The wave of banks banning cryptocurrency purchases using credit cards is growing, with Wells Fargo joining such bans. A number of other banks such as Chase, Bank of America, Citigroup and others are also part of this new trend of restricting the purchase of cryptocurrencies.
Debit cards can apparently still be used to buy cryptocurrencies (check with your bank to be sure about their policy), but using credit cards to buy cryptocurrencies has taken a turn with these banks taking the lead with these purchase bans, and it’s likely that this ban will become standard. it won’t be long.
When credit cards were used to buy cryptocurrencies, overnight purchases began to be cancelled, and people who had no problem buying cryptocurrencies with their credit cards before were finding that they were no longer allowed to do so. Volatility in the cryptocurrency market is to blame here, and banks don’t want people to spend so much money that it will be a struggle to get back if there’s a major crypto downturn like the one at the beginning of the year.
Of course, these banks will also lose money when people buy crypto, and the market is bullish, but they’ve probably decided that the bad outweighs the good when it comes to this gamble with credit cards. It also protects the consumer because it limits their ability to get into financial trouble by using credit to buy something that could leave them money and credit poor.
Most investors who used credit cards to make cryptocurrency purchases were likely looking for short-term gains and had no plans to stay long-term. They were hoping to get in and out quickly and then pay off their credit cards before the high interest rates kicked in. But with the constant volatility of the cryptocurrency market, many who bought into this plan found themselves losing huge amounts of money. assets with market decline. Now they are paying interest on lost money and that is never good. This, of course, was bad news for banks and led to the current and growing trend of banning cryptocurrency purchases with credit cards.
The lesson here is that you should never max out your line of credit to invest in cryptocurrency and only use a percentage of your fixed assets to buy cryptocurrency. These funds should be funds that you can lock in for a long time without hurting your budget.
So don’t get caught investing in a cryptocurrency that you’ll soon need only to find that the downturn 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 a lesson banks want people to learn as they enter this new investment frontier.