The wave of banks banning the purchase of cryptocurrency with their credit cards grows as Wells Fargo now agrees to such bans. Several other banks, including Chase, Bank of America, Citigroup and more, are also part of this new trend that limits buying cryptos.
It appears that debit cards can still be used to buy crypto (check with your bank to be sure of their policy), but using credit cards to buy crypto has taken a turn with these banks leading the way with these purchase bans, and it probably won’t be long before such a ban becomes the standard.
Apparently, overnight purchases started getting canceled when credit cards were used to buy crypto, and people who never had problems before buying crypto with their credit cards begin to notice that they were no longer allowed to make these purchases. Volatility in the cryptocurrency market is to blame here, and banks don’t want people spending a lot of money that will become a struggle to pay if there is a major cryptocurrency crash like it did earlier this year.
Of course, these banks will also miss out on the money that will be made when people buy cryptocurrency and the market goes up, but they’ve apparently decided that the bad outweighs the good when it comes to this gamble with their credit cards. This also protects the consumer by limiting their ability to get into financial trouble by using credit to buy something that could leave them cash-strapped and with poor credit.
Most investors who used credit cards to make cryptocurrency purchases were probably looking for short-term gains and had no plans to stick around for the long term. They hoped to get in and out quickly, then pay off their credit cards before the high interest rate hit. But with the constant volatility of the cryptocurrency market, many of those who had bought, considering this plan, found themselves losing a large amount of money. assets with the market decline. Now they are paying interest on the lost money, and that is never a good thing. This, of course, was bad news for banks and led to the current and growing trend of banning crypto purchases with credit cards.
The lesson here is that you should never max out a line of credit to invest in crypto, and you should only use a percentage of your hard assets to make crypto purchases. These funds should be funds that you can keep locked away for the long term without hurting your budget.
So don’t get caught putting money into cryptocurrency that you’ll need soon only to find that a crisis has taken money out of your pocket. There’s an old saying, “Don’t gamble with money you can’t afford to lose,” and that’s the lesson banks want people to learn as they venture into this new investment frontier.