Buying bitcoin or other crypto currencies with a credit card is possible. This article details how you can do it in several simple steps and some considerations as you make your investment.
Why would you want to use a credit card?
- You may feel that the price of crypto currencies will increase at a sufficiently higher rate than your credit card APR
- Most of your cash is already tied up in other investments so you need fast access to liquidity to invest
- You could be taking advantage of a short term buy position and trying to leverage your access to capital
- You have no cash, and getting in with a credit card is the only way you can afford to invest at this moment (for the record, we hope you can improve this position, but we understand this may be a realistic circumstance and we wouldn’t discourage making investments)
What do I need to get started?
- You need a credit card with some available balance. Some vendors will also support Apple Pay and Samsung Pay.
- You will need a digital wallet. Whether you are buying bitcoin with a credit card or another type of coin, a “wallet” is the place that you store your crypto currencies. There are many types of wallets available. What is important is that the wallet you use supports the type of crypto currency that you are buying. Almost every wallet will support Bitcoin and Ethereum. The Abra wallet is free to download and supports all major crypto currencies and hundreds of other coins. In your consideration for selecting a wallet, you may want to ask these basic questions:
- Does this wallet provider offer any level of customer support? (Abra does)
- Does this wallet hold the types of coins I’m looking to buy?
- Have there been any material security breaches with this wallet provider?
- A valid email address
- Identification: In most cases, when you are purchasing crypto on a credit card the vendors will request that you complete KYC (Know your client). This will typically entail asking you for personal details and possibly uploading identification documents like a driver’s license or passport. Typically KYC is only done the first time that you purchase from a particular vendor. It may seem like a lot of hoops to jump through, but it is necessary to ensure you are who you say you are. Remember that with crypto currency, it is very difficult to catch a fraudster that successfully completes a transaction.
- Internet: Blockchain transactions rely on network validations, so if you find yourself isolated in the desert without any data, you will have to wait to make this happen.
Follow these steps
2. When you get to the main trading screen click on the “Add money” icon on the upper left of this main trading screen.
3. Abra supports several different ways to get cash (fiat currency) into the wallet. For the purpose of this article, we are going to select “deposit cryptocurrency” because we are buying it from one place and wanting to deposit that purchase into this wallet.
4. At this point, we need to get an address to deposit our coins to. An address is this long cryptic looking string that is linked to your account. Remember that this address is unique for each type of coin that you are sending (ex. Do not send Bitcoin to an address that is intended for Ethereum). This part is very important! Some sites will do some validation, but generally speaking, be sure you are copying the right address for the right coin. For the purpose of this tutorial, we are going to use good ol’ Bitcoin.
5. Retrieve the wallet address where you want to send your crypto purchase. Abra has made it easy to copy the entire string in the address by clicking “copy”.
6. Now you have a place to store your coins, but we have to go buy some. Abra’s marketplace has a network of trusted partners where you can purchase via credit/debit card. Some of our existing partners include Simplex, Moonpay and Banxa. We have a number of filters so you can sort by coin type you are looking to buy, payment method, and region. You may notice the conversion rate is higher than the average market rate; This is because Abra marketplace will display a final price with the fees included in the conversion rate in an effort to be more transparent with how much you will actually receive.
7. Each of the displayed partners are called “onramps” (They help onramp you from your payment source into a crypto currency). Generally speaking, you want to pick the onramp provider offering the best exchange rate. Once you have selected an onramp, click the “Buy Now”.
8. Paste your wallet address and review/check the Terms and Conditions. Click “Buy Now” button again. This time you will be taken from Abra.com over to the OnRamp provider’s site. If you are a first-time buyer, you will need to set up an account with that onramp. Typically they will ask for identification information. This is fairly standard procedure to submit a photo ID or passport. Once you’ve set up the account, the onramp provider should allow you to complete your transaction.
9. When your transaction has been completed, you will receive a transaction ID. It’s a good idea to save that as we will get to tracking in subsequent steps.
10. Hang tight: The nature of blockchain technology is that transactions are not instantaneous. Every transaction is validated across a network and you need multiple validations on a network before the transaction is considered complete. The speed of a transaction can vary from several seconds to 15 minutes. If you are a first-time buyer, some onramps will even perform manual reviews of your account which can take additional time. It is not a bad idea to use a smaller amount on your first transaction till you get comfortable with the mechanics of how it all works. Eventually, you will see the deposit made in your wallet and you’ll be off to the races.
Are there fees?
Yes. Each vendor can charge between 3-7% in fees to support the conversion. Keep in mind that a chunk of these fees go directly to the credit card processing. This is not the most cost effective way to buy crypto currencies. That said, you may be investing with the consideration you will see much higher gains. Just be mindful of these fees will make it such that you need to see gains north of 10% before you are actually realizing profits.
If you are buying bitcoin with a credit card, how can you track it?
Blockchain offers a site where you can check transaction status. Every vendor that sells you crypto will offer that transaction ID (tx id) so that you can monitor progress while it is going through validation.
If you are buying other crypto with a credit card, how can you track it?
Etherscan is the main resource for checking transaction status on many tokens including Ethereum. A large number of tokens/alt currencies are under the ERC20 umbrella, so you can rely on Etherscan to help monitor transactions.
So what do I do now?
If you are going to hold your assets for a long period of time, it’s not a bad idea to earn interest on it. Check out our Earn product to learn more about how you can make interest on your crypto assets. Now that you own one form of crypto, you can trade it for others, send it to friends or anything your heart desires. Keep in mind that crypto assets are volatile (part of what makes them incredibly fun). Don’t invest more than you can afford to lose. Enjoy the ride.