Buy Ethereum With a Credit Card - A Beginners Guide 2024

Why Should I Buy Ethereum With a Credit Card?

There are many benefits associated with the purchase of Ethereum with a credit card, the biggest one being the convenience offered by this payment method. Once you’ve successfully onboarded a crypto broker site or an exchange, using your credit card to buy ETH would be a fairly straightforward process.

Additionally, you’d get more security in terms of the chargeback option too, in the event there’s any unauthorized transaction. However, please be mindful of the fact that the convenience of credit card purchases does come at a small cost, in the form of a comparatively higher transaction fee.

Buy Ethereum With a Credit Card Directly

There’s a common misconception amongst new cryptocurrency investors that they can simply visit some Ethereum platform or website and buy the crypto directly, off-the-shelf, using their credit card, without any intermediary such as a broker or a crypto exchange. Please know, that this isn’t possible. You will need to use a third-party platform like a broker or an exchange to make your Ethereum purchase.

Additionally, it is important to note that all brokers and exchanges differ from each other in some aspect or the other. You should carry out ample research and figure out the one that best meets your needs. In essence, it should be a reputed platform, positively reviewed by a large number of customers and regulated by a well-known authority.

Buy Ethereum ETH Anonymously Using a Credit Card

You cannot presently buy Ethereum ETH anonymously using a fiat currency via credit card. Anonymous crypto purchases can only be done via peer-to-peer exchanges or through a crypto ATM. Unfortunately, it’s pretty hard to find an ATM that would allow you to purchase Ethereum with your credit card. Peer-to-peer exchanges get ruled out for anonymous credit card purchases simply because using a credit card will inevitably lead to a traceable record.

Global Regulations for When You Buy Ethereum With Credit Card

It is a common practice for regulated broker platforms and most exchanges to ask people to complete a verification process, as a part of their Anti-Money Laundering (AML) and Know Your Customer (KYC) measures, before allowing them to fully use their platforms’ capabilities.

Though the exact requirements put forth by the websites may differ from country to country and platform to platform, you will need to comply with them, to be able to buy ETH with a payment method of your choice, including a credit or debit card.

In this regard, it’s the FATF (Financial Action Task Force) that tackles all issues related to money laundering and terrorist financing at the global level. It offers a detailed list of 97 recommendations that all countries must follow. Other than that, nations have their own pertinent laws to safeguard their people’s financial interests.

For example, with the introduction of the Sixth Anti-Money Laundering Directive (6AMLD) in December 2020, EU countries are now better equipped to counter-terrorism financing and cyber-crimes.

It is imperative for cryptocurrency brokers and exchanges throughout the world to remain compliant with all these regulations. Please know though that such regulations can seem like a hassle for the end customer signing up with an exchange or a broker website, they are in place for your safety.

Financial organizations in the majority of the countries follow KYC processes to verify the identity of each one of their customers, with the help of government-issued identity documents. Its initial due diligence is carried out by them and is an integral part of their overall AML procedures. Let’s now discuss the KYC/AML regulations followed in some of the major locations of the world.

United States

The United States has the Bank Secrecy Act (BSA) which serves as the most prominent anti-money laundering law in the country. It’s the Financial Crimes Enforcement Network (FinCEN) that administers this act. All the crypto brokers, crypto exchanges, financial institutions and banking establishments of the country have to comply with this act.

Furthermore, FinCEN has clearly instructed the crypto exchanges and brokers that they must abide by the record-keeping requirements as well as the ‘Travel Rule’ detailed in the BSA, making it mandatory for them to share information pertaining to the initiators and beneficiaries of all crypto transactions.

Therefore, if you plan to buy ETH from a US-based crypto exchange/broker, you will need to fulfill their pertinent regulatory requirements, including KYC verification.

European Union

It is imperative for all the European Union-based financial organizations, including the ones involved in digital currency transactions, to comply with the 6AMLD rules. The EU adopts an increasingly tough approach to the AML procedures, and these rules are an integral part of this process.

It is compulsory to furnish a government-issued photo ID and proof of address whenever you sign up with a crypto broker platform or exchange based out of the European Union. Only then you will be able to buy ETH with a credit card.

United Kingdom

In the UK, it’s the FCA (Financial Conduct Authority) which is responsible for regulating the country’s financial services industry. It’s an independent and non-government body that takes all possible measures to combat money laundering, terrorism financing, and other finance-related antisocial activities in the country. Besides, the UK has made a domestic law out of the crypto regulatory requirements detailed in the 6AMLD and 5AMLD.

The country also has the Sanctions and Money-Laundering Act of 2018 in place which covers such activities. If you choose to purchase Ethereum with a credit card from any of the brokers or exchanges operating from the United Kingdom, you’d need to comply with the corresponding requirements, including KYC, put forth by the platforms.

Is Buying Ethereum With a Credit Card Available in My Country?

Credit cards are perceived as a highly trusted payment medium throughout the world. If you reside in a country that allows its residents to engage in cryptocurrency transactions, you will most likely have access to online platforms like crypto exchanges and brokers too, to buy ETH with fiat currency via credit card.

You must first check the regulatory environment in your region and then seek out an ideal platform that serves your area. As against crypto exchanges, online brokerage websites are normally more likely to provide credit cards as a valid payment method for crypto purchases.

What Are the Differences Between Ethereum and a Credit Card?

A large majority of people across the world own credit cards, which they use on a regular basis to pay for product/service purchases on the Internet and offline. Many also regularly use cryptocurrencies such as ETH, BTC, etc. for the same purpose. However, it’s clear that though they serve the same purpose, both these payment forms are quite different from each other.

