Credit card companies ban the purchase of cryto currencies

Personally I agree with the bank ban on buying crypto with credit cards. I also agree with the sentiment of banning credit cards for gambling, or at least with credit restrictions.
 
It's a shame that the Banks were not as diligent when it came to protecting our money in various other ways, in the past. :rolleyes:

Personally, I don't think it's appropriate for the Banks to be preventing customers from buying cryptos with their credit cards. Sure, it's big risk stuff, but the Bank has decided to take on the credit risk the day they approved the card for a customer, regardless of what the customer uses the card for.

If someone goes off and buys €10k worth of disposable plastic cups and uses them, they are worthless ... so what's the difference between that and a potentially worthless cryptocoin etc. ?

The Banks retain the right to cancel someones credit card if they so wish, regardless of what the card is being used for.
 
Hi MrEarl

There are two good reasons why banks might consider such a ban.

Firstly, customers can claim that a refund if the goods or services were not delivered or if they were defrauded. So I would imagine that after the cryptos collapse, the buyers will seek to recoup their losses from the credit card companies. The best way to avoid such complaints is to not allow them buy cryptos in the first place.

Secondly, if people pay real money for something which turns out to be worthless, they often don't treat the debt seriously. I am told that Credit Union's biggest losses are for wedding loans when the marriage doesn't last. Neither of them wants to pay the debt. So if you buy €5,000 worth of Bitcoin with your Visa card, when Bitcoin crashes, you might just welch on your debt.

Brendan
 
Actually, I see that the article Paddy linked to explains it

“Customers that entered at the top (close to $20,000) using a credit card will be panicking seeing their investments down over 60 per cent.

“The law regarding buying cryptocurrency on credit is a grey area and is in need of clarity. Banks are probably worried about being liable for losses.”
 
I was thinking in lines of other investments too. I don’t think it is allowed to buy shares in a company with credit cards either? The opportunity to manipulate share prices, as well as crypto prices, and the potential adverse consequences are easy to spot.

Cancelling the card would effectively amount to banning the holder from buying anything at all on credit, which is not a good idea.
 
Brendan Burgess said:
Hi MrEarl

There are two good reasons why banks might consider such a ban.

Firstly, customers can claim that a refund if the goods or services were not delivered or if they were defrauded. So I would imagine that after the cryptos collapse, the buyers will seek to recoup their losses from the credit card companies. The best way to avoid such complaints is to not allow them buy cryptos in the first place.

Secondly, if people pay real money for something which turns out to be worthless, they often don't treat the debt seriously. I am told that Credit Union's biggest losses are for wedding loans when the marriage doesn't last. Neither of them wants to pay the debt. So if you buy €5,000 worth of Bitcoin with your Visa card, when Bitcoin crashes, you might just welch on your debt.

Brendan
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Hi Mr. Burgess,

Both fair points, but neither justify a credit card company preventing the purchase of crypto currencies imho.

If someone buys perishable goods, then there is the risk that the goods will go off before they are used. Credit card companies cannot be held responsible for such an instance and their payment protection insurance would not cover the purchaser.

Even if the credit card provider had genuine concerns about the risk of a purchaser trying to claim against their insurance (having bought cryptos and then lost the value of their investment), they could easily amend the terms of the cover provided.

Credit card companies don't prevent people using their cards to make cash withdrawls at ATMs in casinos. In my view, this is at least on par, if not an even greater risk, than permitting the cards to be used to purchase crypto currencies.

For me, credit card companies charge high interest rates to cover their perceived credit risk. If credit card companies were concerned about what funds were being used for, they might not permit cash withdrawls, they might prevent people spending more than "X" percent of their credit limit on a single transaction, they might prohibit cards being used in certain jurisdictions or after a certain time at night etc. but they do not. That's because they have assessed a person's credit and concluded that they are worth the risk. Thereafter, as long as its for something legal, the customer should be entitled to do whatever they want with the credit available to them, as they will be help responsible for the debt they accrue, regardless of how it is acrcrued.
 
