Many of the newer cryptocurrencies have been flourishing in recent years. The market capitalization has been increasing exponentially, and we are amidst a cryptocurrency boom. You could be on your way to becoming rich if you haven’t already. However, one thing that might stop you from making a lot of money in crypto is its exchange fees. If you’re looking to withdraw your earnings back into fiat currency, be aware of the high fees crypto exchanges charge and learn how to avoid them.
Investors are looking for different ways to avoid paying high withdrawal fees, which leads to some holding their assets. However, there comes a time when you have to withdraw your assets. This article will discuss how to do so while avoiding high withdrawal fees. Read on!
- Don’t Withdraw Frequently
If you’re mining or trading cryptocurrency, you’ll need to withdraw your earnings to spend them in the real world. Whether you’re drawing out crypto earnings from a bank account or converting them into fiat currency through an exchange, they will involve fees.
Therefore, the best way to minimize these withdrawal fees is to limit the number of withdrawals. The more often you move your crypto around to different wallets or accounts, the higher the expense you will have to pay. Try to withdraw your crypto earnings occasionally instead of doing so every day.
Moreover, holding your cryptocurrencies for a longer time has several tax benefits. For example, cryptocurrencies are treated as property and are subjected to capital gain tax. If you hold cryptocurrencies for more than a year, you can get the capital gain tax. This means that you’re cutting withdrawal charges and your tax liability. You can check on several resources to get more information about crypto’s tax liability.
- Use A Low Fee Crypto Exchange
There are many options for exchanging cryptocurrency, but not all exchanges are created equal. Some may charge high fees for withdrawals, while others don’t offer as many coins. So, always check their costs and commissions if you want an exchange where you can withdraw any coin for a low fee. For example, some platforms have a 0% withdrawal fee for BTC transactions under 0.02 BTC and 1% for transactions above 0.02 BTC but less than 4 BTC. Others will charge you different percentages depending on the card tier or the loyalty level.
Alternatively, you can transfer funds from one exchange to another before making a withdrawal. It can help you save money by withdrawing from exchanges that charge a lesser withdrawal fee. The only fee you may incur is the ‘gas’ fee for the exchange, which may not be as high as when withdrawing the amount.
- Get An Exchange Debit Card Linked To Your Trading Account
Some exchanges offer prepaid cards that you can use anywhere Visa is accepted. These cards usually come with lower fees than traditional bank transfers and can be loaded with cash at any ATM worldwide. Also, most exchanges let customers link their trading accounts with debit cards from Visa or Mastercard to withdraw their earnings instantly from their bank accounts without needing to wait for transfers through traditional financial institutions.
While these cards aren’t necessarily free — some exchanges charge fees for using them — but they’re still much cheaper than sending money through traditional channels. It is convenient because it allows you to spend your crypto earnings immediately without converting them into fiat currency. Just ensure that they have no withdrawal limits or minimum amounts; otherwise, this method will become expensive.
- Convert To Coins That Are Cheap To Withdraw
If you want to convert your crypto earnings into fiat currency without paying too much in fees, convert them into coins that are cheap to withdraw. It means avoiding coins like Bitcoin (BTC) and Ethereum (ETH), which usually have higher withdrawal fees than other coins like Litecoin (LTC).
For example, some exchanges can charge about USD$16 for Ethereum withdrawal, while the same platform can charge only USD$0.20 to withdraw Algorand. The various platforms may charge a different amount for withdrawing a particular coin, so look for a platform with the cheapest fee. Also, when receiving payments in crypto, you can accept payments in one coin and to one crypto wallet to avoid paying any exchange fees later.
Conclusion
Having to convert your crypto into fiat currency can be a frustrating experience. It’s often slow, and it can cost you a lot in withdrawal fees through an exchange. As a trader or investor, you need to be aware of these charges as they directly affect the amount of money you get. Fortunately, there are several ways to withdraw your crypto while still avoiding high fees, as discussed in this article.