Here are four ways crypto investors can save money.
- Bank wire deposit is often free, but debit and credit card deposits can cost up to 5%.
- Check the rate offered to you, as bad exchange rates can eat away at your crypto holdings.
- Upgrade to the pro or advanced platform to reduce trading fees.
Many years ago, when I first opened my checking account, someone added an extra “R” to my name. It was just in one area that never seemed important – I didn’t even see the error until I first got internet banking. I always intended to get it fixed, but I didn’t think it really mattered much either. Like many semi-important non-urgent jobs, I kept putting it off.
My inaction came back to bite me when I tried to deposit money via bank transfer to my crypto accounts. Bank transfers are often free and usually represent the cheapest route to transfer (traditional) fiat money to crypto. The problem is that your name must match the account name exactly. That pesky extra R meant mine wasn’t, so my transfers were rejected.
As a result, I pay a 2% debit card fee each time I deposit money. Last year, I spent about $500 a month on crypto, which cost me about $10 each time. I wasted over $100 in fees just because I never had time to call the bank and correct the spelling of my name. This is before you consider trading fees, gas fees, and withdrawal fees. To reduce your costs when funding your crypto account, here are four ways to lower your fees.
1. Deposit money by bank transfer if possible
I haven’t found a single crypto platform that won’t charge you for depositing money via credit or debit card. Some platforms charge around 2%; on others, it can go up to 5%. In some cases, you may also pay additional bank charges. Indeed, a number of banks treat credit card deposits as a cash advance, potentially charging an additional 3% to 5%. Cash advances also earn interest immediately and may even result in a higher APR.
Worst case scenario? If you deposit $500 via credit card on a platform with high credit card fees and your bank charges significant additional fees, you might pay $50 fees before you bought any cryptocurrency. When there is a free way to achieve the same goal, bank transfers make much more sense.
2. Look and compare rates on different platforms
Without naming any names, some crypto exchanges are sneaky. They may offer so-called low-to-no-fee transactions, but then give you horrible exchange rates. If you use the instant exchange feature on any platform, check exactly how much crypto you will get for your money against a real-time conversion tool.
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For example, on one platform I tested, I tried to buy $500 worth of Etherum (ETH). The price preview showed that I would get 0.41237265 ETH. I compared this with the price on CoinMarketCap’s currency calculator. Guess what? I would only get $476 from ETH – a significant difference. Don’t be afraid to shop around for better rates.
3. Use advanced trading platforms
Many top crypto exchanges have separate trading platforms for pros and for beginners. The beginner option often takes the form of a simple window where you can convert fiat currency to crypto, or from one crypto to another. It’s super easy, but almost all of them charge much higher fees than the pro versions. If you do your research beforehand and get to know the features of the platform, you should be able to use the pro version with no problem.
4. Use local currencies to pay trading fees
Several crypto exchanges have their own native currencies, such as Binance’s BNB Coin or FTX’s FTT Token. If you pay fees using the native token, you will often get a discount of 20% or more on your trading fees. Depending on the platform, you may also enjoy other benefits, such as increased staking rewards.
At the end of the line
When you’re rushing through your to-do list, sometimes $5 or $10 doesn’t seem like much. But it all adds up and there’s no point throwing money away when you don’t need it. I called the bank today and updated my details. I hope the next time I try to deposit money on a crypto platform, I can use a wire transfer and do it for free.
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