Home Crypto Currency Coinbase May Be Refunding Credit Card Cash Advance Fees On Cryptocurrency Purchases...

Coinbase May Be Refunding Credit Card Cash Advance Fees On Cryptocurrency Purchases – Reality Shares Nasdaq NexGen Economy ETF (NASDAQ:BLCN)


Recently, we’ve seen various reports all over the web surrounding the idea that credit card companies are cracking down on cryptocurrency purchases. It all started when reports started to surface stating that major banks like Bank of America (BAC), Capital One (COF), Citi (C), and JPMorgan Chase (JPM) all banned the purchase of cryptocurrency using their brands of credit cards.

However, cryptocurrency traders quickly learned that this supposed ban wasn’t truly accurate. Instead of outright banning cryptocurrency purchases, credit card companies started to classify these purchases as cash advance transactions. This meant that cryptocurrency traders could use their credit cards to purchase these digital coins, but in the process would be charged added fees associated with cash advances.

In general, credit card companies charge cash advance fees of between 3% and 5% of the transaction or between $10 and $15, whichever is greater. So, ultimately, credit card companies hoped that this would deter their customers from using credit cards to purchase cryptos. Nonetheless, if they continued to do so, the added fees would hedge the risks associated with added exposure to the cryptocurrency market.

This Could Be Painful For The Crypto Market

Due to the dramatic rise in the prices of cryptocurrencies through the year 2017, many saw an opportunity in using their credit card to purchase these digital coins, then selling the coins, paying off their credit cards, and making a profit. While there is no telling what percentage of cryptocurrency is purchased using credit cards, we can imagine that credit cards account for a meaningful percentage of purchases.

Once cryptocurrency traders start to realize the fees associated with these purchases, it could dampen demand. The reality is that the fees mentioned above aren’t the only hit credit card users take when purchasing cryptocurrency. The reality is that cash advances generally come with a much higher interest rate. This combined with the fact that when you make a minimum payment on a credit card, that payment is used for the lowest interest rate debt on the card, could make purchasing cryptocurrency on credit cards very expensive if not managed correctly. In order to cut into high interest cash advance debt, credit card users will have to make larger than minimum payments.

At Least One CoinBase User Says His Cash Advance Fee Was Refunded

This is where the story gets interesting. We recently covered a story surrounding cryptocurrency and its relationship to credit cards on our social network and cryptocurrency news platform, CrypoTwits. In the post, we explained the fact that cash advances come with fees, and these fees would now be assessed to cryptocurrency purchases being made with credit cards. However, a user of the network left a pretty interesting comment, insinuating that Coinbase might just be refunding their users’ general fees associated with cash advances. Here’s what CrypoTwits user, jwsmith54 had to offer:

Great article Joshua… I bought some crypto coins last week and used my credit card, they charged me $10.00 for a cash advance, but then Coinbase gave me $10.00 worth of Bitcoin, which offset the cost. I thought that was nice of them!

As soon as the CrypoTwits team saw the comment, we worked to contact Coinbase. While we were able to get in touch with customer support, the representative we spoke with didn’t seem to have the capacity to answer the question surrounding the idea that Coinbase was refunding credit card cash advance fees in the form of Bitcoin. We also emailed the press department at Coinbase but have yet to receive a response. Nonetheless, there is one thing that we do know. At least one person seems to have received a refund of his cash advance fee after using his credit card to purchase cryptocurrency on Coinbase.

This Could Have Big Implications For Coinbase And Cryptocurrency As A Whole

At the end of the day, the idea that credit cards would be classifying cryptocurrency transactions as cash advances could deter many traders from adding to their positions or getting involved in the first place. If Coinbase is indeed offering refunds on cash advance fees, the implications could be massive.

For Coinbase, it would be the only cryptocurrency exchange that offers this type of refund. At the end of the day, anyone using credit cards to purchase cryptocurrency would likely want to use this platform.

However, the implications could reach far further than growth in Coinbase. The reality is that if credit card cash advance fees are being refunded through the service, we could see a spike in demand for cryptos as the word gets out about this feature, pushing coins traded on Coinbase higher and propping up demand for crypto-related ETFs like the Winklevoss Bitcoin Trust ETF (COIN), KOIN, Reality Shares Nasdaq NexGen Economy ETF (BLCN) and others! Ultimately, this could be a massive win for the cryptocurrency market as a whole.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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