Here is your answer.
Yes, you can buy Ethereum using a credit card provided the issuer of the credit card and the network you are using allows for such kind of transaction type.
It is important to note that unlike purchasing a novel, credit cards are riskier and a little expensive in purchasing Ethereum.
If you plan to buy Ethereum, the first step is to identify an exchange (online platform). An exchange is a website that allows you to trade one fiat currency for another currency.
Several exchanges offer the purchase of Ethereum using credit cards for your convenience. Examples of these are CEX.io, Crypto.com, Paybis, Coinmama, Bitbay, Luno, StormGain, Bitit, Binance, SnapEx, Yobit, Wirex, Bitflyer, AEX, Exmo, Indacoin, Bitpanda, Bitstamp, Bibox, Payeer, Coinegg, etc.
Visa and MasterCard are more common.
Some of the currencies that can be traded for Ethereum include USD, EUR, GBP, and JPY, to name a few.
When selecting an exchange, you will be required to settle for one that accepts credit cards; otherwise, you will not manage to buy Ethereum with your card.
Different card issuers have different terms regarding the use of credit cards to purchase Ethereum. An example is American Express which treats such a purchase as a cash advance transaction.
Some credit issuers choose to block the purchase of Ethereum using the card altogether for security purposes to protect users from fraud and market volatility.
How it works
Before buying Ether using your credit card, it is important to understand and be well informed about how the entire process works and the potential transaction fees incurred.
- Buying Ethereum may be treated as a cash advance transaction
This implies that the user has to pay a cash advance fee on top of the Ethereum purchase transaction fee. Mostly, the cash advance fee is 5 dollars or 10 percent of the transaction, whichever is greater
Besides, your card is subject to a higher cash advance APR and no grace period is offered even for a credit card with zero balance. As such, you incur interest from the day of the transaction.
Therefore, the mentioned fees make the use of credit cards to purchase Ethereum more expensive than normal purchases.
2. A transaction fee may be charged.
The credit card issuer may charge a transaction fee for the purchase of Ethereum using the card. The fee is disclosed to the user at the time of the transaction. When using ACH, it takes some days to post to your account but is usually free.
III. Foreign transaction fees may be charged.
Your card issuer charges 3% of the transaction fee if you are using an exchange based outside the USA. This implies that the larger the purchase value, the more the foreign transaction fee charges.
3. There may be a Daily Limit.
Some exchanges have the maximum limit for the purchase you are capable of completing on a business day. It is, therefore, important to confirm from your account settings on the selected exchange the exact limit if it has been set.
Process of Buying Ethereum using a Credit Card
Buying Ethereum using your credit card involves three simple steps, namely:
-Create your Exchange Account
-Place your Ethereum Order
Let us look at an example of the process of buying Ethereum on Coinmama using a credit card.
Step 1: Fill out the ‘Register form’ on the Coinmama homepage.
Step 2: Verify your email address by confirming the link sent to the address.
Step 3: Log in to your Coinmama account. Click on ‘My Account’ followed by ‘Verify my account. To verify, fill the verification form and upload your national identity card. For fraud prevention, you are required to upload a picture of yourself holding a paper written ‘Coinmama’ and the date.
Step 4: Click on ‘Ether’ and select the currency and amount you wish to buy, then click ‘Buy Now.’
Step 5: Select the Credit Card option. Enter your digital wallet address and click on ‘Complete Payment.’
Step 6: Click ‘Pay Now.’ Once the transaction is processed, you will receive Ether in your Coinmama digital wallet.
Drawbacks of buying Ethereum using your credit card
- Your credit score is impacted
Making large Ethereum purchases utilizes your available credit, which marks a negative for your credit scores.
- Your credit card information may be at risk.