Many people still believe that a credit card is a pass to life – free money. The statement cannot be further from the truth. A credit is not free money, but rather a loan that has to be repaid, oftentimes with interest. What many people would call usury is what most banks call credit. Most of the credit cards and loans handed out by banks come with exuberant percentages that have to be paid along with the body of the loan at the onset of the repayment term. This is not a factor that many take into account once they get addicted to using their credit cards.
An even more dire situation is when people start using their credit cards to buy risky assets like cryptocurrencies. This is when your credit card turns into more than just a liability – it turns into an instrument that will not only result in considerable losses for the purchase of the selected assets in terms of repayment and accrued interest, but will also serve as a gateway to potential disaster. Many traders have lost millions of funds on such venues as a crypto trading website, believing that they can predict the market. Not only did they purchase the assets for trading using credit cards, but they also relied on leverage from the platforms to increase their orders.
When it comes to credit cards, the best ones are the ones you do not have. Risk is a very specific phenomenon that very few are ready to shoulder. However, if one has the appetite for risk and is willing to rely on their skills, knowledge and experience, then there are some pro tips that can help.
Best Credit Card to Buy Crypto – Expert Advice
The credit card business is all about profit. But not about profit for the card holder, rather the issuing bank. This is where understanding of the mechanisms of operation of the banking business and client service comes into play. Many credit cards are issued as incentives to nudge clients into spending, rewarding them with higher credit limits for large purchases. Such cards are extremely useful as assets in the long run, since successful repayment of the sums spent will not only increase the credit rating of the holder, but will also result in longer repayment terms and lower interest.
Investors willing to rely on their credit cards for buying cryptocurrencies should think about setting limits on their accounts. This is an important measure that can help prevent uncontrolled spending. Such situations are common for traders who have experienced either a streak of good or bank luck. When success starts rolling in, it will be difficult for the trader to stop spending more credit funds on purchasing more cryptocurrencies in expectation of higher returns. The same occurs in the event of losses, when the trader tries to toss more money at a loss in hopes of recovering. Both approaches are direct routes to immediate losses.
Lastly, a credit card should not have a large amount on it, as that will be a natural barrier to spending too much and risking high losses. The average amount of money on a credit card should not exceed a thousand dollars, as that is the average size of the order for a retail investor on such leading cryptocurrency exchanges as Binance.
Key Takeaways
A credit card can be both a lifeline and a noose at the same time. The instrument is extremely useful if the holder has a sufficient amount of funds they can rely on to cover both the body of the loan and the interest. But for trading purposes, credit cards should be avoided at all costs.
