Bitcoin Blunder - Banks ban buying cryptocurrency with credit cards
Tuesday 06 February 2018
It’s the comeback no one can stop talking about - Bitcoin, the cryptocurrency slow making its way back into the digital wallets of Aussies across the country.
But despite the recent surge in enthusiasm from those keen to grow their savings, banks across the world aren’t too happy, with some banning the use of credit cards to purchase cryptocurrencies, like Bitcoin.
Banks in the US and UK are leading the charge, with British bank Lloyds Banking Group and US banking giants, JPMorgan Chase and Co, Citigroup and the Bank of America already enforcing the ban.
And while Aussie cardholders may be shrugging their shoulders at the news, global financial services business, Virgin Money has also joined the ban.
“Following a review of our policies, I can confirm customers will no longer be able to use their Virgin Money credit card to purchase cryptocurrencies,” said a Virgin Money spokesperson.
The reason for the ban is due to the belief that should cryptocurrencies fall in value, cardholders would be unable to repay their debt.
“It is scary to think that so many people could be sending themselves into debt over digital currency, when there's a risk they could lose their investment” said Mozo Data Manager, Peter Marshall.
“I think it’s important that Aussies carefully consider other options if they are interested in buying into cryptocurrency, especially since no one can predict its value.”
An increase in the number of cardholders using their plastic to pay for their accounts and to perform online exchanges also led to the ban.
Mastercard also announced that buying cryptocurrency with credit cards led to a 1% increase in international transactions.
What is cryptocurrency?
To keep things easy, cryptocurrency is a digital currency that you can exchange or sell with others. The currency is not controlled or regulated by any bank or government and instead uses the internet to approve transactions and set its value.
What’s so great about it?
Aside from the fact that you have an opportunity to plump up your bank account balance, there aren’t many transaction fees and unlike regularly storing your money at the bank, access to the currency is all yours. Your personal details are also never shared, as transactions only require the amount you’d like to send or recieve.
Will I know when to buy in?
Well that’s the thing, regardless of where you’re looking exchange cryptocurrency, no one can predict the market’s exchange rates, meaning that the amount you pay and receive one day can either grow or drop the next.
While you won’t be buying into any digital currencies with your plastic anytime soon, there are still a number of benefits of having a credit card. And if you want to find out how your plastic compares to others in the market, check our credit card comparison tool!