Are Crypto Rewards Credit Cards A Good Idea? (2024)

Crypto rewards credit cards are the newest incentive-style payment option that rewards users with crypto-currency as a substitute for cash back. These cards can be rewarding for varying degrees of crypto enthusiasts—from the crypto-curious person who wants to dabble in cryptocurrency but does not have the risk tolerance to jump in the market, to those deep into crypto—the ones who have a solid belief in the longevity of the digital currency movement and its potential for growth and profit.

Introduction and a Short History

Cryptocurrencies haven’t been around for too long, but in a brief period of time, they’ve made a tremendous impact.

Electronic money first emerged in the late 1980s, but it wasn’t until 2009 that a truly decentralized cryptocurrency, known as Bitcoin, hit the market. Considered to be the pioneer of the movement, Bitcoin was introduced by an anonymous individual (or group of individuals, no one really knows) using the pseudonym Satoshi Nakamora. When Bitcoin first entered the market, it was valued at basically nothing. That’s right—it was essentially worthless when applying a fiat value to it. By 2010, it was worth roughly 0.0008 U.S. dollars. In February 2021, Bitcoin value topped $50,000 per coin.

As Bitcoin grew in popularity, loads of other cryptocurrencies emerged—estimated at over 18,000 as of early 2022. Users now have more options than ever when it comes to cryptocurrencies.

Crypto Rewards Credit Cards

Crypto-rewards credit cards are the newest tool popping up in the field of digital currencies and so far their rewards incentives look pretty attractive, and even more so if cryptocurrencies continue to gain value at the rapid rate they are gaining today. But what exactly are crypto-rewards credit cards?

Although on the surface they sound confusing, crypto-rewards credit cards are really no different than most traditional rewards credit cards. Just like the majority of credit cards in circulation, transactions are conducted through the world’s largest payment processing networks: Visa, Mastercard, etc.

This means that if your crypto-rewards card is issued by Visa, your card will be accepted everywhere Visa credit cards are accepted. Depending on their processing network, crypto-rewards cards can also be eligible for benefits and card protections offered by Visa or Mastercard.

You can use a crypto-rewards card for purchases just like any traditional credit card. And just like a traditional rewards earning card, each time you spend with your crypto-rewards credit card, you will often be eligible to earn cash back. While some credit cards offer airline miles or cash back, crypto credit cards offer rewards in the form of Bitcoin and other cryptocurrencies. Some cards also allow you to redeem your earnings for cryptocurrency.

Crypto Rewards Debit Cards

The rise in cryptocurrency popularity has simultaneously created a need for crypto holders to be able to quickly access their funds for spending. Up until recently, the only options for cryptocurrency owners was to either invest and hold long term (HODL) or speculatively trade. In order to cash out their crypto to fiat currency for day-to-day spending, holders need to convert their coins to usable fiat currency and then wait for their funds to hit their bank account. This is a slow and inefficient way to access funds and makes crypto not much better than “Monopoly” money without an effective means of real-time usage.

To meet this need, crypto debit cards began emerging. Their launch revolutionized the movement, helping to drive interest and ultimately, public adoption.

Now, a crypto-rewards debit card can be used at merchants just like a standard debit card is used, but instead of being backed by a bank account, it is backed by your own crypto wallet. Think of it as more of a prepaid debit card than a traditional debit card.

Here’s how it works. First, the crypto is converted into the user’s choice of fiat currency before being loaded to the debit card. Once loaded and ready to use, purchases are processed in that specific currency. Rewards, however, are given as a digital coin depending on the debit card.

Many of these crypto debit cards also earn rewards in the form of cryptocurrencies on day-to-day spending. Some cards can even offer lucrative rewards, depending on how you value digital currencies.

Crypto debit cards, similar to crypto credit cards and other traditional payment options run on the major payment processing networks like Visa and Mastercard. If your crypto rewards debit card is issued by Visa, the card will work anywhere Visa is accepted—you can even withdraw cash from ATMs worldwide with crypto debit cards.

Crypto Rewards Credit Cards vs. Crypto Rewards Debit and Prepaid Debit Cards

Despite running on major processing networks and having the ability to earn rewards, crypto-rewards credit cards are actually quite a bit different than the debit options currently available.

