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3 crypto exchange fees to watch out for

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Cryptocurrency exchange fees can weigh you down. It may seem like you’re only paying a few dollars here and there, but those dollars add up – and they can seriously eat into your profits.

If you are looking for the best cryptocurrency app or exchange, it is difficult to make direct fee comparisons as there is very little standardization between platforms. An exchange may charge more to deposit money but offer cheap withdrawals. Another might appear to offer free exchanges but give you poor exchange rates.

Here are some fees that may surprise you.

1. Deposit fees

Some crypto exchanges offer a wide range of ways to deposit money – from wire transfers to credit or debit card deposits and PayPal transfers. But be aware that it is often free to transfer money directly from your bank, while credit or debit cards can incur charges of 2-5%. You can pay 2.5% or more to deposit money through PayPal.

Sometimes, rather than depositing money to use for trading later, you will need to buy cryptocurrency directly. This combines a deposit fee and a trading fee, and it is not always clear how much you are being charged.

For example, I tried buying about $ 250 worth of Bitcoin (BTC) by debit card with a platform that uses a third party to process the payment. It says there is no charge, but when I use the conversion tool on sites like CoinMarketCap to check the rate, I actually only buy $ 240 worth of BTC.

2. Trading fees

Trading fees come in many forms and depend on how much you spend and whether you are using the “convert” feature or the trading tool. Several exchanges offer an easy “convert” option for new traders, but these are often the most expensive to buy.

Make sure you understand what you are being charged so that you know how to reduce the fees. Here are the most common trading fees:

  • Fixed Fee: A leading exchange charges a fee of $ 0.99 for trades below $ 10 and above for larger trades.
  • Percentage Fee: You will often find maker / taker fees, which are a percentage of the total trade. This can be reduced by paying with the platform’s utility token and often decreases as you trade.
  • Lower Rates: As in the example above, some low cost platforms hide their fees in the spread offered to you. Take a close look at how much crypto you are getting for your dollar. One trick is to compare the total with what you would get on other sites. You can also use crypto tools like CoinMarketCap or CoinGecko to find the market rate.

Finally, be aware that some platforms charge a combination of the fees listed above – you may find yourself paying a flat fee and getting an unfavorable rate. Or you may find that there is a percentage fee on top of the fixed fee.

3. Withdrawal fees

The latest boost when it comes to cryptocurrency fees are the withdrawal fees. If you want to leave your assets on the platform where you bought them (in what’s called a custodial wallet), that’s less of a problem.

You can either withdraw traditional fiat money from your bank account, which will likely incur a percentage fee. Or you might want to move your cryptocurrency to another platform, a non-custodial wallet, or someone else’s wallet.

Many crypto investors prefer to keep their assets in a non-custodial crypto wallet. The idea is that leaving your assets on the platform puts you at risk if the exchange gets hacked or, for whatever reason, decides to freeze your account. This is why some people prefer to move their cryptocurrencies to a wallet that they control.

Some platforms like Gemini offer a limited number of free withdrawals each month. Others don’t charge if you want to withdraw to their external wallet, but you will pay for other wallets. Most charge a fixed amount for the cryptocurrency you want to withdraw.

For example, a platform charges 0.0035 ETH (around $ 16) to withdraw Ethereum, but only 0.1 ALGO to withdraw Algorand (around $ 0.20). And he charges 40 LRC (over $ 100) to remove Loopring. It is important to pay close attention to what each cryptocurrency can cost.

One trick I have used is to convert my crypto into an inexpensive asset to withdraw and then convert it back to another platform. But that won’t help if you plan to keep it in a wallet.

Not much in life is free, and cryptocurrency trading can cost more than you might think. But if you are careful and use some of the tips above, you can minimize these costs.

A note on decentralized exchanges

We have limited ourselves to discussing the centralized cryptocurrency exchange fees so far in this article. If you are using a decentralized exchange (where there is no account or middleman setup), the fee structure is totally different. You’ll need to buy crypto using a central exchange or a third-party app to get started, and then you’ll likely need to pay Ethereum gas fees for each transaction. These vary depending on Ethereum network congestion, but can be as high as $ 100 or more.

Buy and sell cryptocurrencies on an exchange chosen by experts

There are hundreds of platforms around the world waiting to give you access to thousands of cryptocurrencies. And to find the right one for you, you’ll need to decide which features are most important to you.

To help youyou started, our independent experts have sifted through the options to bring you some of our best cryptocurrency exchanges for 2021. Check out the list heD and start your crypto journey, today.

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Emma Newbery owns Bitcoin, Ethereum, Loopring, and Algorand.

We strongly believe in the Golden Rule, which is why the editorial opinions are our own and have not been previously reviewed, endorsed or endorsed by the advertisers included. The Ascent does not cover all the offers on the market. Editorial content for The Ascent is separate from editorial content for The Motley Fool and is created by a different team of analysts. The Motley Fool owns stocks and recommends Bitcoin, Ethereum, and PayPal Holdings. The Motley Fool recommends the following options: $ 75 long calls in January 2022 to PayPal Holdings. The Motley Fool has a disclosure policy.

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