It makes sense.  Why should CoinBase be the only one to get rich on consumers buying crypto. Over the last week both credit card companies Visa and MasterCard have reclassified how these transactions are done.  This means that financial institutions can now add an addition 5% fee to all transactions processed by credit cards.

New Fees

If you want an instant transaction the only option is a credit card because bank transfers take several days.  Users have long paid the 4% fee for credit card transactions on CoinBase.  Now American’s can expect to pay an addition 5% fee to their bank.  That makes the cost to buy crypto 9% plus the conversion fees.

Cash Advances

The reason for this is what the industry calls Cash Advances and this reclassification comes with an extra fee, typically 5%.  If anyone has gotten a cash advance in a casino they are familiar with this extra fee. In addition to the 5% fee understand that these types of transactions do not qualify for the 30 day interest free grace period.  This means that as soon as the transaction posts to your account you will pay the typical high interest rates that most credit cards charge.

Difficulty

Not only will this new fee make buying crypto currencies difficult.  It means that buying using a credit card makes little sense.  You lose 10% of the value immediately due to fees.  ACH transfers take 3 to 5 days.  Even though these types of transfers are done electronically banks still hold funds for a few days.  The IRS has already said bitcoin is not a currency and that it’s a taxable property. The issue is question is how can the IRS say it’s not currency but then credit cards are charging as if it is.

Bank Ban

Several major financial institutions have banned all crypto purchases with credit card.  The list included Citigroup, Bank of America, Capital One and Discover.  This list includes the top 5 credit card issuers in the United States.  The move might be in their best interests as prices of most crypto currencies have dropped more than 50%.  Consumers who have leveraged themselves by using credit cards to make purchases are potentially in a position to not be able to pay back those loans.  The fear is that leveraged consumers could end in a run of bankruptcy filing.