Bitcoing managed to gain a ridiculous amount of popularity lately, managing to reach even the $11,000 mark, even though for just a few hours, this week. Basically, it’s now up around 1,000 percent from where it was one year ago, so more and more people are interested in getting some.
If you are among them, we have one vital piece of advice: don’t buy using your credit card.
According to BGR, queries like “Bitcoin credit card” and “Buy Bitcoin with credit card” are trending on Google right now, after the recent price spike, and it’s far from being something good.
Ok, but shouldn’t we use a credit card?
The cryptocurrency is considered a fast growing bubble, but there’s one thing than can make it worse: leverage. to be more specific, we’re talking about using debt to buy an investment. After all, it’s an investment, since everybody who buys hopes that one day it will generate return.
Leverage can indeed generate bigger profits than just using your own money to purchase something, but, at the same time, it multiplies the risk of an investment. After all, one of the main causes of the 2007 housing market crash was this entire leverage idea we’re talking about.
Why is Bitcoin a risky investment?
This is easy to answer. Technically, after buying, you’re not doing anything else but hope that the currency will keep growing and you will be able to sell your whole Bitcoin amount at a bigger price.
A cryptocurrency enthusiast will tell you that this is a great investment, but a personal-finance expert will advise you to stay away from it, since it’s a fast way to lose a lot of money.
Technically, you can buy Bitcoin with your credit card, since there are a lot of exchanges out there, willing to take your money and transform it into a string of numbers. However, don’t be surprised if it won’t be as profitable as you would expect. Just stick to one of the several rewards credit cards if you want some guaranteed free stuff!
To wrap it up, we’re not saying that you shouldn’t consider investing into cryptocurrency, but just be aware of the fact you can easily lose all the money you’re putting into this.