I don't think it's smart to borrow money to buy crypto. However, there's nothing altruistic about this stunt. First the banks suggested they were protecting consumers. Now they're saying its to protect themselves from potential bad debts. There might be some truth in the latter - but if that's the case, surely payments to Paddy Power/Betfair/Ladbrokes would be on the same list, the ability to buy shares the same.
Visa at the same game. They have now classified buying crypto as the same as a cash advance - so cash advance fee payable. So they have concerns about consumers getting into bother with crypto's and react by making it far more expensive to purchase via credit card. They'll also say - no doubt - that crypto is not legal tender, not a currency...yet they turn around and charge a cash advance fee.

This sort of stuff is what got me interested in crypto in the first place.
 
MrEarl said:
they could easily amend the terms of the cover provided.
Click to expand...

Eh, no. It's in the Consumer Credit Act.

It's a practical thing Mr Earl. They will be inundated with complaints from people who lost money and they will be tied up with the Ombudsman.

It's much simpler to just ban them using their Credit Cards to buy cryptos. They are doing their customers a huge favour.

Brendan
 
Brendan Burgess said:
Eh, no. It's in the Consumer Credit Act.
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Sorry, what exactly is in the Consumer Credit Act (that a credit card provided cannot stipulate, or amend, what is or is not covered by the insurance they have provided on card purchases) ?


Brendan Burgess said:
It's a practical thing Mr Earl. They will be inundated with complaints from people who lost money and they will be tied up with the Ombudsman.

It's much simpler to just ban them using their Credit Cards to buy cryptos. They are doing their customers a huge favour.

Brendan
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If the card providers are doing their customers a hugh favour, please explain to me why they are not prohibiting the use of cards for other things where there are similar high risks, like use of ATMs for cash withdraws in casinos (or to purchase alcohol) for example ?

Complaints to the Ombudsman will be treated just like all other complaints, with customers having first gone through the complaints procedure with the card provider (and the claim having been rejected). A couple of quick and clear decisions by the Ombudsman's office is all that will be required, if even that. I'm sure the Ombudsman's office could easily put something on their website to indicate that they won't consider such claims, if it were ever to become an issue where they were receiving a lot of "time wasting" complaints.
 
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TheBigShort said:
Are you allowed to buy shares with credit cards? I wouldn't have thought so?
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Sorry, I honestly don't know. Do you ?

From a practical point of view, I can't see many stockbrokers accepting credit card payments. Perhaps some of the online guys accept credit card payments, but I would doubt that Goodbodys, Davys or Cantor Fitz. do, if I were to guess.

However, from the card providers point of view, you are purchasing a tangible asset.

I have seen personal loans granted for the purpose of investing in quoted equities (or even non quoted shares, on occasion).
 
It's cartelism and it's the opposite of what a market economy should look like.
If there is a demand for consumer credit to purchase something (that isn't illegal), the market should fill that demand.

Banks are determining what you are allowed to purchase, regardless of legality.
It's either manipulation or nanny-statism, pick your poison.
 
Hi jman0war,

I am inclined to agree, given some of the other things that we can use our credit cards for.

I actually see it as part of a bigger long term strategy to frustrate the use of crypto currencies, given the banks and card providers are rivals to the crypto currencies and see them as a threat (offering potentially faster and cheaper payment options worldwide).

While I very much respect the point that Mr. Burgess is ultimately making here about the serious risk of investing in crypto currencies, I just cannot accept that the card providers are trying to prevent us from buying these currencies with our credit cards for our own good - simply because they don't take similar steps to protect us from other high risk transactions.
 
MrEarl said:
I just cannot accept that the card providers are trying to prevent us from buying these currencies with our credit cards for our own good - simply because they don't take similar steps to protect us from other high risk transactions.
Click to expand...

Agree totally.
 
MrEarl said:
I just cannot accept that the card providers are trying to prevent us from buying these currencies with our credit cards for our own good
Click to expand...

I have not said that, in case you are attributing it to me.

They are doing it because
1) Customers will try to get charge backs claiming that they were scammed
2) Customers will be less likely to pay when the crypto they buy goes to nothing.

The credit card companies are doing to protect themselves.

But, by doing that, they are doing their customers a favour.

Brendan
 
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