Aussie Lender Bans Crypto Purchases with Credit Cards
The CBA said on Wednesday its customers can no longer buy Bitcoin with their credit cards.
The Commonwealth Bank of Australia (CBA) announced on Wednesday it was banning its customers from buying cryptocurrencies through the use of credit cards due to the excessive volatility of digital currency values.
Australia’s largest bank also sent text messages to its customers to alert them of the ban.
The announcement read:
“Due to the unregulated and highly volatile nature of virtual currencies, customers will no longer be able to use their CommBank credit cards to buy virtual currencies. This will come into effect as of 14 February 2018.”
CBA went on to say:
“We have made this decision because we believe virtual currencies do not meet a minimum standard of regulation, reliability, and reputation when compared to currencies that we offer to our customers. Given the dynamic, volatile nature of virtual currency markets, this position is regularly reviewed.”
This makes CBA the first bank in Australia to issue a ban on buying Bitcoin and digital currencies with credit cards. However, the lender clarified that its customers may continue “to buy and sell virtual currencies using other CommBank transaction accounts, and their debit cards.”
The move is apparently aimed at protecting CBA customers from financial risk by preventing investments in a speculative and volatile asset on borrowed capital with credit card interest rates, which oftentimes reach as high as 20%.
Global banks ban credit card purchases of Bitcoin
Across the globe, several major banks no longer allow their customers to buy Bitcoin and other virtual currencies with their credit cards.
In the US, the first to impose such bans were Bank of America, JP Morgan Chase, Capital One, and Citigroup. They were later joined by UK banks such as Lloyds Banking Group, which runs Halifax, Bank of Scotland, and MBNA.
The decision of banks to curb such speculative investment stems from growing concerns over the risk customers face as a result of rising credit card debt. This has, in turn, led to tighter requirements on loan applications.