How do crypto credit cards work?
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Cryptocurrency is fast becoming an incredibly valuable “asset” in investment portfolios around the world. According to CoinMarketCap, the value of all available cryptocurrencies is over $ 2 trillion – and it’s only getting bigger.
Traditional and young financial service companies have become aware of themselves and want to win new customers with crypto. And instead of having a credit card that offers travel rewards or cash for purchases, there are cards that offer rewards in cryptocurrency.
Choose describes how this new type of credit card works, what to expect, and how to judge whether a crypto credit card is right for your wallet.
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Crypto credit cards work just like any other premium credit card on the market: you are rewarded when you spend on the card. But in this case, you will receive cryptocurrency for your purchases. Note, however, that each card differs in how it processes and issues cryptocurrency for its cardholders.
For example the BlockFi Rewards Visa Signature Credit Card gives cardholders the following:
- 1.5% back in crypto on all eligible purchases
- 3.5% back in crypto rewards during the first 90 days of card membership
- 2% back in crypto on all eligible purchases over $ 50,000 of annual spending
However, since there are thousands of cryptocurrencies to hold, the card will actually reward you with BlockFi Cryptocurrency Rewards Points. As soon as the points have been deposited and the cardholder’s account is in order, you can use BlockFi to convert the points into the cryptocurrency of your choice.
Conversely, the Gemini credit card pays cryptocurrency directly to you. one Twins account every time you swipe your card – you have instant access to your rewards – and don’t have to wait for the monthly statement to be reduced.
So if you are looking for crypto credit cards, it is important to find out how cardholders are rewarded. It may take an extra step or two compared to traditional credit cards, but it might be worth it if you’re interested in cryptocurrency investing.
Also, keep in mind that not all of them are just credit cards as there are multiple debit cards like the Coinbase and Crypto.com debit cards. So, if you are credit card averse, you don’t have to forego your purchases to earn more crypto for your portfolio.
Remember, however, that the crypto cards continue to work like normal credit cards, so the balance must be paid out every month or you will otherwise have to pay interest or late fees. While you usually buy things and pay your card in US dollars, a couple of cards allow you to make purchases (and withdraw your card) using the cryptocurrency that is in your associated account.
In addition, the cards have the same effect on your creditworthiness as a traditional card, and fees such as annual fees or transaction fees may be incurred with the use of the card. Check the terms and conditions for each card to understand which rules apply.
What to watch out for with a crypto credit card
Owning a crypto card is a little more complex than a traditional credit card, so here are a few things to consider before you apply:
- Steer: One of the best parts of a crypto card is the ability to earn rewards that have the potential to increase in value, while cashback and travel rewards are likely to depreciate due to inflation and devaluation, respectively. This, however Rewards are not taxable, while cryptocurrencies are considered an asset that is taxable if you choose to sell them. So if you are planning on making or selling a significant amount of cryptocurrency, you might want to contact a tax advisor.
- Flexibility: Each crypto card has a different portfolio of cryptocurrencies in which you can earn rewards. If you are looking to invest in specific coins, you should find out if the card and wallet that supports it will allow you to invest in the coin that you want.
- Services: Many crypto cards are plain and simple in terms of benefits. So if you are an avid traveler you may find more value in a travel rewards credit card. Or, if you’re trying to save money on your purchases every month, a cash back credit card may be more effective in meeting your needs.
- Limitations: Due to different state laws in the county, not every crypto card is available to everyone. So, before applying, be sure to check the terms and conditions of each card to see if you live in an eligible state. Also, if you manage your cryptocurrency account outside of the United States, you may be breaking international laws so the crypto rewards you earn are best handled in the United States
Some crypto cards offer a waiting list, but if you want to apply and make money you can apply to the following cards.
Crypto debit cards
Crypto credit cards
- SoFi credit card: When you spend on the card, you’ll earn SoFi Credit Card Reward Points that can be redeemed for either Bitcoin or Ethereum.
- Venmo credit card: You can buy Bitcoin, Ethereum, Litecoin or Bitcoin Cash automatically with the cashback earned from the purchases.
- Brex business card: You can spend your reward points that you earn on the card for either Bitcoin or Ethereum.
- BlockFi credit card: You can choose to earn rewards in a dozen types of crypto, including Bitcoin and Ethereum.
There are few types of credit card rewards, but now cryptocurrency has been added to that list. It’s an exciting innovation in the credit card industry, but similar to almost every decision you make regarding your personal finances, you make sure that crypto rewards make sense to you.
Also, remember that it is important to always spend responsibly, even when the rewards can potentially increase in value. Credit card debt is never a good idea, and spending too much on a credit card can lead to high interest charges.
Note to editors: Opinions, analysis, reviews or recommendations expressed in this article are those of the Select editorial team and have not been reviewed, approved or otherwise endorsed by third parties.