Cryptocurrencies have exploded in popularity all around the globe. More and more people are interested in investing in bitcoins. They are looking for any means of getting funds to buy bitcoins. A loan appears to be a logical option.
It’s estimated that more than 20 percent of people buy bitcoins and other cryptocurrencies with borrowed money. Is it a good idea? Well, it depends on individual circumstances.
It may be tempting to use credit cards and loans to invest in bitcoin. Be aware of high interest rates and low credit limits though. As a matter of fact, bitcoin purchase through credit card is usually charged as a cash advance. This results in higher interest and fees.
It’s also worth noting that Coinbase tends to charge extremely high fees when buying with a credit card. For example, they will charge about $160 when using a credit card to purchase 4,000 dollars worth of cryptocurrency. The good news is that Coinbase will only charge around $60 when you’re using a loan to finance a checking account. That makes a big difference!
That’s why most people take out an unsecured personal loan to buy bitcoin. It’s also possible to get a loan in bitcoin. Just as with a personal loan, you can cover any expense by using a bitcoin loan. This attracts investors to business ventures. There are quite a few online platforms that provide bitcoin loans. Likewise, many people use Bitcoin wallet start-ups to transfer money. It’s kind of like social payments.
NBFCs and banks are very flexible when it comes to the utilization of personal loans. However, they don’t support investing in Bitcoins. That’s because buying cryptocurrencies is treated as a speculative investment where financial risk is high. Furthermore, it can put you at high risk of losing money.
But if you’re repaying your loan on time, they won’t ask you about the funds spend. You can make use of the personal loan proceeds to go on a vacation, pay the University tuition fees, pay off old debts, and the like. In a similar fashion, you can use a small personal loan to buy bitcoins.
Manufactured Spending with Bitcoin
You are probably wondering how money flow looks like. Is there any violation of the terms of service? Let us break it down for you.
- First, you need to choose the right credit card.
- Then make use of your credit card to buy a gift card.
- The next step is to jump into a bitcoin marketplace (like Paxful) and create a free bitcoin seller account.
- Deposit bitcoin bond into an escrow account to start trading.
- Create a trade offer out there.
- Wait for it to sell – it may take some time to find a buyer.
- Convert your bitcoins to US dollars.
- Once the funds settle in your bank account, you will be able to pay off your credit card; You will earn rewards along the way.
One may say this takes lots of work for a little or no return. The key is to use your bitcoins wisely. For about 26 days per month, bitcoins are not stuck in the processing between credit card company and your bank. That means you have free cash to play with – of course, with some limitations. Once the bitcoins get back in Coinbase, you’ll be able to do a wide variety of things with loan capital.
Be responsible when investing. Before taking out a loan to buy cryptocurrency, make sure you can pay it back. Is it worth the risk? Remember that the biggest risk is not taking any risk.