How do crypto credit cards work?
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Cryptocurrency is quickly becoming an incredibly valuable “asset” in investment portfolios around the world. According to CoinMarketCap, the value of all available cryptocurrencies exceeds $ 2 trillion – and it’s only growing.
Traditional and start-up financial services companies have taken notice, and they are looking to attract new customers with crypto. And rather than having a credit card that offers travel rewards or cash back on purchases, there are cards that offer cryptocurrency rewards.
Select the details of how these new types of credit cards work, what to expect, and how to assess whether an encrypted credit card is right for your wallet.
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How crypto credit cards work
Crypto credit cards work exactly the same as any other reward credit card on the market – you get rewarded when you spend on the card. But in this case, you receive cryptocurrency for your purchases. However, keep in mind that each card differs in the way it treats and allocates cryptocurrency to its cardholders.
- 1.5% crypto cashback on all qualifying purchases
- 3.5% cash back in crypto rewards in the first 90 days of card membership
- 2% back in crypto on all qualifying purchases over $ 50,000 in annual spend
But since there are thousands of cryptocurrencies you can hold, the card actually rewards you with BlockFi Cryptocurrency reward points. Once the points are deposited and the cardholder’s account is in good standing, BlockFi will allow you to convert the points into any cryptocurrency of your choice.
Conversely, the Gemini credit card deposits the cryptocurrency directly into your Gemini account every time you swipe your card – giving you instant access to your rewards – rather than having to wait for the monthly statement to be cut. .
So, when looking for crypto credit cards, make sure you know what the process is for rewarding cardholders. It may take an extra step or two compared to more traditional credit cards, but it might be worth it if you’re interested in investing in cryptocurrency.
Also, keep in mind that not all of them are credit cards only, as there are several debit cards available, such as Coinbase and Crypto.com debit cards. So if you are averse to credit cards then you must not miss out on your purchases which earns you more crypto for your wallet.
But remember, crypto cards still work like normal credit cards, so balances need to be paid every month or else you’ll have to pay interest or late fees. While you typically buy things and pay for your card in US dollars, some cards allow you to make purchases (and pay for your card) with the cryptocurrency that is in your linked account.
Additionally, cards affect your credit score just like a traditional card, and using the card may incur fees, such as annual fees or transaction fees. Be sure to check the terms and conditions of each card to understand which rules apply.
What to consider with a crypto credit card
Having a crypto card is a bit more complex than a traditional credit card, so here are a few things to consider before applying:
- Taxes: One of the best parts of a crypto card is the ability to earn rewards that have the potential to increase in value, while cash back and travel rewards likely lose value due to inflation. and devaluation, respectively. However, these the rewards are not taxable, whereas if you earn crypto it is considered a taxable asset if you decide to sell it. So, if you are planning to earn or sell a substantial amount of cryptocurrency, you may want to consult a tax professional for advice.
- Flexibility: Each crypto card has a different wallet of cryptocurrencies in which you can earn rewards. If you want to invest in specific coins, make sure you know if the card and the exchange that supports it will allow you to invest in the coin you want.
- Advantages: Many crypto cards are rudimentary when it comes to benefits, so if you’re a frequent 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 suit your needs better.
- Limits: Due to different state laws in the county, not all crypto cards are available to everyone. So, before you apply, be sure to check each card’s terms and conditions to see if you live in an eligible state. Additionally, 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 managed in the United States.
Crypto Cards Available Now
Some crypto cards offer a waiting list, but if you are eager to apply and start earning, the following cards are open for applications.
Crypto Debit Cards
Crypto credit cards
- SoFi Credit Card: As you spend on the card, you will earn SoFi Credit Card Reward Points which can be redeemed for Bitcoin or Ethereum.
- Venmo Credit Card: You can automatically buy Bitcoin, Ethereum, Litecoin, or Bitcoin Cash with the cash back earned from your purchases.
- Brex Business Card: You can spend your reward points that you earn on the card in Bitcoin or Ethereum.
- BlockFi Credit Card: You can choose to earn rewards in a dozen types of crypto, including Bitcoin and Ethereum.
At the end of the line
There are only a few types of credit card rewards, but now cryptocurrency has been added to this list. It’s an exciting innovation in the credit card industry, but like almost any decision you make when it comes to your personal finances, make sure the crypto rewards make sense to you.
Additionally, remember that it’s important to always spend responsibly, even though the rewards can potentially increase in value. Credit card debt is never a good idea, and overspending on a credit card can result in high interest charges.
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Editorial note: Any opinions, analysis, criticism or recommendations expressed in this article are the sole responsibility of the editorial staff of Select and have not been reviewed, endorsed or otherwise approved by any third party.