Spending cryptocurrency online is becoming easier, but sometimes the fees can be a surprise. People often ask why it feels like they are paying more than they expected when making crypto purchases. Understanding where these extra costs come from is an important first step before choosing ways to cut them down.
Fees are not always obvious at first glance. They can be hidden inside the transaction process, or show up at different stages. Sometimes, these charges are small, but they add up quickly when using crypto for everyday spending.
For anyone searching for ways to avoid high fees when spending cryptocurrency, it is useful to break down the different types of charges involved. This helps make sense of the total amount paid in each transaction.
Why Crypto Spending Fees Add Up (Quick Glossary of Fee Types)
Cryptocurrency transaction fees come from several sources, not just the blockchain network itself.
The first layer is the network fee, which is paid to miners or validators for processing and securing transactions on the blockchain. This fee can change depending on how busy the network is at any given moment.
The second layer is exchange or platform fees. These are added by services that help convert, swap, or process your crypto before it can be spent. Each time a transaction passes through a platform, another fee is likely to be included.
A third fee layer is conversion costs. If spending crypto with a merchant that only accepts a certain currency, conversion from one token to another or into fiat money can trigger additional costs. These conversion fees may be based on current exchange rates and can also include hidden markups.
When all these layers are combined - network, exchange, and conversion - the total cost to spend cryptocurrency is often higher than many expect.
Other types include Card service fee - charge by providers when loading or using virtual crypto cards and withdrawal fee - applied when moving cryptocurrency from an exchange to a personal wallet or another platform
12 Smart Tactics To Cut Fees Right Now
1. Choose Low Fee Blockchains Or Stablecoins
Some blockchains charge lower transaction fees than others. Polygon, Binance Smart Chain, and Solana are known for consistently low costs per transaction. Stablecoins like USDT and USDC are available on these networks, allowing users to spend or transfer value with minimal fees compared to using the same assets on more expensive networks.
2. Use Layer 2 Networks For Micro-Purchases
Layer 2 networks process transactions off the main blockchain to lower costs and increase speed. The Lightning Network is a Layer 2 solution for Bitcoin, enabling small, fast, and inexpensive payments. Ethereum rollups, such as Arbitrum and Optimism, provide similar benefits for Ethereum transactions.
3. Time Purchases During Off-Peak Network Hours
Network congestion affects transaction fees. Fees are usually lower late at night, early in the morning, or during weekends when fewer people are making transactions. Monitoring network activity helps identify less busy times for sending transactions.
4. Place Limit Orders Instead Of Market Orders
Exchanges have maker and taker fees. Placing a limit order makes you a maker, often qualifying for a lower fee, while market orders are taker orders and usually result in a higher fee. Limit orders allow users to set their preferred price, while market orders execute immediately at the current price.
5. Swap Tokens Inside Your Wallet Instead Of On-Chain
Many crypto wallets offer built-in swap features. Swapping tokens inside a wallet can avoid extra fees from external exchanges and prevent additional blockchain transactions, reducing overall costs.
7. Pay Fees Using Native Exchange Tokens For Discounts
Many exchanges offer a discount on trading fees if fees are paid using the platform's native token, such as BNB or KCS. Holding and using these tokens for fees can lower overall transaction costs.
8. Avoid Multiple Transfers Between Platforms
Each transfer between exchanges, wallets, or services can add a new fee. Planning transactions to minimize unnecessary transfers helps keep total costs lower.
9. Select Payment Methods That Avoid Cash Advance Fees
Funding crypto purchases with bank transfers generally costs less than using credit cards. Credit card payments can be treated as cash advances by banks, triggering extra fees.
10. Redeem Rewards Points Toward Network Fees
Some platforms provide loyalty programs or cashback rewards. These points can often be used to pay part or all of a transaction fee, reducing out-of-pocket costs.
11. Leverage Volume-Based Or Maker Fee Tiers
Exchanges sometimes offer lower fees to users with higher trading volumes or those who use limit orders. Trading more or using limit orders can result in qualifying for these lower fee tiers.
12. Track Real-Time Fees Before Confirming
Fee tracking tools and apps display current network and exchange fees. Checking these before making a transaction enables selection of the best time to transact.
Popular fee tracking websites include Etherscan Gas Tracker, Mempool.space, and EthGasStation.
How Virtual Cards And Gift Cards Reduce Costs
Virtual cards and gift cards provide a way to use cryptocurrency for online purchases without triggering new blockchain fees for each transaction. By converting crypto into a prepaid card or gift card, ongoing network fees are avoided.
Zero Withdrawal Fees When Loading Virtual Cards
Loading a virtual card with cryptocurrency involves one transaction from a crypto wallet or exchange. After the card is funded, it can be used for multiple purchases without requiring new withdrawals or blockchain transfers for each spend. This approach removes repeated withdrawal fees that typically occur when moving crypto out of an exchange for every purchase.
