How To Buy Bitcoin (BTC) With A Credit Card (2024)

Estimated reading time: 2 min

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

1. You could lose all the money you invest.
   • The performance of most cryptoassets can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you invest in cryptoassets.
   • The cryptoasset market is generally unregulated. There is a risk of losing money or any cryptoassets you purchase due to risks such as cyber-attacks, financial crime and firm failure.
2. You should not expect to be protected if something goes wrong.
   • The Financial Services Compensation Scheme (FSCS) doesn’t protect this type of investment because it’s not a ‘specified investment’ under the UK regulatory regime – in other words, this type of investment isn’t recognised as the sort of investment that the FSCS can protect. Learn more by using the FSCS investment protection checkerhere.
   • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA regulated firm, FOS may be able to consider it. Learn more about FOS protectionhere.
3. You may not be able to sell your investment when you want to.
   • There is no guarantee that investments in cryptoassets can be easily sold at any given time. The ability to sell a cryptoasset depends on various factors, including the supply and demand in the market at that time.
   • Operational failings such as technology outages, cyber-attacks and comingling of funds could cause unwanted delay and you may be unable to sell your cryptoassets at the time you want.
4. Cryptoasset investments can be complex.
   • Investments in cryptoassets can be complex, making it difficult to understand the risks associated with the investment.
   • You should do your own research before investing. If something sounds too good to be true, it probably is.
5. Don’t put all your eggs in one basket.
   • Putting all your money into a single type of investment is risky. Spreading your money across different investments makes you less dependent on any one to do well.
   • A good rule of thumb is not to invest more than 10% of your money in high-risk investments.

If you are interested in learning more about how to protect yourself, visit the FCA’s websitehere

For further information about cryptoassets, visit the FCA’s websitehere

Forbes Advisor has provided this content for educational reasons only and not to help you decide whether or not to invest in cryptocurrency. Should you decide to invest in cryptocurrency or in any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose.

Bitcoin has fluctuated in value dramatically in recent years, and its performance in May 2022 has seen its value tumble to below $30,000 – half of the $60,000-plus it hit in October 2021.

So, for those thinking about investing in Bitcoin, it’s important to know there’s no guarantee they’ll see a return – or break even.

Such volatility has led the UK’s financial watchdog, the Financial Conduct Authority (FCA), to repeatedly warn that cryptocurrency buyers should be prepared to lose their entire investments.

If an investors is aware of the risks and still wants to buy Bitcoin however, here’s how to do it using a credit card.

Sign up with a crypto exchange

To buy Bitcoin, an investor will need to exchange some currency for it.

However an investor chooses to pay for their Bitcoin, they’ll need to use a crypto exchange.

Choosing an exchange with a Bitcoin wallet built into its platform means investors won’t have to sign up for one elsewhere. If investors do want to hold their cryptocurrency in a wallet outside of their chosen exchange, they should make sure it allows withdrawals and check what, if any, fees apply.

If an investor is intending to buy Bitcoin with their credit card, they should first check if the exchange accepts the credit card brand (for example, American Express, Visa, Mastercard).

Paying with a credit card

Once an investor as signed up for an account with an exchange, they’ll need to add funds to it.

Not all credit card providers allow the purchase of crypto with a credit card. For example TSB, Virgin Money and Tesco Bank block transactions with crypto exchanges. Some providers mayallow investors to use their credit card to buy crypto, but investors should then beware of any fees (and interest) that might add to the cost of the transaction.

However, taking on debt to buy Bitcoin is not advisable. Investors who choose to buy Bitcoin with a credit card, should pay off the balance as soon as possible to minimise the interest it will attract.

Place an order

Investors can navigate within the chosen platform to ‘Bitcoin’ and enter the amount they’d like to invest. Unless this is more than £30,000, they’ll be buying a share of one Bitcoin. If Bitcoin’s value were at £30,000 and £1,000 was purchased for example, the investor would own 3.33% of a Bitcoin.

Securely store Bitcoin

Investors can store Bitcoin in the exchange’s integrated wallet or, if they prefer and the exchange allows it, a wallet provided by a third party.

If investors feel uncomfortable holding their Bitcoin in a ‘hot’ wallet i.e. online, they can instead use a ‘cold’ wallet, which is a storage device not connected to the internet.

Bear in mind that there may be fees to pay for withdrawing Bitcoin from the exchange, and investors choosing a cold wallet will need to keep safe their access codes or risk being locked out of their own holdings.

How to sell Bitcoin

Investors can also sell their Bitcoin via a crypto exchange, either immediately or when it hits a certain price. Once sold, investors can transfer the money back to their bank account – although in some cases there will be a couple of days wait before it can be withdrawn.

If the profits from selling Bitcoin are big enough, investors will be liable for Capital Gains Tax (CGT). Everyone has an annual CGT allowance of £12,300. If an investor’s gains are beyond this amount in any given year, they are likely to be liable for tax.

Cryptocurrency is unregulated in the UK. The UK regulator, the Financial Conduct Authority, has repeatedly warned investors that they risk losing all their money if they buy cryptocurrency, with no possibility of compensation.

Staff writer Mark Hooson has been a journalist within the personal finance, consumer affairs and fraud sectors for more than 10 years. He is also Forbes Advisor UK’s resident tech expert. Mark says he thrives on making ‘complicated and dry topics easier to digest’.