Lloyds Bank and Virgin Money have joined the list of banks which has banned the use of credit cards for the purchase of Bitcoins. Banks across the globe are afraid that they would have to bear the brunt, in the event customers fail to pay the loan taken through credit cards. Lloyds’ ban, which has gone effective from Monday onwards, applies to over eight million credit card customers across Lloyds Bank, Halifax, MBNA, and Bank of Scotland. Virgin Money followed suit yesterday to ban the use of the Virgin Money credit card to purchase crypto currencies.
Both Lloyds bank and Virgin Money have banned the use of only credit cards and not debit cards. Over the weekend, several US financial institutions, including Bank of America, Citigroup, Capital One, JP Morgan, and Discover have made a similar announcement.
The Banking Trade Organization UK Finance issued a statement saying that it had not issued any guidance on the matter. Lloyds said it will not contact customers to inform about the change to its credit card policy. Customers will be informed about the ban should they query a blocked crypto-currency credit card transaction. Barclays, however, continues to allow both credit and debit cards for purchasing crypto currencies.
Barclays spokeswoman said
“We take precautions to assess affordability before extending credit, flag and prevent any suspicious transactions and also closely monitor credit risk.”
The decision to ban credit cards for crypto currency purchases has set a new precedence in banking. Until now, a credit card cannot be used to pay off debt or anything illegal. Stock brokers may not allow the use of credit cards to buy shares, but it is their decision. Ironically, credit cards can even be used to gamble. It seems, banks consider investing in Bitcoin and crypto currencies more riskier than gambling.