Buying Bitcoin on Credit Card – Forbes Advisor Australia

1. Sign Up to a Reputable Crypto Exchange

The first step to buying bitcoin with a credit card is to choose a reputable cryptocurrency exchange that operates in Australia. Selecting a trustworthy exchange is crucial to ensure the safety of your funds and personal information. Look for exchanges with a solid track record, strong security measures, and positive user reviews. Some well-known exchanges include Binance, Coinbase, Kraken, and Coinspot.

Before signing up, confirm that the exchange accepts credit card payments, as not all platforms offer this option.

To create an account on your chosen exchange, you’ll need to complete a Know Your Customer (KYC) process, which is a mandatory requirement for compliance with Australian authorities. This process involves submitting proof of identity and address, such as a driver’s licence or passport, and a utility bill or bank statement.

The exchange will verify your documents to ensure the legitimacy of your account and to prevent fraudulent activities. The Australian Tax Office (ATO) also collects this information to ensure crypto investors are reporting their crypto taxes correctly.

2. Fund Your Account

Once you’ve signed up for an account with an exchange, you’ll need to add funds to it. Not all providers in Australia allow you to use their credit cards to buy crypto.

When buying crypto with a credit card, there are some key things to keep in mind:

  • Buying crypto with a credit card will typically incur higher fees on the exchange side. Bank transfers and debit cards typically have much lower fees.
  • On the card issuer side, the transaction will almost certainly be treated as a cash advance, which can come with a host of other fees, immediate interest charges and other consequences.
  • Aside from the additional fees, buying crypto with a credit card is typically not recommended due to the potential financial risks involved.

If you do buy bitcoin with a credit card, you should try to pay off your balance as soon as possible to minimise the fees it will attract.

3. Place an Order

Within the platform you’re using, navigate to the bitcoin market and enter the amount you’d like to invest. Unless you’re investing north of $US70,000, you’ll be buying a part of one bitcoin. If bitcoin’s value were at $US70,000 and you invested $1000, for example, you’d own 1.42% of a bitcoin. Remember that bitcoin is divisible up to 100 million units.

4. Securely Store your Bitcoin

You can store your bitcoin on your exchange, however, if you are security conscious, you may prefer to transfer your bitcoin off the exchange into a private wallet. If you decide to self-custody your bitcoin, you will need to decide whether you want to use a ‘hot’ or ‘cold’ wallet. Both options have their pros and cons, but it is generally accepted that ‘cold’ wallets are the most secure option.

Bear in mind that there may be fees to pay for withdrawing your bitcoin from the exchange, and depending on what wallet you go for, you’ll need to keep safe your access codes or risk being locked out of your own holdings.

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