In the precious metals industry, there are a number of payment options available for investors and collectors. With the popularity of online transactions, one very popular choice is to use a credit card, such as those offered by ubiquitous financial brands including Visa and MasterCard. While no one payment method is the perfect option for everyone, the credit card is suitable for many people for a number of reasons; however, it is not without its downsides. In this article we will cover the pros and cons of shopping for silver and other precious metals with a credit card.
Credit Cards Fees can Quickly Mount Up
As retailers and vendors are charged a fee for accepting payments by credit card, it is not uncommon to see this fee being passed on to the customers who choose to pay in this way. When it comes to large value purchases, as is common in the gold and silver markets, these fees can soon mount up to considerable amounts.
While these processing fees for credit cards may only be 1 or 2 per cent, when you consider a large purchase of a few thousand dollars or more, the fees can soon begin to add up. While not all silver dealers will pass this cost directly on the customer, adding it to their bill, it is not uncommon. This is mainly because of the very small profit margins available when selling these precious metals. A few percentage points can really cut into the dealers profits so they are more likely to pass this fee on to their customers than other types of retailers might.
For example, buying a 20 coin tube of Silver Eagles will incur you about a $20 surcharge, compared with paying by check or wire at APMEX.com
Will Using a Credit Card Land you on a Government List?
Due to the scare stories circulating about precious metals, especially the infamous gold seizure of 1933, there are a lot of myths surrounding the act of buying and owning gold and silver. One concern of those collecting, or thinking about collecting silver, is that by using their credit card to make a purchase, the details of that transaction will cause them to be put on a government list of known silver or gold holders. While this is possible, it is probably unlikely that someone buying a few coins or bars from time to time will attract the attention of the federal government in a way that could risk their collection.
Not Accepted Everywhere
While nearly all retail websites will take credit cards as a payment method, this is not always the case with online precious metal dealers. While some insist on a mark-up when the customer chooses to pay by card, or offer a discount to those paying by cash, some refuse to accept this form of payment at all.
Websites that will not accept credit cards include Colorado Gold, Texas Precious Metals, Pacific Precious Metals and AJPM to name but a few.
Ability to Earn Miles and Points
While using a credit card to purchase silver can limit your options in terms of where you can shop, as well as incurring you transaction fees, you do often have the ability to earn loyalty points or air miles. For each dollar you spend, you could be accumulating some points with your credit card that could be put towards a flight or another purchase. It is up to you to calculate the extra costs of using a card, and the bonus you could acquire from the credit card provider to find out if it is a cost effective way of paying or not.