More People Using Credit Cards to Buy Bitcoin; Good Idea?
A new study has found that more people are using their credit cards and bank accounts to buy Bitcoin, but financial experts warn that may not be a good idea.
In 2017, Bitcoin observers warned that one of the worst things people could do when it came to getting in on the crypto craze was to use their credit cards to buy it.
So interested in the process that Google reported that the phrase “how to buy Bitcoin with a credit card” was one of the top trending searches in November. Well now there is data to back up how many people were pulling out their plastic to buy Bitcoin.
An outfit called LendEDU recently polled 672 active Bitcoin investors and discovered that many of them are purchasing the crypto currency in an incredibly risk manner: incurring credit card debt.
Those who were polled were asked “Which of the following best describes how you funded your account to purchase Bitcoin?”
Here are their responses:
- 33.63% of Bitcoin investors answered "I used a debit card to fund and purchase."
- 18.60% of Bitcoin investors answered "I used the ACH bank transfer process to fund and purchase."
- 18.15% of Bitcoin investors answered "I used a credit card to fund and purchase."
- 16.22% of Bitcoin investors answered "Other."
- 13.39% of Bitcoin investors answered "I used a bank wire transfer to fund and purchase."
Next, those who responded that they had used a credit card to make Bitcoin purchases were asked whether they had paid off the balances. Roughly 77.8% said they had. The remaining responders said they had not.
Asked only of those who answered that they had used the ACH bank transfer process to fund their Bitcoin purchase, their responses were as follows:
“Are you comfortable paying interest on your credit card as a result of your Bitcoin purchase? Roughly 70% of Bitcoin investors answered ‘Yes, I believe owning Bitcoin is worth the interest expense.
About 30% of Bitcoin investors answered “No, I am worried about the interest expense."
People using their credit cards may be missing the point of investing. Just like you wouldn’t likely invest in stocks and bonds with credit cards, the same logic should apply to Bitcoin investing. You should keep in mind that not only do you have to make your monthly payments, but also those payments come with interest. With the volatility of Bitcoin, you should think long and hard about whipping out your credit card for the investment. Going into debt just to own the crypto may not be the best idea.