credit: AmericanBanker.com
A growing number of big U.S. credit card issuers are deciding they don’t want to finance digital currency purchases.
JPMorgan Chase and Bank of America, the nation’s two largest banks, said they’re halting purchases of Bitcoin and other cryptocurrencies on their credit cards.
JPMorgan, which will implement the ban on Saturday, doesn’t want the credit risk associated with the transactions, said Mary Jane Rogers, a spokeswoman for the firm.
Bank of America told staff in a memo that it would start declining credit card transactions with known crypto exchanges on Feb. 2. The policy applies to all personal and business credit cards issued by the bank. The move doesn’t affect debit cards, according to Betty Riess, a spokeswoman for the Charlotte, N.C.-based lender.
Allowing purchases of cryptocurrencies can create big headaches for card lenders, which can be left on the hook if a borrower bets wrong and can’t repay. Banks also are required by regulators to monitor customer transactions for signs of money laundering.
But cutting off card purchases has big implications for bitcoin and other virtual currencies, potentially making it more difficult for an enthusiastic public to jump into that market.
Citigroup, the nation’s third-biggest bank, is still reviewing its policy. Capital One and Discover previously said they aren’t supporting the transactions.
Now to add more to this according to a poll at https://lendedu.com/blog/bitcoin-and-credit-cards/
18.5% of people used credit cards to fund their crypto currency purchases.
33.63 % used their debit cards
18.6% used a bank transfer
13.39% used "other" means
But the one thing i can see in this poll why banks should be a bit worried
22.13 % of BTC investors did not pay off their credit card balance after purchasing Bitcoin.
I believe they are using this ban in the same vein as gambling in a casino,credit cards aren't allowed for purchasing chips (or even online gambling)
BUT you can make a cash advance in regards.
I honestly dont view this as a terrible thing basically because the idea of buying a highly speculative investment using a credit card with a possible 24% APR ...isn't financially sound in any sense.
What do you think?
I think that this step taken by some banks is done in order to curb the use of stolen credit cards to purchase irreversible cryptocurrencies which make it almost impossible for banks and global law enforcement agencies to follow the stolen funds and recoup the losses.
Given the fact that identity and credit theft is one of the fastest growing global financial crimes, this is a wise and good measure for banks to take.
I somehow do not think that banks did this to prevent people from overleveraging themselves in cryptos as banks are not responsible for potential losses that some of their clients may incur by trading cryptocurrencies.
Just stating my opinion. Let me know what you guys think.
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Though i do agree ID theft is something banks want to avoid, i do also believe they don't want people to leverage themselves as credit card defaults are rising at a quick rate.
-Credit card delinquencies rose to 2.53% across all commercial banks.
-Credit card delinquencies soared to 5.34% across small banks, the highest since the financial crisis.
-The major four U.S. banks saw credit card losses surge 20% in 2017 compared to 2016.
-Something also to keep in mind is Subprime auto loan defaults are starting to soar, noted by Bloomberg. ( that will be something banks cant hide from or blame anyone but themselves)
We are heading quickly back to that road we were traveling back in 2008 but on different paths.
Banks i believe are trying to discredit crypto currencies in every way...and seeing it drop in the last few weeks are taking away methods from people buying/supporting it.
Now would i use a credit card to do so?
No...it isn't financially sound to do so.
but that's me.
thanks again for replying!
Thank you for sharing this. I also don't see this as a negative impact for on my own opinion, invest something that you have and that you can afford to lose. Using credit card for such purchases might really put the business (card issuer) into big trouble if some are not paying for their credits after the purchase. So I guess I'm not seeing anything wrong with it.
11.48% @pushup from @technicalwealth
What a joke. I'm disgusted.
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good information and good article
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thanks for this update
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