Bitcoin can be purchased in many ways, some of which include cash PayPal, Gift cards, Paysafecard and credit/debit card. Buying through a credit card is relatively easy though more expensive than most of the available options because of the chargeback fees imposed.
However, there are a variety of alternative options available when considering purchasing Bitcoin. The cost of a Bitcoin depends on the prevailing market rates.
What to consider when buying with a credit card
It is crucial before selecting any option to make a few considerations that would save one money and time. Since a credit card purchase is a sort of cash advance, the interest rate chargeable is worth taking into account so that you weigh the viability of the purchase and whether you can pay it off with ease. A few considerations include:-
- Whether the card you possess is acceptable lest you find yourself with a restrictive card.
- Whether the option you select offers a card-linking service to your account or the payment is meant to be a one-off event.
- Whether the option you select charges local or foreign conversion rates.
- A surcharge is imposed on a credit card, so it is worth shopping around for a decent surcharge.
- The transfer limits allowable – whether they are too low and also if there is a possibility of increasing this limit with each transaction.
What type of service is required?
There are three options available when considering what type of service to use:-
Exchanges– This might be the best option in terms of cost-effectiveness, but then exchanges that accept Credit Cards are limited. Once an exchange is identified, the transaction limits may start low as one builds a reputation regarding their creditworthiness and gradually have this limit increased.
Peer to Peer Exchanges– This is an online exchange service that matches buyers and sellers, through the use of a credit card might be received with some hesitation because of the level of trust required. A good reputation is paramount on the online site.
Brokers– Brokers are the easiest to work with when it comes to the use of credit cards. The only big disadvantage is the costs involved.
Alternatives for buying Bitcoin with credit card
There are a number of options available which include:-
It is not possible to buy Bitcoins via PayPal per se. This is because there is no adequate provision for redress course in case of a fraudulent buyer. To effect a purchase, you have to work around through a Second Life Lindens (SLL). Through this method, PayPal will use SLL to buy another currency and then exchange this currency to Bitcoin. A limit is set at $88 per day and costs about 6% to secure complete purchase transactions.
In the event that you have unused gift cards, you can convert them to Bitcoin. The downside is that you get about 50% value worth of Bitcoins for your gift card. There are many online services providing his option amongst which are LocalBitcoins, Amazon gift cards, Visa gift cards, Walmart and Starbucks.
Western Union has over 500,000 locations worldwide. You are required to deposit some money at your nearest local location. There is a quick verification process and once complete; your Bitcoins will be available usually after one business day.
The service is quite costly, and you will be charged a Western Union transaction fee. Besides that, the Bitcoin rates come at a 10% price above the daily rate. Western Union can be transacted through LocalBitcoins and Coinmama among a few others.
This is a global payment solution provider which allows users to send and receive cash in different currencies, precisely 41 currencies, and is also compatible for use with most major credit cards. One of the ways to buy Bitcoin through Skrill is to first register with LocalBitcoins.
Here you will get a listing of sellers among whom you can make your selection and negotiate the terms of purchase. Usually, a 10% commission is charged, and many sellers accept Skrill as a payment method. Verification information is dependent upon the trader.
This is not common, but a few European users can enlist in Coingate. A mobile user can make a purchase by making a call or sending a text message. The credit is charged to your phone by way of making deductions from your prepaid balance or charged to your mobile bill. A good mobile telephone system that is verifiable must be in place.
This is the closest and best alternative to credit cards while considering a Bitcoin purchase. Paysafecard has over 500,000 outlets worldwide and is used in 45 countries. A user is required to buy a Pin Code that is 16-digit code, which comes with a credit balance depending on your local currency and the amount you have used. It is actually a prepaid card.
There are various marketplaces that will accept Paysafecard including LocalBitcoins, Paxful,and Virwox. To buy through LocalBitcoins, you will first need to register with them. You will get a list of sellers from whom to choose. You will then proceed to negotiate the terms of purchase and conclude the transaction through Paysafecard. A hefty fee is charged by the provider so other options can be explored like the earlier mentioned Virwox and Paxful.
Exchanging money on an exchange platform using Paysafecard is not the most secure method,and one may lose anonymity. It is for that reason that there is a limitation of platforms that Paysafecard can work with online. The preferred choice among most users is Virwox which offers a payment method that is close-looped.
With all the above options available to select from while buying Bitcoin, it is important to remember that Bitcoin is a volatile currency prone to surges and outages with no prior warning. Before a purchase is made, one ought to consider both market and technical analysis reports and charts to give an indication on what the trend is as at the time of purchase and where it is likely to be headed. With such analysis and a good payment method that saves you time and money, Bitcoin purchase can be a beneficial venture.
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