Credit card companies have been working to reduce their exposure to the cryptocurrency space. That’s why many of the big banks have banned the purchase of these assets through the use of credit cards. Interestingly enough however, many report being able to use the credit cards if processed as debit. While this seems to be possible, running a credit card as debit generally classifies as a cash advance, leading to cash advance fees charged by credit card companies. However, Coinbase, a leading cryptocurrency exchange, may be refunding these cash advance fees to its users. Today, we’ll talk about how cash advance fees work, reports of Coinbase refunding cash advance fees charged by credit cards, and what we’ll be watching for ahead.
How Cash Advance Fees Work
Many credit card companies offer cash advances when using their credit cards. This is when a credit card user gets cash back on a purchase or uses an ATM. However, cryptocurrency purchases have been added to this list. As with other fees, each bank has their own schedule of fees. However, in general, cash advance fees are charged as a percentage of the purchase (often 3% to 5%) or a minimum fee (often between $10 and $15). On top of that, most credit card companies charge higher interest rates on cash advances. When payments are made, the payments apply to purchases with lower interest rates first, only applying to cash advances once purchases are paid off. This ultimately makes cash advances very expensive.
Coinbase May Be Refunding Cash Advance Fees
While there have been no reports of Coinbase refunding the interest associated with cash advances, nor any expectations of these types of reports, it seems as though the company may be refunding initial cash advance fees charged to cryptocurrency traders that use credit cards to purchase cryptos on their platform.
The story first broke on CrypoTwits, a wholly-owned subsidiary of CNA Finance, LLC. It started with an article that I wrote surrounding the fact that credit card companies were classifying cryptocurrency purchases as cash advances. On the story, a CrypoTwits social network user with the username jwsmith54, commented with the following:
Great article Joshua… I bought some crypto coins last week and used my credit card, they charged me $10.00 for a cash advance, but then Coinbase gave me $10.00 worth of Bitcoin, which offset the cost. I thought that was nice of them!
So, it seems as though Coinbase, one of the world’s leading cryptocurrency exchanges may be refunding cash advance fees when users purchase cryptocurrencies with credit cards on their network.
While we haven’t been able to confirm with Coinbase that they are indeed offering refunds on cash advance fees caused by cryptocurrency purchases, we know that at least one user has experienced this. We attempted to contact Coinbase, but have not yet received a response. We’ll keep you posted as soon as we receive one.