How to buy Bitcoins with a credit card is an important question to consider with the rising fame of cryptocurrency. Whether or not you should use a credit card to purchase any virtual currencies has been discussed and weighed by many people.
Some people feel that using a credit card to purchase cryptocurrency is safe; other people are against it because of the fees and high-interest rates associated with credit cards.
Lucky for you, credit cards are not the only option for buying Bitcoins (or any other cryptocurrency). There are other methods available such as debit cards, wire transfers, ACH, and even Pay Pal! Some of these options are actually better than using credit cards because the fees involved are not as high.
Whether you want to learn how to buy Bitcoins with a credit card, debit card, or anything else, there are three simple steps involved with this process. Let’s get right into them.
Step 1: Choosing a Broker
If you’re new at buying Bitcoin, you probably want a broker that’s safe and makes the process easy for you. This means that there can’t be any sketchiness involved with the broker.
When looking for a broker, you should be looking for one that has the following qualities:
- Easy Access to Cryptocurrency
- Good Value (not too much in fees)
- Safety & Security
- Ease of Use
The easiest broker options to use when buying Bitcoins are Coinbase and Gemini. These platforms fit all of the Criteria listed above and although they do charge small fees for transactions, they are very reasonable prices to pay for the benefit of having easy access to the crypto market.
Word of advice, using ACH transfers to buy your cryptocurrency is, by far, the most inexpensive options when using these platforms. Using credit cards or debit cards to buy cryptocurrency proves to be a lot more expensive than ACH transfers.
Now, remember how I said that there must be no sketchiness involved in the broker? Well, Coinbase and Gemini are regulated platforms that do not break any laws of the designated nations they can be used in.
All Brokers Require:
In short, these mean that all of them (even non-crypto brokers) will require personal information such as ID, phone number, address, and everything else that standard brokerages require.
Signing up with either of these brokers will get you started on the right foot to buying Bitcoins and any other cryptocurrency!
Step 2: Choose a Place to Store your Bitcoin
Once you’ve bought your Bitcoin (or other cryptos) you need to find a place to store them. Although Coinbase and Gemini go above and beyond on their safety standards to keep your crypto safe, they act as a bank and do not provide you direct control or APY benefits on your cryptocurrency.
Now, if you don’t mind having an intermediary holding your Bitcoin as if it were a bank with no APY, then go ahead and leave your Bitcoin on these platforms.
However, if you’d like to have direct access to your Bitcoin with no other party involved, or if you’d like to earn high interest on your cryptocurrency then let’s look at your two best storage options!
This is a wallet that is independent of an internet connection, it cannot be hacked remotely. It safely stores your private key and provides you with a seed phrase to access your cryptocurrency. It can be safely used on an untrusted computer.
If you were to ever lose this wallet or it was stolen, you can use the back-up phrase to access your cryptocurrency from another wallet.
However, make sure to NEVER share your seed phrase with anyone. Whoever has access to that phrase has access to your crypto. So make sure to write it down, keep it safe and never tell anyone about it.
To perform any type of transaction with this wallet, you need to connect it to a computer and a bridge program (a program that allows the connection between your wallet and your electronic device). This will grant you control over the wallet. These wallets offer a mix of security and ease of use. Unfortunately, you need to keep it on you at all times to send the coins.
And sending or trading any crypto is not a practical process.
Although this is one of the safest forms of storage for your crypto, the drawback is that you don’t earn any interest on it. The crypto just sits in there and goes up or down in value depending on what the markets are doing.
However, if you’re looking for a place that stores your Bitcoin, and pays you a high 6% APY on its value, then you might be looking for the following option.
BlockFi (Hot Wallet)
This web wallet has a connection to the internet, so make sure to enable multi-factor authentication for maximum security when using this wallet.
The great benefit of this is that BlockFi pays above-average interest rates for holding your cryptocurrency within them. The following interest rates are what BlockFi offers (Jan. 2021).
Some people (in the United States) who don’t want to expose their money to the volatility of cryptocurrency will convert their regular dollars to US Dollar Coins (USDC) or US Dollar Tether (USDT), two forms of stablecoins, to earn the high-interest rates on their money.
They also offer a Rewards Bitcoin Credit Card with amazing benefits!
BlockFi is partnered up with well-known investors in the financial industry in efforts to continue to improve its services and provide the best quality interest rates for its users.
The drawback with using BlockFi though is that it is not insured by corporations such as the FDIC or SIPC. However, the majority of the funds in BlockFi are kept in a cold storage. Meaning that those funds are as safe as if you were to store them in your own cold storage.
The fact that it is not insured has not stopped me from using it though, as the services provided by BlockFi are not only trusted by investors like myself but the large venture capital industries using their money to back BlockFi up.
Using BlockFi has been a very lucrative decision for me and I have not had negative experiences with it.
Step 3: Don’t Forget Taxes!
If you’ve ever bought, sold, or exchanged Bitcoin, you probably have to pay some taxes on it. But no one wants to be spending extra time on taxes, especially for something like cryptocurrency. So let’s automize it!
A tool I use to calculate and pay my right taxes every year is taxbit.com. There are other options out there but this is the one I use and I have found the most value from.
This account integrates with almost every cryptocurrency account that I have (minus BlockFi).
What you do is you allow this account access to view your cryptocurrency accounts but they can’t actually go in and buy, sell, exchange, or make other transactions in your accounts. They only have an external view of your account as an auditor.
This account can calculate all your transactions for you, it then aggregates all of it for you, and puts it into a document for you. You can print that sheet out and give it to your tax professional so that you don’t have to do any of the tax calculations yourself.
Overall, buying Bitcoins with a credit card might be the more expensive route to take, luckily, the same platforms that accept credit cards (Coinbase & Gemini) would also accept alternative and less expensive methods.
Once you have bought your Bitcoins, you could either leave them in the brokerage and get no interest on them, put them in a web wallet while earning a high-interest yield, or store it in a cold wallet with the utmost security, while foregoing the high-interest yields.
Also, don’t forget about taxes. If you don’t want to do your taxes yourself, you could have an automated auditor do the tax calculations for you.
I hope this article has been helpful, please let me know if you have any questions or comments about these platforms. I’d be more than happy to read and respond to them.