In a rapidly-innovating cryptocurrency world, the Coinbase exchange remains one of the most popular crypto-focused platforms. The exchange is heralded for its easy-to-use interface, educational resources for new investors, and a high degree of security and stability (with a few high-profile issues).
Transaction fees on Coinbase, while lower than many traditional payment processing platforms, are an issue that has caused many crypto enthusiasts to look towards different options. Platforms like CryptoExchange have gained popularity by specifically advertising a low fee structure.
Coinbase fees are a bit confusing as the platform levy’s several different charges. A buying fee automatically deducts from any transaction on the platform. Fees are either fixed or variable based on the amount involved in the transaction. This creates a situation where fees can quickly add up, especially if a user is continually buying and selling crypto.
Additionally, some banks will institute a charge on Coinbase transactions. Since the exchange works with a London-based company to process credit and debit transactions, some banks might institute a foreign transaction fee on specific transactions.
As a result, many wonder how they can purchase cryptocurrencies like Bitcoin without subjecting themselves to the confusing and high fees associated with Coinbase. Keep reading to learn more about a few options.
Steps To Avoid Paying High Coinbase Fees
- Switch to Coinbase Pro: Coinbase Pro is the ‘upgraded’ version of the traditional Coinbase exchange and is marketed towards professional traders. However, it is not necessarily much harder to use than Coinbase. Coinbase Pro does not charge money to add funds to an account as it is not technically a broker. For fees, Coinbase Pro operates on the ‘maker-taker’ module. When a user adds liquidity, they can make their own offers, but as a taker, they remove part of an order book. Overall, fees for transactions are up to 50%, a lower figure than on Coinbase.
- Fund Accounts With Bank Transfers: Any sort of crypto purchase with a credit card on an exchange will lead to high fees. Users on Coinbase or another platform should always try to fund their accounts with ACH bank transfers. Trading fees are much lower than with a credit or debit card.
- Opt For A Different Exchange: Crypto holders always have the option to turn to a different exchange besides Coinbase. Bitmex, CoinMama, and OKEx are other options that have different fee structures. Holders can ‘shop around’ and find a platform with a fee structure they are comfortable adhering to. Some exchanges, like Phemex, have implemented a subscription-based model for spot markets. Through this system, traders pay a set fee and then execute trades with no fees. High-volume traders find this type of system extremely advantageous as they could save significant amounts of money on fees.
- Turn To Peer-To-Peer Marketplaces: Another option to purchase cryptocurrencies like Bitcoin without high fees is to utilize a marketplace like LocalBitcoins or Paxful. These entities let individuals connect and agree to the terms of a transaction without a third party governing decisions. Buyers do not have to pay fees, but many platforms do institute a small fee for sellers. The downside of a peer-to-peer marketplace is the inevitable waiting time before finding a buyer or seller and the risks of being scammed or tricked by an unscrupulous user.
Purchasing Cryptocurrency & Avoiding Fees
There are a variety of ways to buy and sell cryptocurrency while paying as low fees as possible. Users can take advantage of Coinbase Pro, change their funding method, or turn to a different platform to find a competitive rate.
One of the best ways to keep fees down is to be smart about trading and just execute transactions as needed. Closing multiple transactions each day will lead to money being siphoned off to fees at a growing rate.
Crypto users eager to avoid fees would be wise just to trade when there is an opportunity for profit or if they need crypto or fiat for a particular instance.