Is Using A Credit Card To Buy Bitcoin The Same As Getting A Cash Advance? Chase Says Yes!

Written By: Jay L. Hack


First, let’s get the clutter out of the way. I think cryptocurrencies are useless and have no social utility other than to allow people to gamble without going to a casino if you call that social utility. For over 5 years, I have been challenging Bitcoin proponents at public forums to give me one useful case, and other than protecting against Venezuelan hyperinflation by parking local currency in a Bitcoin wallet, no one has met my challenge by providing a justification for its existence.

Now enter Messrs. Tucker, Hilton and Smith, who were using their Chase credit cards to buy various cryptocurrencies. For about two years, Chase charged interest on these purchases at the rate that applied when a card is used to purchase a product. However, Chase then changed its approach and decided to charge the higher interest rate applicable to cash advances. The plaintiffs quickly stopped using their cards to buy cryptocurrency and instead sued Chase. In August, some of the claims were dismissed, but others are still being litigated. You can argue the merits either way and today the answer is at best uncertain.

Today’s Takeaway? As I suggested months ago in discussing Bitcoin as collateral, don’t be in a hurry to be an early adopter. Courts are still struggling to figure out how cryptocurrencies are to be treated in a legal framework that, in most cases, does not directly address the issues being raised. Our advice is to let other people incur the legal expense of figuring out what cryptocurrency is, while you conduct business where legal advice on how to proceed can be based upon court precedent, rather than hype you read in the financial press.

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