Canada’s TD Bank Nixes Crypto Purchases on Credit CardsFebruary 26, 2018
Canada's Toronto-Dominion Bank now forbids customers to use their credit cards for cryptocurrency purchases.
Toronto-Dominion Bank, Canada’s second-largest lender by assets, has bad news for those who plan to pile up credit card debt to buy Bitcoin or other cryptocurrencies.
The bank has started suspending cryptocurrency purchases through credit cards while continuing its review of the phenomenon.
“At TD, we regularly evaluate our policies and security measures, in order to serve and protect our customers, as well as the bank,” a spokesperson for TD Bank said in an email to the Financial Post.
The move seems to be driven by the volatility of some cryptocurrencies and the bank’s concerns that customers will not be as keen to pay off their debts should the value of their purchase diminish significantly.
Royal Bank of Canada (RBC) said something similar in a statement released on Friday. Although it still allows customers to get into debt to buy cryptocurrencies, it warned them about a potential inability to repay the bank.
“We do recognize that regulatory, risk and other external environmental factors relating to cryptocurrency continues to evolve. As such, we continue to review our policies to consider how we can best support clients,” said an RBC spokesperson.
Bank of Nova Scotia is also looking into mitigating any debt spirals as a result of customers using their credit cards to purchase digital coins.
TD Bank joins a growing list of banks that have banned their customers from using credit cards to make these purchases. Others are Lloyds, Bank of America, Citigroup, JP Morgan Chase, Halifax, Bank of Scotland, MBNA, and Capital One. So far, the list includes mostly US and UK banks.
For anyone doubting that credit card purchases are a trend, a LendEDU survey published at the beginning of this year showed that one in five investors loaded their cards with debt to buy some Bitcoin.
This may have panicked banks just enough for them to try and stop these purchases, which they began doing quickly after Bitcoin’s price fell more than 50% throughout January. The cryptocurrency now appears to be in the early stages of a recovery.
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