TA poll performed in December by LendEDU revealed that almost a fifth of Bitcoin buyers financed their purchases with credit cards. While some of these buyers will pay off the credit quickly, others will carry an unpaid credit card balance. This suggests that Bitcoin investors trusted that the value of the cryptocurrency would increase.
LendEDU, an online marketplace for student loan refinancing, coordinated an online survey to gauge the payment behavior of 67 active Bitcoin investors. 18.15 % of buyers purchased their Bitcoins with credit. A fifth of those buyers had not paid off their balances. This suggests that the Bitcoin investors trusted that the value of the cryptocurrency would increase over time, especially since over 80% reported that they intended to settle their balances by selling their Bitcoin investments.
The findings of the survey are concerning because buying with credit typically involve a surcharge. For example, CoinBase, the leading cryptocurrency marketplace in the United States, applies a 4% transaction fee to credit card purchases. This is an unnecessary loss of money, even to the buyers who pay off their balance immediately. A lower start-up cost enhances your chance of making a long-term profit on your investment. Therefore, avoiding fees lowers your risk. Those fees go to credit card companies when the money could stay in your pocket.
The issue is an even greater cause for alarm for those who wait to settle their balance. If the buyer lacks the liquid capital needed to finance their investment, their ability to square up their debt will depend on how fast the investment grows. For most credit cards, the annual percentage rates are around 15%. A high-interest rate necessitates rapid growth, and with the fluid nature of the value of cryptocurrency, this is a problem that shouldn’t be ignored. The price of Bitcoin fluctuated from $11,000 to $17,000 to $14,5000, just in the month of December. This suggests that cryptocurrency is an unpredictable investment. The market is excitable; contingent on the whims of Bitcoin mania. You’re taking a palpable risk if you spend more money than you can spare.