If you want to invest in cryptocurrencies, you will find Coinbase an attractive option to start buying cryptocurrencies. However, if you start using Coinbase without digging deeper, you will end up paying fees that increase over time.
It can be a bit tricky trying to get a good feel for how high Coinbase fees are, let alone how to avoid them. This guide is about that — a breakdown of Coinbase fees and what you can do to maximize your investment.
What types of fees does Coinbase charge?
Coinbase charges a variety of fees for trades – margin or spread fees and what the platform calls Coinbase fees. Here's a look at each type:
Margin or Spread Fees: Coinbase interprets margin (or spread) as a service fee of up to 2.00%, which is added to Coinbase Pro's exchange rate. This is the name of the Coinbase-owned exchange that handles all transactions.
Coinbase Fees: Coinbase fees are a confusing fee because there are many factors at play. Users pay a fixed fee or a variable percentage of the transaction, depending on the region, product and payment method.
Coinbase considers both fees when previewing transactions. For example, a US customer who purchases $204 will be charged a rate of 1.49% of the maximum purchase amount.
You can verify this by initiating a purchase on Coinbase.com and previewing the purchase for $205. Note that fees will increase with the purchase amount up to your maximum limit.
As you might imagine, these fees add up to a lot of money you could have invested. Which begs the question: how do you avoid being charged fees at Coinbase?
How to Minimize Coinbase Fees
The key to minimizing fees at Coinbase is to understand the connection between Coinbase and Coinbase Pro.
What is Coinbase Pro?
Coinbase Pro, formerly known as GDAX, is the trading platform of choice for processing orders placed through Coinbase. It is a platform built for crypto enthusiasts to gain a deeper understanding of the cryptocurrency market so traders can make more informed decisions.
Since both are owned by Coinbase, transfers between them are instant and free. This is important because the fees for the same operation on Coinbase Pro are much lower than on Coinbase.
The breakdown of these deals is more technical. They follow the so-called maker receiver model. Here is an overview of the types of transactions you can make:
Take-In: Orders placed at market prices and executed immediately are considered "take-in" orders and are subject to a fee of 0.04% to 0.50%.
Pending Orders: Orders that are not filled immediately are recorded in the ledger, known as "pending orders" and incur fees ranging from 0.00% to 0.50%.
Partial Orders: Partial orders exist when part of the order is executed immediately and the rest remains on the books to be executed later. In this case, the first part will be graded on the "Taker" page. The rest are executed as "manufacturer" orders.