How to buy Bitcoin (BTC) with a credit card

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itcoin has risen in value from around £300 in May 2016 to nearly £30,000 in May 2022, and has become part of the zeitgeist along the way. As a result, interest in cryptocurrency is high.

If you are considering investing in Bitcoin, be aware that there is no guarantee that you will see a return or break even. Between 2017 and 2018, the value of the cryptocurrency dropped from almost £16,000 to £2,400. His record is over £60,000, meaning his current value is half what it once was.

Such volatility has led the UK’s financial watchdog, the Financial Conduct Authority (FCA), to repeatedly warn that cryptocurrency buyers should be prepared to lose all of their investments.

If you’re aware of the risks and still want to buy Bitcoin, here’s how to do it using a credit card.

Sign up with a crypto exchange

To buy Bitcoin, you will need to exchange a currency for it.

However you want to pay for your Bitcoin, you will need to use a crypto exchange. Popular exchanges include Coinbase and Binance.

Choose an exchange with a Bitcoin wallet built into their platform and you won’t have to sign up anywhere else. If you want to keep your cryptocurrency in a wallet outside of your chosen exchange, make sure it allows withdrawals and check what fees, if any, apply.

If you intend to buy Bitcoins with your credit card, check if the exchange accepts the brand you have (eg American Express, Visa, Mastercard).

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Pay with a credit card

Once you have opened an account with an exchange, you will need to add funds to it.

Not all lenders allow you to use their credit cards to buy crypto, for example TSB, Virgin Money and Tesco Bank block transactions with crypto exchanges. Some providers may allow you to use your card to purchase crypto, but beware of fees they may add to the cost of the transaction.

Here is how some of the big lenders handle crypto purchases:

Vendor Allow crypto purchases? Transaction Type Costs
HSBC Yes Cash advance 2.99%
M&S Bank Yes Cash advance 2.99%
barclaycard Yes Cash transaction 2.99%
Revolution Yes Cash advance Up to 2.50%
Tesco Bank Nope N / A N / A
TSB Nope N / A N / A
blank silver Nope N / A N / A
Bank of Sainsbury’s Nope N / A N / A
NatWest Nope N / A N / A
RBS Nope N / A N / A

Although not common, some credit cards charge 0% on cash advances, such as the Barclaycard Rewards credit card. However, going into debt to buy Bitcoin is not advisable. If you buy Bitcoin with a credit card, you should try to pay off your balance as soon as possible to minimize the interest it will attract.

Order

In the platform you are using, go to Bitcoin and enter the amount you want to invest. Unless you are investing north of £30,000, you will be buying a share of one Bitcoin. If the value of Bitcoin was £30,000 and you invested £1,000, for example, you would own 3.33% of a Bitcoin.

Store your Bitcoins securely

You can store your Bitcoin in your exchange’s built-in wallet or, if you prefer and if the exchange allows it, a wallet provided by a third party. But, if you feel comfortable keeping your Bitcoin in a “hot” wallet, i.e. online, you can instead use a “cold” wallet, which is a storage device not connected to the Internet.

Keep in mind that there may be a fee to withdraw your Bitcoin from the exchange, and if you opt for a cold wallet, you will have to keep your access codes safe or risk being locked out. of your own assets.

How to sell your bitcoin

You can also sell your Bitcoin through a crypto exchange, either immediately or when it hits a certain price. Once sold, you can transfer the money to your bank account – although in some cases you may have to wait a few days before you can withdraw it.

If the profits you make from selling Bitcoin are large enough, you will be liable for capital gains tax (CGT). Everyone has an annual CGT allowance of £12,300. If you have earnings in excess of this amount in a given year, you are likely to be subject to tax.

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