for the time being, although not all exchanges will offer them as an option. If this is your first time using credit cards to buy Bitcoin, here’s a simple guide to the process along with other useful information to help you easily make that first purchase.
How to Buy Bitcoins with a Credit Card?
The main advantage of using a Bitcoin exchange is the easiness of the buying process. Bitcoin exchanges are services that are designed to give any user level a simple way to buy, sell, and trade Bitcoin and other cryptocurrencies. While the exact process may vary between one exchange and the next, it usually involves the following essential steps:
- Create a user account at the exchange you’ve chosen.
- Verify your account through e-mail, phone, or whatever option the exchange is asking for.
- Open a Bitcoin wallet with the exchange if you already don’t have one. Alternatively, get a wallet from a different service (for more help with this, use our Bitcoin Wallets page).
- Go to your account settings or wallet and find the deposit page.
- Add a credit card as your payment method.
- Enter your credit card details and confirm the entry of your card to your account.
- Go through the account verification process by uploading your documents.
- Wait for your verification to finish.
- Set up Two-Factor Authentication or other security measures available at your exchange.
- Place an order to buy Bitcoins and enter the address of your Bitcoin wallet correctly (failing to do so could result in losing your money).
- Transfer your Bitcoins to a safer wallet (optional).
Depending on your exchange, you might be asked to verify your identity first before being allowed to set up any payment method. Also, make sure to always wait for the verification to end before you send a buying order. Bitcoin’s price can change dramatically, so it’s better to wait and buy only when you have your account fully set up.
Buying Bitcoin with Credit Card vs. Other Options
Credit cards are indeed a practical and easy to use option for buying Bitcoin but are they really the best way to pay for your cryptocurrency? Bitcoin can be bought in other ways as well, like using payment processors like PayPal, using a bank transfer, paying in cash, or even mining the cryptocurrency yourself.
Thus, whether a credit card will be the best payment option for you will depend mostly on what you personally need when buying. Is security your primary concern, or do you want lower fees regardless of how difficult it would be to buy? To answer those questions better, here’s a quick comparison of the pros and cons of using credit cards to buy Bitcoin.
The Pros of Credit Cards
The main advantage of credit cards is that they can be a very fast way of funding your Bitcoin investments. Once you verify your account with your exchange, depositing through a credit card can be done much faster than when using bank transfers. PayPal offers similar speed but it is not accepted in many exchanges, which is yet another advantage of using credit cards.
Furthermore, credit cards are one of the easiest payment options you can use. Even if you’re quite new to paying online, chances are you’ve used a credit card at least once to buy something or pay for a service. Unlike bank transfers, PayPal, or setting up cash purchases in person, credit cards deposits take only a minute to set up and use.
The Cons of Credit Cards
One of the biggest disadvantages of using a credit card is the fees. Exchanges that accept credit cards usually charge higher fees than with bank transfers, most likely due to possible complications like a chargeback, etc. Credit card fees range from 1-4% with most exchanges whereas bank transfers either have a much lower fee below 1% or are in some cases even free when you deposit more money.
Another disadvantage of using credit cards is that you will lose much of Bitcoin’s cherished privacy. When buying with cash in-person or with other cryptocurrencies through an exchange, you won’t have to submit your personal documents to verify your account, while most exchanges will ask you to do so when using a credit card. How big of a problem that is will be entirely up to you to decide.
What Makes a Good Bitcoin Exchange?
If you only want to use your credit card to buy Bitcoin, your buying options will mostly be limited to exchanges. But before you go and join the first exchange you can find online, it’s important to understand what makes one exchange better than the other. To help you with this, here are the most important criteria you have to consider when looking for a Bitcoin exchange:
- Fees – When looking for fees, look for both the trading fees as well as other fees you pay for deposits, chargeback penalty fees, or any other service the exchange provides.
- Trading volume – The volume of daily and monthly transactions help exchanges become more liquid and offer faster selling and buying. More trading volume can also lead to better prices and a smaller difference between buying and selling prices thanks to bigger liquidity.
- Other cryptocurrencies – If you’re already investing in Bitcoin, chances are you will also want to invest in other cryptocurrencies in the future. Having more options is always better.
- Security and reputation – Security is paramount when trading cryptocurrencies. Always check what security protection an exchange offers and research their history of handling cyber attacks.
- Support – And last but not least, it’s always good to have access to quality customer support, just in case something unforeseen happens down the line.
Ultimately, buying Bitcoin requires some risk if you don’t do your research beforehand. We have years of experience in this industry and feel confident that if you follow our advice you should be all good.