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With US fair debt not reaching its highest level, individual credit card debt also breaks new records in 2019. Faced with rising credit card debt and the risk of economic recession, should crypto investors really buy Bitcoin with their credit cards?
Those who have already used crypto with their credit cards during the 2017 bull race may regret it now that Bitcoin has repeatedly painted new lows since.
US credit card debt reaches a new high, averaging $ 6,375 per person
While Bitcoin can reach new lows, the US credit card is reaching new heights. According to new data, US credit card debt grew 3% over the previous year, the average debtor exhausting an average of $ 6,375.
The US Federal Reserve said total credit card debt reached $ 1 trillion in 2017, the highest level ever recorded.
Related reading | Fed Chairman, Concerned about US $ 22 trillion Debt, Is Bitcoin a viable alternative?
This is not bad for indebtedness. The VantageScore consumer credit rating model used by credit reporting companies, Equifax, Experian and more, is also at the highest level since the last decade. The increase suggests that consumers have become comfortable and competent again to manage their debt.
Why investors should never buy bitcoin or crypto on credit
Although they are clearly better at managing debt, investors mistakenly bought encrypted cards at the height of the uptrend of Bitcoins with their credit cards, which has ruined many people in the process.
Take the example of Redditor, which adds to the validity of the old adage that "never invest more than you can afford to lose." "Involving credit cards and crypto.
This person revealed that she had almost made a profit of $ 10,000 through her investment in the XRP, as well as $ 10,000 from "other coins." The craze and irrational exuberance that occurs at the height of the stock market cycles have given the best of itself. various cryptocurrencies with the help of his credit card and has even contracted loans.
"At first, I was shopping at Coinbase with credit cards, and then borrowing after Visa began to think of credit card cryptographic purchases as cash advances," he said.
The story is not rare. Many investors were buying crypto-currencies with credit cards, prompting the issuing companies to intervene to block transactions. While the cryptographic community was quick to point fingers at credit card companies who feared that crypto would dislodge them from the financial throne they currently enjoy, the credit card companies really had their interest at heart and may have saved many investors from financial difficulty.
Crypto is a risky, speculative badet clbad, and could somehow be considered a money game. And betting on a credit card is extremely dangerous. Even many US states prevent individuals from buying something as innocent as lottery tickets with a credit card.
Related reading | Can Crypto credit cards create a bridge between the two financial realms?
Bitcoin and crypto is much worse to put on a credit card. If the market changed like in 2018, causing a 95% loss of value for most cryptocurrencies, it could result in a financial disaster. It is bad enough to lose money on an investment, but it is far worse to pay an annual rate of up to 36% on the value that has essentially evaporated.
Although it is never advisable for investors to buy crypto on a credit card, this can very well be done responsibly. In the case of recent news with Binance adding crypto credit card purchases, this helps in the adoption of crypto and creates a positive market. move by adding another ramp for investors.
If you plan to invest in cryptography with the help of a credit card, you should also understand the risks badociated with cryptocurrency and credit card debt, and clearly define the way to repay this debt. Counting on the cryptography market to reactivate it is not a good strategy for eliminating debt, it is playing with its finances.
A much safer strategy for investing in crypto and Bitcoin is an average dollar cost – buying a set amount of crypto at regular intervals.
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