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A growing number of big U.S. credit-card issuers are deciding they don't want to finance a falling knife.
JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. said they're halting purchases of Bitcoin and other cryptocurrencies on their credit cards. JPMorgan, enacting the ban Saturday, doesn't want the credit risk associated with the transactions, company spokeswoman Mary Jane Rogers said.
Bank of America started declining credit card transactions with known crypto exchanges on Friday. The policy applies to all personal and business credit cards, according to a memo. It doesn't affect debit cards, said company spokeswoman Betty Riess.
And late Friday, Citigroup said it too will halt purchases of cryptocurrencies on its credit cards. "We will continue to review our policy as this market evolves," company spokeswoman Jennifer Bombardier said.
(Score: 2) by MostCynical on Sunday February 04 2018, @11:15PM (1 child)
Are credit card limits linked to assets?
In Australia, banks won't give you a credit limit beyond your assessed ability to pay, so having assests (house, regular stable income), means a larger limit.
Is the issue here, then, about the *value* of the transaction, or the "verifieablility" (for want of a better word)?
I suspect the issue is the potential exposure of the exchanges, where credit transactions usually have a vendor (with a risk rating), and, in these cases (crypto currencies), the exchanges are the vendors, but the risk profile is such the banks don't trust the abilit to get money back for dodgy/bad transactions.
"I guess once you start doubting, there's no end to it." -Batou, Ghost in the Shell: Stand Alone Complex
(Score: 3, Informative) by requerdanos on Monday February 05 2018, @12:38AM
As far as I can tell, the bank's decision to extend credit is the bank's alone.
The bank considers things like income, debt-to-income ratio, number of accounts paid as agreed (or not). Assets sufficient to cover the credit extended are generally not a factor, except in the special case of "secured" cards, whose credit limits are determined by the amount of money the receiver of the credit has in a savings account at the bank extending the credit.
Secured cards are more commonly used by people with "bad credit" (who are not able to qualify for a regular credit card) to establish "good credit" (a record of paying-as-agreed reported to the major credit stalking bureaus). Terms on secured cards often range from "not great" (higher-than-usual interest or fees) to "downright predatory" (much higher than usual interest and fees) because those who have no other option than a secured card are a captive market, as it were.
This article [edinformatics.com] seems to explain things from a U.S.-centric point of view.