Rising Credit Card Debt and the Risky Business of Credit Crypto Investment
Credit card debt in 2019 has reached an unparalleled high. Experts have gone ahead to posit that this is a pointer to an impending economic recession. Consequently, many people are wondering whether or not it’s a good idea for investors to continue buying Bitcoin with their credit cards. It’s also possible that crypto investors who already took the leap and used their credit cards to stock Bitcoin might be biting their fingers in shame because of the repeated drops in the price of Bitcoin.
How Bad Is Credit Card Debt In The United States?
Reports currently show that credit card debt in America seems to be consistently going up annually with an estimation that the average American has a debt of about $6,375. It is also important to note that the Federal Reserve announced that in 2017, credit card debt crossed an unprecedented $1 trillion marks.
However, with all the news of bad debt and a mounting credit card debt, other reports – including The Vantage Score – have shown that consumers’ credit ratings are also higher than they ever have been in the last ten years. This might seem like contradictory information but the assumption that people are becoming more careful with debt management can also be made.
The Dangers Of Investing In Crypto Using Credit Cards
It would seem like a lot of investors thought it was a good idea to buy into Bitcoin using their credit cards. This turned out to be a bad decision, evidently because prices crashed seriously. There have been many stories of people who made a lot of money from investing in Bitcoin and then decided to up their earnings by buying Bitcoin and other cryptocurrencies, on credit.
When market cycles are high and there seems to be a commendable rate with regards to returns on investments, many people seem to think that they should cash out in the season before it drops. The problem with this is that it’s never enough and no one ever really knows when the crash would happen.
At the time, the cryptocurrency purchases greatly increased in number so much that the credit card companies started to deliberately kill the acquisitions via their platforms. Consequently, the entire cryptocurrency world reacted by seriously condemning this action and blaming it on the companies’ fear of being relegated to the background for crypto.
However, this proved to be wrong as many investors – who were upset at the time – were eventually grateful that their transactions were blocked.
In all fairness, the crypto sector might be a little too unstable for anyone to believe that they can invest in credit. Some people even consider cryptocurrency investment as unstable as old-fashioned gambling. If this is to be believed, anyone can easily see how gambling with borrowed money is extremely risky.
So, Should Credit Cards Never Be Used For Crypto Investment?
As unstable and volatile as the crypto market can be, it is not totally suicidal to invest on credit. However, it should be done very meticulously and should be very carefully planned. Large purchases should generally be avoided and even the small purchases should be made at very specific times. If this is not done, an investor’s purchases could seriously tank.