Why did banks ban the purchase of cryptocurrencies using their credit cards?

The wave of banks that have banned the purchase of cryptocurrencies using their credit cards is growing while Wells Fargo is now included in this type of ban. Numerous other banks, such as Chase, Bank of America, Citigroup and others, are also part of this new trend that restricts the purchase of cryptocurrencies.

It seems that debit cards can still be used to buy cryptocurrencies (check with your bank to be sure of their policies), but the use of credit cards to buy cryptocurrencies has turned around with these banks leading the way in these buying bans, and it probably won’t be long before this ban becomes standard.

Apparently overnight purchases began to be canceled when credit cards were used to buy cryptocurrencies, and people who had never had problems before buying cryptocurrencies with their credit cards began to notice that they were no longer allowed to make these purchases. The culprit is volatility in the cryptocurrency market, and banks do not want people to spend a lot of money that will become a struggle for return if there is a big drop in cryptocurrency, as happened at the beginning of the year.

Of course, these banks will also miss the money they will make when people buy cryptocurrencies and the market is booming, but they have obviously decided that the bad outweighs the good when it comes to gambling with their credit cards. This also protects consumers because it limits their ability to get into financial trouble by using credit to buy something that could leave them with cash and credit poor.

Most investors who used credit cards to buy cryptocurrencies were probably looking for short-term profits, and did not plan to stay in the long run. They hoped to get in and out quickly and then repay the credit cards before high interest rates began. But with the constant volatility of the cryptocurrency market, many who bought, with this plan in mind, found themselves losing a huge amount of assets with the fall of the market. Now they pay interest on lost money, and that is never good. This, of course, was bad news for banks, and caused the current and growing trend of banning the purchase of cryptocurrencies by credit cards.

The lesson here is that you should never maximize your credit line for investing in cryptocurrencies, but only use a percentage of your solid assets to buy cryptocurrencies. These funds should be funds that you can lock in the long run without harming your budget.

So, don’t get caught putting money into the cryptocurrency that you will soon need just to find out that the crisis has taken money out of your pocket. There’s an old saying that goes, “Don’t gamble with money you can’t afford to lose,” and that’s a lesson banks want people to learn as they embark on this new investment limit.