Ethereum is normally used for two purposes–first, for crypto trading activity on crypto apps, and second as a token on the Ethereum blockchain, for running decentralized apps. Though you can also use it to purchase goods and services, ETH is nowhere close to the fiat currencies when it comes to the market penetration enjoyed by the latter.

Ethereum payments can be likened to wire transfers involving direct payment from one party to another, without any middleman (such as a financial institution) in between. Every ETH transaction is validated and recorded on Ethereum’s public blockchain and gets executed within 5 minutes. The transaction fee, or gas fee, charged on ETH transactions was around USD 20 per ETH at the time of writing this guide.

By contrast, credit cards usually involve a buyer authorizing an online/offline merchant to ‘pull’ the concerned payment amount from their account, and reach the latter through multiple financial intermediaries. For instance, a normal Mastercard transaction would entail 4 different entities–the credit card holder, the credit card issuer, the merchant and the financial organization that facilitates the payment at the merchant end.

Whereas you normally store credit cards in a physical wallet, Ethereum transactions are executed from electronic wallets, which are stored on the cloud, smartphones, or computers. An Ethereum transaction cannot be reversed unless the receiving party agrees to refund it to you; however, it’s fairly easy to cancel credit card transactions, usually referred to as chargebacks. Credit cards usually involve a transaction fee which can vary from 0.5% to 6%.

Please also be mindful of the fact that both ETH and credit card transactions will come under the scope of the financial laws of your country. Hence, you would need to comply with certain KYC requirements before being allowed to buy any goods or services online/offline with it. A credit card on the other hand is normally issued only after completing such KYC formalities.

What Limitations Exist for a Credit Card While Buying Ethereum?

Please note, that you may face certain limitations while you buy Ethereum with a credit card. First and foremost, not every broker or exchange out there will accept credit card payments as a valid form of payment for cryptocurrency purchases. Secondly, depending upon the platform you’re transacting on, you may have to face a limit on how much Ethereum you’d be allowed to buy with a credit or debit card.

Please make sure that you check your account settings and ascertain such limits, before planning any purchase. There may also be a purchase cap placed on your account depending upon whether it has been verified yet or not. Some platforms may not allow you to buy any crypto at all before completing the verification formalities.

What Fees Are Associated With Buying Ethereum With a Credit Card?

It’s a well-known fact that credit card transactions involve a certain processing fee. This fee can vary anywhere from 2.9% to 6%, depending upon the broker or exchange site you are buying the crypto on. Some cards may charge even 10% or higher fees.

Other than that, there may be a foreign transaction fee involved too if the concerned exchange/broker site is based outside of your country. It’s worth noting that the exact cost of the transaction may vary from country to country and platform to platform. Hence, it’s always important to check it before making any buying decision.

What to Look for in a Platform When Buying Ethereum With a Credit Card

Security

Security is the foremost factor to be aware of, as a security breach could result in your financial information being compromised. In a worst-case scenario, this could lead to financial losses for you. Hence, your chosen exchange must use industry-grade information security measures to safeguard its platform.

A good way for non-technically savvy people to check for adequate security is to look for ISO certifications.

Cost

Credit card payments are already one of the most expensive methods available. Hence the ideal exchange will, as much as possible, avoid unnecessarily adding to the cost of these transactions. You may need to shop around for rates, as various exchanges charge different fees for credit card transactions.

You also want to consider the overall cost of buying Ethereum on your chosen platform. For example, platform A may charge a 1.5% fee for credit card deposits and a 1% fee for conversion to ETH, while platform B charges a one-off 2% fee for buying ETH directly with your card.

In this case, platform B is cheaper overall.

Reputation

Reputation often ties in with security, as exchanges with lax security measures usually end up with bad reputations. Check social media for any reports about security, fraud, regulatory, or operational issues before signing up for an account.

Regulation

Regulated sites are usually more secure because they must comply with legal stipulations, which include a standard security level. Hence, you’re much safer with regulated exchanges. Luckily, all the exchanges on our list are licensed and regulated.

Is Buying Ethereum With a Credit Card the Best Method?

If you look at it closely, there’s no best or worst payment method when it comes to buying ETH. It depends completely on your personal preferences and what works best for you. Even though credit cards have their respective drawbacks, they do provide one of the easiest and quickest means to buy Ethereum in the crypto market at present.

Eventually, it will boil down to whether you want maximum convenience or minimum fees. In that context, credit card payments are amongst the easiest and the wire transfers cheapest. Other alternatives such as Paypal, eWallets, etc. are also worth looking into.

Further Tips for Buying Ethereum With a Credit Card

If you have decided to use your credit or debit card to buy Ethereum, your first step should be to locate a reputed and secure platform to make the purchase. Next, you must locate an ideal crypto wallet to store your Ethereum ETH tokens. Avoid leaving them in an exchange wallet as it’s not the safest place to store your digital currencies.

Further, never disclose your credit card details in reply to any email received seemingly from a reputed crypto broker website or cryptocurrency exchange. No regulated platform will ask you for your card details via email. It’s a common phishing tactic used by hackers to illegally obtain credit card information.

There are many fraudulent phishing sites also in existence that might seem like legit crypto sites. Always thoroughly check the website you’re on before entering any financial details on any of its pages. In general, you may not face any major problems as long as you transact on a regulated crypto broker site.

Final Thoughts on Buying Ethereum With a Credit Card

The cryptocurrency market witnessed a significant bull run in the early part of 2021, driving up the Bitcoin and Ethereum prices to record highs. Both these cryptocurrencies, along with some prominent altcoins can be used as excellent investment options nowadays. In this detailed guide on how to buy Ethereum with a credit card, we took you over various aspects of its process including the limitations of using a credit card, the pros, fees, global regulations and more.

For multiple ways to buy, check out our specific guides to buy Ethereum with debit cards and PayPal, or take a look at our main buy guide.