The world is changing at a fast pace. Since the time changed, it has taken a big leap in the world of technology. From the invention of the wheel to the invention of the satellite orbiting in the space the human civilization has witnessed a lot of changes in the fast-changing world. There was no any field where the change was not witnessed.
In the world of the digital era, the smartphones have shown us the new face of technology. When the world is changing then how can the world of finance remain constant? The world of finance has also changed at a very fast pace. There was a huge point of difference in the world of finance with the launching of the new cryptocurrency came into the picture. It is a virtual cryptocurrency that is ruling the world of finance in the present generation.
A cryptocurrency is a virtual currency designed to work as a medium of exchange around the globe. The currency works on the principle of cryptography which helps to secure the financial transaction as well as control the creation of the additional units. It also helps to verify the transfer of assets. The new version of the currency, i.e. virtual currency has created a lot of buzz in the global market.
A cryptocurrency is different just because of its security feature. It has decentralized control as opposed to centralized electronic money and central banking system. The entire concept of cryptocurrency works on the blockchain. The blockchain is a public transaction database which is functioning as a distributed ledger. Since the blockchain came into the existence, it has become easier to transfer the funds between the two parties.
The transfer takes place through the use of public and private keys for the security purpose. The most amazing features that the cryptocurrency has it requires minimum transaction fee as compared to the fee which is charged by the banks and other financial institutions for fund transfer. Cryptocurrencies have good security features. So they can be used as a means for the transfer of funds between the two parties.
In the world of finance, there are various modes to transfer or to receive money from various parts of the world. For Ex:- Credit Card, ATM card. The most which are used in the world of finance for a financial transaction is the credit card. It is a card issued to the cardholder to make a payment while purchasing the goods and services. Based on the promise made to the card issuer the customer agrees to pay at the end of the month.
But now the new trend of purchasing the cryptocurrency has come into the fashion. The owners who have an interest towards purchasing the cryptocurrency there are various options to purchase it. But the best way of purchasing the cryptocurrency is through the credit card. But before that, it is very important to know that how the buying of the bitcoin works.
To buy the bitcoins there is an exchange; the exchange is a website where the customers can exchange one currency to another. For Ex. You can buy the Bitcoins for US dollars on a cryptocurrency exchange. Apart from this the exchange also allows other forms of virtual currency like Ethereum(ETH), Bitcoin cash(BCH), Litecoin (LTC), Ripple (XRP), and Dash. Once after purchasing the bitcoin, you can keep it in the bitcoin wallet.
The wallet in which the bitcoin is kept it has an address so that it could be very easy for the other people to send the bitcoins in the wallets. There are some exchanges like coinbase which acts as a bank for your cryptocurrency. They allow you to purchase cryptocurrency on a credit card or with the help of your bank account. Once the transaction is over, they keep it in the account for your future reference. So a separate wallet is not necessary.
Tips to buy a Cryptocurrencies with Credit Card
There are a few tips that need to be kept in mind while making a purchase through credit card. The percentage of the credit limits we are using is a large factor in the credit scores. It is known as credit utilization. The more is the credit we use; the lower will be the credit score. So if you are planning to buy cryptocurrency then it will lose all the credit scores. Once the credit card bill is paid then the credit scores will return to the original position.
- Transaction Fees
When you pay something from the credit card generally the processing fee is required to pay the fee is 2-3 %. But as the person goes to buy the cryptocurrency it may go up to at least 3%. The lucky ones earn a reward on the purchase. Generally, there is cash back of 2% while making a purchase for the cryptocurrency. The transaction fee can be avoided if you make a bank transfer rather than the credit card or the debit card.
- Foreign Transaction Fees
The credit card issued to buy a bitcoin on the exchange that is not based on the Us currency then it may charge some foreign transaction fee by the credit card issuer, depending on what credit card you have? The credit card charging the annual transaction fee it is usually 3% of the total transaction. This can be avoided by using the card that doesn’t have foreign transaction fees.
- Cash Advance Fees
Later in the year 2017, most exchanges treated Bitcoin as a regular purchase, which means that they will fall under the credit card’s grace period and purchase APR. With the passing of the time in the year 2018Visa and Mastercard have started classifying the cryptocurrency purchases in the cash advance. This means higher fees and the interest starts getting calculated immediately.
The user will not get any cash rewards on the transactions which are classified as the cash advance. Conduct a research on the exchange you plan to use. Meet those people who have used credit cards on the exchange recently issued by the same banks. It will help to know that the weather the purchase was categorized as a cash advance or not.
The user might simply buy the cryptocurrency just to get rewards. Then you will pay off the card immediately with the money which the user of the credit card has. The user will lose all the money on the value of the cryptocurrency. The users who are in debt and they are planning to buy a cryptocurrency they may fall into the loop once they buy the cryptocurrency and no matter what is the price of the cryptocurrency.
Cryptocurrencies are highly volatile. Buying a large number of cryptocurrencies with the credit card the user can find themselves trapped in the debt and will be unable to pay the bills for the credit cards on time. The interest on the credit card can cost you very expensive especially if the transaction is treated in the cash advance.
- Reasons to Buy the cryptocurrency on Credit Card
The main reason to buy the cryptocurrency on the credit card is that the customer can get more reward points or cash back to some lucky ones. A large number of credit cards have some types of reward programs. In the case of new credit cards, the person may have some types of introductory bonus. The introductory bonus in the cards may bring you more rewards by spending a certain amount.
The transaction treated as a cash advance the person is not likely to earn rewards. The other reason is a bit risky and the reason is to get a financial favor. As the bitcoin is considered as a purchase rather than giving the cash advance. Trying to purchase a cryptocurrency from the credit card make give you a unique opportunity but on the risky side, it may land you on a large debt.
Now the tips mentioned above are helpful before the user is planning to buy a cryptocurrency.
Where to buy Bitcoin on the Credit Card?
There are many cryptocurrency exchanges around the world which deals with the various types of cryptocurrencies. Before going forward, it is very important to make a research before making a purchase. Some exchanges accept the credit card for the purchasing of the cryptocurrency.
Which Kind of credit card should be used to purchase the bitcoin?
There are no any types of special credit cards which is there in the market to purchase the cryptocurrencies. Make a detailed research on the reward programs of the credit cards which you have. Try to know what other kinds of benefits the user will get on the existing cards as well as the credit cards which are issued newly.
The tips mentioned above will help you to buy the cryptocurrency at the best deals available in the cryptocurrency exchange. Be aware of the offers as well as the reward programs, transaction fees, and the debt if you have any before talking the step ahead.