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Card fees, ATM markups and withdrawal charges: where bitcoin buyers lose money

The cheapest way to buy bitcoin comes down to four choices: a low-fee exchange, bank funding, limit orders and checking withdrawal fees before moving coins

Bitcoin trades at one market price, but two buyers can spend very different amounts to get the same coin. The gap comes from fees, and they build up at more than one stage of a purchase. For anyone looking for the cheapest way to buy bitcoin, the savings sit in the route the money takes rather than in the price chart.

That route has four checkpoints. The first is the platform. A centralized exchange, often shortened to CEX, holds customer funds and matches buyers with sellers. Each one sets its own trading fee schedule. The second checkpoint is the way money reaches the account. A bank transfer usually costs little or nothing. A card payment can cost 3% to 7%, and a Bitcoin ATM can add markups or fees of 7% to 20%.

The third checkpoint is the order itself. Exchanges often charge one rate for orders that add liquidity to the order book and another for orders that take it away. These are called maker and taker fees. The button a buyer presses decides which one applies. The fourth checkpoint is the exit. Moving bitcoin off an exchange and into a private wallet can carry a withdrawal fee. A large flat charge at that stage can erase savings made earlier.

Each checkpoint is a separate decision, and the costs add together. A buyer who picks a low-fee exchange but funds it by card still pays the card charge. A buyer who places a cheap order and then withdraws a small amount with a high flat fee can lose what the order saved. Percentage fees grow with the size of a purchase. A flat fee weighs most heavily on a small one.

The four steps below follow the order of a typical purchase. They start with choosing an exchange with low bitcoin exchange fees and funding the account by bank transfer. They finish with placing a limit order to pay the maker rate and checking the bitcoin withdrawal fee before sending coins to cold storage.

How to choose a low-fee centralized exchange for buying bitcoin

A centralized exchange with low trading fees is the starting point for buying bitcoin cheaply. The platform takes a cut of every purchase. That rate becomes the baseline........

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