The Bitcoin ban now includes not only the Lloyds Banking Group but also Virgin Money. Customers of Lloyds bank, and now Virgin money, are banned from buying Bitcoin or any other cryptocurrencies using their credit cards. The Bitcoin credit card ban has already been applied in the US by the Bank of America, Capital One, Citi Group, Discover and JP Morgan.
Credit cards provided by any of these banking groups are no longer permitted to be used to purchase Bitcoin. Nor can they be used for any other form of cryptocurrency. It should be noted that the ban is intended to prevent customers from accruing too much debt. Should the digital currency crash in value then they may be unable to pay.
Bitcoin Ban Not Applied to Debit Cards
The Bitcoin ban does not extend to debit cards because customers are then unable to lose any more than the balance in their current accounts. The reason for such bans is the recent sharp fall in the value of digital currencies across the board.
Bitcoin fell by 10.86% Monday to $7.297.65. It has been losing value over the past few days. The ban on Cryptocurrency purchases by Lloyds Group applies to credit card customers using cards issued by Lloyds bank, The Halifax, MBNA and the Bank of Scotland.
Cryptocurrency Investment Can Lead to Unaffordable Debt
According to Lloyds, no customers have been informed of this ban. They find out about it only if they query a blocked attempt to purchase cryptocurrencies. The banking group believes that it is too easy for credit card holders to be drawn to such currencies, and overextend themselves by purchasing digital currencies such as Bitcoin that are rapidly losing value. They could run up debts that they are unable to repay.
Barclays Has Not Yet Applied a Bitcoin Purchase Ban
Currently, Barclaycard holders can use their credit cards to purchase digital currencies. Barclay card says that they generally assess the customer’s level of affordability before allowing credit on their cards. A credit card can be used to finance gambling. However, that usage is looked upon by the card issuer as being a cash loan. That accrues corresponding high rates of interest up to 30% per annum. There might also be additional fees added to that.
Cryptocurrency Investment is High Risk
Nevertheless, you can use a credit card to gamble although that will be treated as a cash loan, with charges of up to 30% a year and additional fees on top. Many financial institutions, however, regard cryptocurrency investment as being of much higher risk than traditional gambling. Lloyds is one of these, but not yet Barclays.
Last week, Bitcoin experienced its worst week since April 2013. It ended 30% down at just $8,291.87 and dropped to $7.297.65 Monday. In November, it was sitting at $19,000. That said, it should be borne in mind that the Bitcoin cryptocurrency was trading at just $1,000 this time last year.