Barclays Will Block Credit Card Crypto Transactions
Barclays, a UK-based bank, will stop allowing crypto transactions through its Barclaycard credit cards starting Friday, citing the risks tied to cryptocurrency price volatility. The bank explained on its website that the move aims to protect customers from falling into unmanageable debt due to sudden drops in crypto asset values. Barclays also noted that crypto purchases lack consumer protections, stating:
“There's also no protection for crypto assets if something goes wrong with a purchase, as they're not covered by the Financial Ombudsman Service and Financial Services Compensation Scheme.” A spokesperson for the bank declined to provide additional comments.
Since at least 2018, Barclays has permitted customers to use credit cards to buy cryptocurrencies, and in 2023 it held over five million credit card accounts in the UK.
The new restriction arrives amid broader discussions in the UK over whether tighter rules are needed for credit-based crypto purchases. On May 2, the Financial Conduct Authority (FCA) released a paper requesting public feedback on whether such transactions should face additional limits.
In response, the Payments Association, based in London, criticized the idea of equating crypto with gambling, arguing that consumers should be trusted to make informed choices within existing credit frameworks. The organization pointed out that banks already impose controls on high-risk credit card transactions, and that when cash purchases are blocked, credit cards often serve as an alternative.
Despite this, buying crypto with a credit card can be costly. Some issuers classify the transaction as a cash advance, which may result in elevated fees and interest rates, according to Bankrate.
Sources:
https://cointelegraph.com/news/barclays-ban-crypto-transactions-credit-cards-june
https://www.bankrate.com/credit-cards/rewards/buying-cryptocurrency-with-credit-card/