Why Did Banks Ban Cryptocurrency Purchases Using Their Credit Cards?

Wells Fargo joins the growing list of banks that have prohibited cryptocurrency purchases using their credit cards. This new trend is also being followed by many other banks such as Chase Bank of America, Citigroup, and Bank of America.

It seems that you can still use your debit card to buy crypto (check with the bank to confirm their policy), but it has become more difficult to use credit cards to purchase crypto. These banks are leading the charge with these purchasing bans, and it is likely that this ban will soon be the norm.

Major Banks Ban Cryptocurrency Purchases on Credit Cards

It seemed that overnight purchases were being canceled when crypto was purchased with credit cards. People who had never had to have any problems before purchasing crypto with credit cards noticed that they couldn’t make these purchases. This is due to volatility in the cryptocurrency market. Banks don’t want people spending a lot of money that will be difficult to repay if there is a major cryptocurrency crash like the one at the start of the year.

These banks will be losing out on the potential profits when cryptocurrency is purchased, and the market rises, but they seem to have decided that the risk outweighs any reward when it comes down to their gamble with credit cards. This protects consumers as they are able to avoid getting into financial trouble by not using credit to purchase something that could cause them to lose cash or credit.

Many cryptocurrency investors used credit cards to purchase cryptocurrency. They were likely looking for short-term profits and did not intend to invest for the long term. They hoped to be able to quickly get out and then pay off their credit cards before the high interest rates kick in. Many who bought cryptocurrency with this intention lost a lot of their assets due to the market’s volatility. They are now paying interest on the money they have lost, which is not a good thing. This was bad news for banks and led to the growing trend of banning cryptocurrency purchases using credit cards.

This is a reminder that crypto investments should not be made with credit. Instead, you should use a small percentage of your assets to purchase crypto. You should have enough funds to last for the long term without affecting your budget.

Don’t invest money in cryptocurrency you won’t use soon, only to discover that the market has gone down. Banks want you to remember the old saying, “Don’t gamble with money that you can’t afford to lose,” as this is what banks expect people to do when they enter this new frontier of investment.

Source by Mark B Monroe