Can You Buy Cryptocurrency With an American Express Card?
You can use American Express to purchase Bitcoin and other cryptocurrencies. However, there are limits on how much you can buy and you might have to pay extra fees. Be careful if you plan to carry a balance after a cryptocurrency purchase.
In recent years, there’s been increased interest in buying cryptocurrency, especially Bitcoin. And, among university students, the interest is strong according to a recent survey from cryptocurrency industry leader Coinbase. The survey found 18 percent of university students have owned cryptocurrency—twice the rate of the general population.
There are some payment options you can use to purchase cryptocurrencies, including Bitcoin (or its competitors like Ripple, Ethereum, and Litecoin). Some standard payment methods like cash, bank transfers, debit cards, and some credit cards can be used to buy cryptocurrencies.
Although some major credit card issuers currently block the purchase of cryptocurrencies, American Express allows these transactions with some caveats. Before you buy Bitcoin with an American Express Card, though, here’s what you need to know.
What You Need to Know About Buying Cryptocurrency with Amex
“Since last year, some of the major banks issuing Visa and Mastercard began declining purchases of crypto-assets,” said Ashe Oro, the former head of business development at Euro Pacific Bank and a blockchain expert and founder of Liberty Entrepreneurs. “Discover hasn’t allowed them for years.”
Capital One is one credit card issuer that doesn’t allow cryptocurrency purchases, and Bank of America and Citigroup are reviewing their own policies and could decide to ban cryptocurrency purchases in the future. However, it’s still possible to buy cryptocurrencies using a debit card or credit card depending on what the exchange accepts and whether your issuer will allow it.
“That American Express allows them is a strategic move that could help them with young millennials who are interested in buying a cryptocurrency like Bitcoin,” said Oro.
Credit cards that actually allow the purchase make it easy to buy cryptocurrencies on the market and 18.15 percent of Bitcoin investors say they used credit cards to fund their accounts, according to a survey by LendEDU.
In order to buy Bitcoin and other cryptocurrencies using American Express, though, you need to find a third-party cryptocurrency exchange that accepts Amex. You need to open an account, then use your credit card to fund it. Some of the reputable exchanges that accept American Express include:
- CEX IO
It’s also important to note that most exchanges limit large purchases of cryptocurrency assets with a credit card, so you probably won’t be able to max out your credit card by funding your account.
It’s possible for users of Abra, the cryptocurrency wallet and exchange app, to use American Express to buy Bitcoin.
American Express does, however, limit users to $200 worth of Bitcoin per day and up to $1,000 worth of Bitcoin per month.
“Credit card issuers are still wary of crypto-assets,” said Oro. “The market is still considered in its early stages and thought to be unstable, and they don’t have the means to collect on cryptos. After all, there’s no way to hack into your wallet and get the Bitcoin back.”
When looking for an exchange, Oro suggested starting with those located in countries that have developed rules. “There’s some level of regulatory protection in places like the U.S.,” he pointed out. “Consider exchanges that have been around for a while and have social presence and community.”
While fraud is still a factor for some exchanges, Oro says using a credit card to make these purchases can provide some additional safeguards. “Credit cards come with fraud protection and the ability to call and reverse the purchase,” he said. “And the limits placed on credit card purchases can reduce your exposure to losses that you can’t pay back.”
How Much Does It Cost to Purchase Bitcoin Using an Amex Card?
The cost of purchasing bitcoin or another cryptocurrency with a credit card varies depending on the exchange. For example, with 247Exchange, you’ll pay a transaction fee equal to 3.5 percent of your purchase, plus $0.15. This is one of the lower fees when you consider that Coinbase charges 3.99 percent and Coinmama weighs in at nearly 6 percent. CEX IO, though, only charges 0.2 percent, but you have to go through a cumbersome verification process to use the exchange.
There might be other fees as well, including fees related to exchange rates and foreign transactions. Before moving forward, double-check your fees. A good exchange will be upfront about the fees before you complete your transaction.
In addition to considering the cost of actually buying a cryptocurrency like Bitcoin with Amex, you should also realize that you’re getting an asset that is considered somewhat illiquid.
“It can be difficult to sell your crypto-assets for a profit down the road, especially with regulation and market value still uncertain,” says Oro. “Bitcoin and other crypto-assets are likely to gain over time, but you still have to realize that you could lose out.”
Oro suggests doing a cost/benefit analysis, weighing the costs against the potential gains and staying power of cryptocurrencies. He believes that crypto will emerge as a new, viable asset class but warns against assuming that it will happen at a time when it’s convenient for your own finances.
Is Using Amex for Buying Bitcoin Worth It?
No matter what exchange you use, there’s going to be a fee involved, according to Oro. The key is making sure you stick with a reputable exchange and that you don’t go overboard with your purchases.
“If you’re used to using credit cards and paying the balance off, American Express can be a good option to start investing in cryptocurrency,” said Oro. “However, it doesn’t make sense to use any credit card if you’re frontloading to buy crypto-assets that you can’t really afford.”
Look for a reputable trading platform that works for you and will accept your Amex card. Then, make sure you’re only buying as much cryptocurrency as you can afford to lose, said Oro.
“Don’t buy Bitcoin on debt unless you’re an absolute pro, which you’re not,” he said. “Use the credit card to get what you can afford and then pay it off at the end of the month.”
Fortunately, you don’t have to get into debt to buy Bitcoin if you use an Amex prepaid card. A platform like Paxful accepts reloadable prepaid cards, particularly the American Express Bluebird card, which is available through Walmart. Some Bitcoin exchanges might also accept American Express Serve cards, which are also reloadable prepaid cards. In these cases, you’ll be investing in Bitcoin using cash, which might help you avoid overextending yourself.
Author: Miranda Marquit
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