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If you’re an Amex Cardmember that’s looking to invest in cryptocurrency like Bitcoin, Ethereum, or Tether, you may be wondering if you can use your credit card and earn points along the way.
Investing in crypto while earning enough points for cash statement credits, free hotel rooms, and first class flights sounds like a dream scenario, but unfortunately banks don’t make it quite so easy.
Learn More: Credit Card Issuers Charging Cash Advance Fees on Crypto Purchases
In today’s landscape, it’s rare to find a crypto exchange that accepts American Express. Some exchanges do accept Visa and Mastercard, but it costs more than using your debit card to buy crypto.
That’s because credit card companies treat crypto purchases as a cash advance due to the high risk of fraudulent transactions, and the fact that people could easily rack up travel reward points in the process.
Cash advance fees can be subject to a higher APR and may mean you’ll incur interest from the day you make the transaction.
However, if you really want to use Amex to buy bitcoin, there is a workaround, but it’s going to cost you.
Where to buy Bitcoin with Amex in Canada
The workaround to buy crypto with Amex (or any credit card) is to find a trusted seller on a crypto marketplace, like Paxful.
What is Paxful?
Paxful is a peer-to-peer marketplace where users can buy and sell cryptocurrency using a variety of payment methods such as Amex Cards, any debit or credit card, Amazon gift cards, Amex gift cards, Air Bnb gift cards, and even Hilton Honors points and airline tickets.
Who Should Buy Crypto from Paxful?
Buying crypto with Amex is for experienced users who:
- do not want the transaction coded as a cash advance
- who accept higher fees
- who are looking to earn credit card points
- and who are working with trusted sellers who process payments securely.
It’s riskier, and more expensive. But although you’ll be paying more to buy crypto with Amex on Paxful, this method doesn’t count as a cash advance, and actually counts towards meeting a minimum spend requirement.
Because crypto purchases through Paxful are done through third party sellers, they are not coded as cash advances like traditional exchanges.
Here’s how to buy Bitcoin with Amex in Canada:
Create a Paxful account
Creating an account with Paxful allows you to buy and sell cryptocurrency on the Paxful marketplace. Once you create your account, you can buy and sell crypto with a variety of payment methods.
[fusion_button link=”https://pointswise.ca/paxful” text_transform=”” title=”” target=”_self” link_attributes=”” alignment_medium=”” alignment_small=”” alignment=”” modal=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” color=”default” button_gradient_top_color=”” button_gradient_bottom_color=”” button_gradient_top_color_hover=”” button_gradient_bottom_color_hover=”” accent_color=”” accent_hover_color=”” type=”” bevel_color=”” border_width=”” border_radius=”” border_color=”” border_hover_color=”” size=”large” stretch=”default” margin_top=”” margin_right=”” margin_bottom=”” margin_left=”” icon=”” icon_position=”left” icon_divider=”no” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]Create your Paxful account[/fusion_button]
Find a Trusted Seller
Overall, Paxful is a safe marketplace with escrow and moderators to help in case something goes wrong, however, you still need to do your own research and find a trusted seller with positive reviews.
Do not trade with untrustworthy sellers, and don’t trade when you don’t understand the offer terms.
Look at the seller’s markup. You’ll likely be in for some sticker shock. Sellers who accept Amex generally command a high price.
Here is a trusted seller on Paxful that accepts Amex as payment for bitcoin.
View all sellers who accept Amex Cards for bitcoin.
Read and Understand the Offer Terms
Some sellers require verification before purchasing. If you are not comfortable with the seller’s rules, do not enter into a trade. Once you enter into a trade, a chat window will open where you can communicate with the seller and they will provide further instructions.
Follow the Seller’s Instructions
Once you start a trade, your money will be placed in escrow.
For sellers who require verification before trading, you will likely need to upload a selfie with you, your driver’s license, and showing the last 4 digits of your Amex Card so the seller can verify it’s actually you who’s making the purchase, and not a stolen credit Card.
Trustworthy sellers who accept credit cards as payments may send you to a secure third party website to provide payment.
Fund Your Wallet with Bitcoin
Once the seller has received your payment, they will release your cryptocurrency from escrow and your wallet will be funded. This can happen within minutes of a successful trade.
From there, you can do what you want with your cryptocurrency: buy, sell, or hold.
Why is it So Expensive to Buy Crypto with Amex?
Once the seller releases the bitcoin to the buyer, the buyer still has 120 days (4 months) to file a chargeback with Amex. Chargebacks can be filed and won if the seller hasn’t done their due diligence and verified the buyer is who they say they are.