Instant Spend Without On-Chain Gas
Once a virtual card is loaded, the funds are held in USD. Spending with the card is processed through traditional payment networks, not the blockchain. Each purchase draws from the available balance on the card, so gas fees are not applied for individual transactions.
Extra Savings From Discounted Gift Cards
Discounted merchant gift cards can be purchased with cryptocurrency, sometimes below their face value. This provides a direct cost saving, in addition to eliminating repeated network fees. These gift cards can be used instantly for online shopping at supported merchants.
Examples of popular merchants that accept virtual cards include:
- Walmart
- Amazon
- Netflix
- Airbnb
- eBay
Comparing Networks And Tokens For Lower Fees
Cryptocurrency networks operate with different transaction fee structures. The choice of blockchain network and the type of token used can impact how much is paid in fees, especially when spending or transferring funds.
Bitcoin Lightning
The Lightning Network is a second-layer protocol built on top of the Bitcoin blockchain. It enables near-instant Bitcoin payments with minimal fees by creating off-chain payment channels. Transactions conducted on the Lightning Network are not recorded individually on the main blockchain, which helps decrease congestion and reduce costs.
Ethereum Layer 2 Rollups
Ethereum mainnet transactions can become expensive during periods of high activity. Layer 2 rollup solutions, such as Arbitrum, Optimism, and Polygon, process transactions off the main Ethereum chain and periodically settle batches of transactions back to the mainnet. This approach reduces the cost per transaction and allows for faster processing.
Solana And Other High-Throughput Chains
Solana is designed as a high-throughput blockchain, processing thousands of transactions per second with low fees. Other blockchains such as Avalanche and Binance Smart Chain also focus on providing a high volume of transactions at a lower cost.
Stablecoins On Multiple Networks
Stablecoins such as USDC and USDT are available on several blockchain networks, including Ethereum, Solana, Polygon, and Binance Smart Chain. The cost to send these stablecoins depends on the network chosen. Transferring stablecoins on a low-fee network can help reduce the overall cost of spending or moving funds.
Frequently Asked Questions About Cutting Crypto Spending Fees
Is it cheaper to pay merchants directly with crypto or to load a virtual card?
Virtual cards make it possible to pay a single network fee when loading the card and then use that balance for multiple purchases. Each direct crypto payment to a merchant involves a separate network fee for every transaction.
How accurate are fee prediction tools for everyday crypto spending?
Fee prediction tools can provide good estimates for near-term network activity. Because blockchain congestion can change quickly, these tools are most reliable for planning non-urgent transactions rather than for guaranteeing savings on immediate purchases.
Do low-fee blockchain networks compromise on security or decentralization?
Some newer blockchains lower fees by reducing the number of people involved in transaction validation, which can affect decentralization. Layer 2 solutions connected to established networks like Ethereum maintain security by relying on the security and decentralization of the primary blockchain.
Keep More Crypto With Rewards And Discounts
There are several ways to offset cryptocurrency transaction costs by earning rewards or discounts. These methods provide opportunities to receive value back over time, helping to balance out unavoidable fees.
Cashback Crypto Cards
Some crypto cards offer cashback in the form of cryptocurrency. Each time a purchase is made using the card, a percentage of the amount spent is returned as crypto rewards. These rewards are usually credited automatically to a linked wallet or account.
Staking Or Loyalty Programs
Certain platforms offer loyalty programs or staking options that reward users for holding or using their services. Staking involves locking up a specific amount of cryptocurrency to receive interest payments or rebates. Loyalty programs may also provide fee discounts, rebates, or points that can be applied to future transactions.
Referral Or Sign-Up Bonuses
Many platforms provide one-time bonuses for new users who sign up or for existing users who refer others. These bonuses can include credits, reduced fees, or small amounts of cryptocurrency, which can help cover initial transaction costs.
Spend Confidently With Moon
Moon offers a way to spend cryptocurrency online with less friction from transaction fees. With Moon, users can purchase a virtual Visa card using Bitcoin, USDT, USDC, Ether, and other supported cryptocurrencies. The card is denominated in USD, which means payments to merchants do not require new blockchain transactions for each purchase.
After creating a card, users can shop at millions of online merchants, including eBay, Airbnb, Walmart, Netflix and more. Merchants only see the card information, shielding your personal details or wallet addresses, maintaining privacy in each transaction.
Card issuance is instant, allowing users to begin spending their crypto as soon as their card is created. There are no ongoing network fees after the card is initially purchased.
Every time you spend at a merchant, the merchant deducts from the existing card balance without triggering additional crypto withdrawal or gas fees.Moon also offers discounted merchant gift cards, which can be bought with cryptocurrency. This provides an additional way to use crypto for everyday expenses while keeping costs predictable and in some cases getting a nice discount.
