How to Lower Cryptocurrency Trading Fees: Top 7 Ways to Reduce Costs
Top 7 Ways to Drastically Lower Crypto Trading Fees
As with all financial transactions, trading cryptocurrencies also come with their own fees. The exchanges bill you, credit/debit card issuers bill you, banks bill you when you withdraw, third party wallets bill you for using their wallets and so on.
It’s almost as if everyone is hell bent on taking a cut of your profits. If you’re tired of all that, the following tips can help you lower the fees associated with trading cryptos.
Seek Alternative Means Of Buying Cryptos
For many people, the easiest way to buy cryptos is by simply funding their accounts directly from the credit/debit cards. While the exchanges typically don’t charge you anything for funding your accounts, the banks do; to the tune of at least 3.99 percent.
You need to understand that your bank makes a lot of money from these seemingly small charges. They’re essentially charging you for using their cards.
Also, depending on the exchange you use, you may end up paying something called a foreign transaction fee. This is common among financial institutions issuing cards in the US.
While there’s no doubt that these cards have their upsides, the reality is that they do attract significant fees when used for crypto purchases.
Take Advantage Of Exchange Deposit Accounts
So, instead of buying the cryptocurrency of choice directly from your card, you can just fund your exchange, and then use that cash to buy your crypto. This is super effective and doesn’t cost as much as buying directly.
In fact, many exchanges offer zero fees when it comes to direct deposits on exchanges. The only downside is it might take a while for your cash to reflect in your exchange wallet. So, if you’re going to use this method, make sure it’s not when you want to trade urgently.
Deposit way before you want to trade so you have a reserve fund on the exchange. This is smart and will help you take advantage of certain trades. Purchases made using exchange deposits typically attract only 0.25 percent. As you can see, that’s far lower than the 3.99 percent charged for direct purchases.
Utilize The Available Free Maker Option
Some exchanges like GDAX are big on prioritizing orders, so they have a maker order option where using the already deposited funds, you can easily put in a maker buy order. This attracts zero costs and helps you buy cryptos at fair or lower prices than what’s available on the market.
You can also use the limit order options where you “instruct” the exchange to buy or sell a certain amount of your cryptos once they exceed a certain price. These limit orders also attract no fees and can be profitable if you know how to use them.
Try ACH Transfers
As far as we can tell, this option is limited to Gemini for now. Here, you can do an ACH bank transfer which will reflect almost immediately, and use that to buy your cryptos of choice on the exchange.
Other exchanges typically take 3-5 days to clear your funds and have it reflected. The only downside is that Gemini only allows a daily limit of $500 for all non-debit/credit card purchases. So, you will be limited to just $500 for this option.
Avoid Paying Withdrawal Fees
Depending on the exchange, it might be possible to pay zero withdrawal fees. For instance, instead of transferring bitcoins directly from Coinbase to exchanges like Kucoin or Binance, simply send them to GDAX, and from there to other exchanges.
The only challenge is there’s an extra step in the process. Otherwise, there’s no cost for transfers to GDAX from Coinbase, and none from GDAX to the other exchanges.
Understand How Much Each Exchange Charges
Take your time to study the various exchanges and their charges. The fees differ according to the exchange. Research your intended exchange, study their fees, and look for reddit threads about them if you’re unsure of anything.
We would have listed that here, but there are far too many exchanges to cover that here. Check each and everyone of them for their various rates and fees. Some offer low upfront fees to entice you, while their backend fees can be astronomical, and vice versa. So, pay attention.
You can also look for apps that allow you trade without any fees. One of these is Square Cash app which allows you trade bitcoin at zero cost.
Research For New Offers
Exchanges keep having and giving new offers for new signups or to encourage trading. You can take advantage of these offers to cut down on your fees.
A good example of this was CoinMama’s willingness to shave off 15 percent on all transactions if members verified themselves with a selfie in front of any TV showing a world cup match.