If the bank sides with the buyer, the seller will be out the bitcoin, plus a chargeback fee. This is why fees to buy cryptocurrency with Amex can be so high – the risk is on the seller.
However, if the seller has proof of verification from the buyer, plus authorization in writing that they are purchasing the bitcoin, that would likely be enough proof for the bank to side with the seller.
Sellers may also have small buying limits for new buyers as added protection.
Generally, trades that don’t require verification will have even higher markups because the seller is on the hook for chargeback fees.
If you have a good history of doing successful trades with a seller, you may be invited to a private trade with lower seller fees once the seller gets to know you.
Why Do Credit Card Companies Penalize You For Buying Crypto?
The banks have placed restrictions on credit cards because thieves can steal a credit card, signup with an account under the cardholder’s name, buy bitcoin, withdraw the funds, and have no fear of any repercussions.
With a debit card the same protections and insurance are not in place.
Another concern for credit card companies is people buying too much bitcoin, running up their credit, and then defaulting.
The credit card companies may block or penalize these transactions because they are losing money due to fraud. With debit cards they are not required by federal law to cover these losses.
The banks imposed cash advance penalties for people buying crypto several years ago, but with ever changing technology, there are always new loopholes to explore, especially when it comes to NFTs.
The Cheapest Way to Invest in Crypto
Buying crypto with Amex is expensive. The cheapest option to buy crypto in Canada is from an exchange like Coinbase with your debit card.
Get $13 in Free Bitcoin with Coinbase: Create Your Account!
[fusion_button link=”https://pointswise.ca/coinbase” text_transform=”” title=”” target=”_self” link_attributes=”” alignment_medium=”” alignment_small=”” alignment=”” modal=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” color=”default” button_gradient_top_color=”” button_gradient_bottom_color=”” button_gradient_top_color_hover=”” button_gradient_bottom_color_hover=”” accent_color=”” accent_hover_color=”” type=”” bevel_color=”” border_width=”” border_radius=”” border_color=”” border_hover_color=”” size=”large” stretch=”default” margin_top=”” margin_right=”” margin_bottom=”” margin_left=”” icon=”” icon_position=”left” icon_divider=”no” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]Create your Coinbase account[/fusion_button]
How to Buy Crypto with Debit and Get Rewards
Since you’ll be paying high transaction fees to buy crypto with your credit card, you might as well use your debit card to pay the lowest fees and use one that gives you rewards.
Consider a rewards debit card like the Scotiabank Scene Debit Card to make bitcoin purchases from a crypto exchange like Coinbase.
You’ll earn 1 SCENE point for every $5 spent.
You can redeem your SCENE points for movie tickets.1,250 Scene points will get you a free movie ticket at Cineplex. You can also redeem SCENE points for gift cards to Cineplex, Best Buy, Home Depot, Sephora and more, and discounts on restaurants.
See what you can redeem SCENE points for.
Apply now for a Scotiabank Chequing account.
Consider Investing in NFTs with your Credit Card
What are NFTs?
NFTs (Non-Fungible Tokens) are unique digital assets that can be sold or traded on the blockchain.
Learn more: What Are Non-Fungible Tokens (NFT) & Why Are They Worth Millions?
Read more: American Express Cardholders Can Now Buy Unique NFTs
Traditional crypto purchases are coded as cash advances when you use a credit card.
However, there is still an opportunity to buy NFTs on Rarible.com with Visa and Mastercard, invest in digital art and the crypto world, and earn travel reward points.
We don’t know how long this will last, but anticipate new bank rules will come into play in the near future to mitigate risk in this area as well.
Is it Worth it to Buy Bitcoin with Amex?
I tried really hard to make buying bitcoin with Amex worth it, but the reality is, the fees are just too high.
Buying crypto from Paxful with your Amex Card should be considered a risky move. And is only recommended for those who are already familiar with how bitcoin trading works, how volatile the market is, and security risks from dealing with third party sellers.
If the price is right once you gain a reputation with a trusted seller, it may be worth it to buy bitcoin with Amex and let the Amex points or cashback rewards offset the markup cost.
When you buy bitcoin from Paxful using your Amex Card, you won’t be charged a cash advance fee because it won’t be coded as such. This is one way to take a cash advance from your Amex Card without paying the cash advance fee (you’ll just pay seller fees on Paxful instead).
Unless you desperately need to move money around and need a cash advance, this option is not recommended because of the high fees. Buying bitcoin with your Amex card in Canada should be considered a last resort.
Get $13 in free bitcoin: Use your debit card to make crypto purchases in Canada from Coinbase.
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