If you want to buy cryptocurrency with US dollars, using a crypto exchange that accepts bank transfers can be one of the cheapest and most convenient solutions. But if you’re new to cryptocurrency, it can be tough knowing where to get started.
Read on for a list of which exchanges accept bank transfers and how you can buy crypto with your bank account.
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Where to buy cryptocurrency with a bank transfer
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How to buy cryptocurrency with your bank account
Buying crypto with your bank account is actually quite easy. To show you how to do it, let’s look at an example of how to buy bitcoin (BTC) with US dollars.
For security reasons, you shouldn’t store digital coins or tokens on an exchange for an extended period of time. Instead, before buying any crypto, you should set up a secure wallet where you can store your private keys.
The site will require you to verify your identity and provide a photo ID before you start trading. Remember to also enable two-factor authentication on your account for an extra layer of security.
Go the “Settings” menu and click on “Linked Accounts,” then click on “Link a New Account” and add a payment method. You can then either verify your account instantly by providing the name of your bank along with your online banking username and password or choose to verify your account manually using a deposit verification process. This will require your bank name, routing number, account number and account type. Coinbase will initiate two small test deposits in the next two to three days — you’ll need to verify the amount of the deposits in order to link your account.
Once your account is linked and has been verified, you’ll be able to buy cryptocurrency on the exchange.
Click the “Buy/Sell” tab at the top of the screen, find bitcoin in the list of currencies and click on “Buy Bitcoin.” Simply enter the amount of BTC you want to buy or the amount of USD you want to spend in the fields provided. Take a moment to review all the details of your transaction before you click “Buy Bitcoin.”
Once the transaction has been processed, remember to move your bitcoin off the exchange and into your private wallet. To do this on Coinbase, click on the “Account” link on the navigation bar and click on the “Send” button next to the Coinbase digital currency wallet you want to send from.
Next, click on “Wallet Address” and enter the address of your private wallet. Enter the amount of currency you’d like to send, and then click “Continue.” Remember to review all of the detail before sending your cryptocurrency to your private wallet.
Choosing the right exchange
There are a number of platforms to choose from when purchasing crypto with your bank account, so compare your options to see how each exchange performs across a range of key areas:
Payment methods. How can you send USD to the exchange: bank transfer, debit card and/or PayPal? Look for an exchange with your preferred method.
Fees. How much will it cost you to complete your transaction? Remember to also consider the trading fees the exchange charges.
Transaction limits. Are there any minimum or maximum limits on the amount of crypto you can purchase? When you want to transfer the crypto you purchase away from the exchange, what is the minimum withdrawal limit?
Processing times. How long will it take for you to complete your crypto purchase from start to finish? For example, bank transfers can take four to five business days on Coinbase, though debit card purchases are almost instant.
Supported cryptocurrencies. Which cryptocurrencies can you purchase directly with USD? Some platforms will only provide access to one or two popular digital currencies while others will offer a much wider range.
Ease of use. Does the platform have a simple and intuitive user interface that you can navigate without any problems?
Signup and verification. What information and documentation will you need to provide to register for an account? How long does the verification process take?
Security features. What protective measures are in place to ensure the security of your funds? For example, does the platform support two-factor authentication? Where are your funds stored? Has the exchange ever been hacked?
Customer support. How can you contact the customer support team? What contact methods are supported and during what hours is the team available? Is there an online help center where you can easily find solutions to a range of common problems?
Reputation. Check out online forums and reviews to gauge what level of community trust the platform has. Would other users recommend it?
Answering these questions should help you narrow down your choices and find a platform that will work for you.
If you want to store your newly acquired crypto coins on the exchange where you bought them, you can. However, this is not recommended for a couple of reasons:
You don’t control your private keys, the exchange does.
Exchanges are frequently targeted by hackers and there have been numerous incidences of security breaches.
With this in mind, the safest course of action is to move your digital coins into a secure wallet that allows you to retain control of your private keys. From desktop and mobile wallets to online and hardware wallets, there are plenty of options to choose from. Make sure you do your research before picking one that’s right for you.
Buying crypto with a bank account offers a safe and secure way to exchange USD for digital currency, but only if you’re certain you’re dealing with a reputable exchange provider. With this in mind, it’s essential that you thoroughly research the credentials of any platform before transferring any funds.
You’ll need to find out the following:
Who are the people behind the platform?
Where is it based?
How is it regulated and is it properly licensed?
How long has it been in business?
Of course, if you plan on buying cryptocurrency from someone through a peer-to-peer platform, you’ll need to be certain you’re dealing with a reputable seller before transferring any funds. This is why it’s a good idea to set up the trade through a marketplace that uses some sort of reputation system and has security measures in place to protect against fraud.
From a broader point of view, you should also be fully aware of the risks associated with buying cryptocurrency before you make a purchase. Cryptocurrencies are complicated and volatile assets, so there’s a risk of losing some or all of the money you spend.
Pros and cons
Pros
Buy crypto directly with USD.
Relatively simple process.
Cheaper than buying with a credit card.
Suitable for beginners looking to get their hands on some digital currency.
Cons
Bank transfers can take several business days to process.
Only a limited selection of altcoins can be purchased with USD — many digital currencies can only be exchanged for other cryptocurrencies.
Fiat-to-crypto trades usually attract higher fees than crypto-to-crypto trades.
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Next steps
If you want to buy crypto with your bank account, the first thing you need to do is start comparing a range of cryptocurrency exchanges. Compare their features, accepted payment methods, transaction limits, fees and level of community trust to find a platform that’s right for your needs.
Yes, at the time of writing, it’s legal to buy crypto with your bank account in the US.
No, bank transfers usually take several days to be processed. You can buy bitcoin instantly with your debit card.
If you’re making a peer-to-peer trade, it may be possible to buy crypto with your bank account without providing proof of ID. However, if purchasing through a crypto exchange or broker, you’ll most likely need to provide your personal details and proof of ID before you’ll be allowed to buy cryptocurrency using your bank account.
For those looking to buy bitcoin anonymously, it’s worth pointing out that your bank account will be linked to your ID, so paying for your crypto via bank transfer won’t allow you to protect your identity.
Yes. There are several platforms that accept debit card payments and bank transfers from US customers, most notably Uphold. Other platforms, such as peer-to-peer marketplace Paxful, welcome deposits made via PayPal and other money transfer services, or you can use a bitcoin ATM to turn your cash into crypto.
Images: Shutterstock
Disclosure: At the time of writing, the author holds ADA, ICX, IOTA and XLM.
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Tim Falk is a freelance writer for Finder. Over the course of his 15-year writing career, he has reported on a wide range of personal finance topics. Whether you're investing in stocks and ETFs, comparing savings accounts or choosing a credit card, Tim wants to make it easier for you to understand. When he’s not staring at his computer, you can usually find him exploring the great outdoors. See full profile
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