The main difference is that with crypto credit cards, cardmembers make purchases on credit via the credit line allowed by the issuing institution and are responsible for paying back the balance. Crypto debit cards involve the user using their own funds—if they don’t have the money, they can’t use their card.

Another essential difference is the proof of stake obligation of many prepaid debit cards. Proof of stake, in its most basic form, is when a crypto holder contributes some of their digital coins to a specific blockchain network in order to support said network. Some debit cards require proof of stake as a term of card membership.

These requirements can be quite significant and tying up your money with the issuing financial institution may not be worth the opportunity cost. Rewards may not compensate for the loss incurred from tying up your capital.

Comparing Crypto Credit Cards

Brex 30 Card

Although it doesn’t earn cryptocurrency exclusively, the Brex cards now include redemptions for Bitcoin (BTC) and Ethereum (ETH) along with other options including miles, gift cards, cash or travel, making it the first business card to include crypto as a redemption option.

Brex offers two different business cards, each aimed at a different type of company. One version, the Brex 30 Card paid monthly, allows well-funded companies to access capital quickly, while the Brex Card paid daily has no minimum balance requirement and allows a company to charge up to 100% of their limit. On both cards, earnings can be redeemed for Bitcoin or Ethereum the same way they’re redeemed for miles, gift cards, cash or travel.

The Gemini Credit Card®*

The Gemini Credit Card®*, like the BlockFi Visa, has the ability to earn rewards in the form of Bitcoin and over 60 other cryptocurrencies. Cardholders use U.S. dollars to make purchases but can earn rewards in the form of crypto assets.

The card comes with two bonus spending categories—Dining and groceries. You’ll earn 3% back on dining (on up to $6,000 in annual spending; then 1%), 2% back on groceries, and 1% back on all other purchases. The Gemini Credit Card has no annual fee. You can also take this card along with you on your travels as it has no foreign transaction fees. Lastly, there is no exchange fee when acquiring your rewards, however, exchange fees may be incurred when you convert or sell your crypto assets.

Crypto.com Visa Card*

The Crypto.com Visa Card* is a prepaid debit card that includes five different “flavors,” each with its own unique set of perks and benefits. These tier levels are determined by how much you “stake,” or essentially loan, the crypto card issuing institution. The lowest tier requires no staking, but the rewards are minimal. The highest-tier card requires a stake $400,000 U.S. dollars, making the highest tier out of reach for all but a very limited group of Crypto investors.

Crypto.com Rewards Visa’s mid-tier cards seem to be the most logical as the staking requirements are less egregious, yet the benefits are still enticing. Perks include free Amazon Prime, Spotify monthly subscriptions, Netflix, airport lounge access and more.

SoFi Credit Card*

If you have an active SoFi investment account, the SoFi Credit Card allows you to redeem your points for cryptocurrency. You’ll earn 3% cash back for a year when setting up direct deposit with SoFi. After that, earn 2% unlimited cash back on purchases when redeemed toward investing, saving, or paying down an eligible loan with SoFi and can also redeem it directly into one of 20 different types of crypto offered through SoFi Invest.

Upgrade Bitcoin Rewards Visa®

The Upgrade Bitcoin Rewards Visa® earns an unlimited 1.5% back in Bitcoin on payments. You can hang onto the Bitcoin as an investment or sell it at any time and redeem the value towards a statement credit. Your Bitcoin will be held by NYDIG, a technology and financial services firm focused solely on Bitcoin. When you do choose to sell your Bitcoin, you’ll be subject to a transaction fee.

This allows you to select a “Cash Back for Crypto” option which will allow you to use your normal cash back from your Venmo account to buy the cryptocurrency of your choosing.  You can hold that crypto, buy more or sell it when you want. As of this writing, you can buy Bitcoin, Ethereum, Litecoin, or Bitcoin Cash. Although Venmo won’t charge a purchase transaction fee when you buy crypto this way, it will charge a fee any other time you buy or sell your holdings.

Venmo Credit Card*

The Venmo credit card has been around for a few years, but its dive into the crypto world is much more recent. This card earns your typical cash back—you’ll earn 3% cash back in the top spend category, 2% on the next category and 1% on all other purchases. It still falls under the crypto card category, though, thanks to the following feature—Cash Back to Crypto, the same program mentioned above, is a newer option on Venmo. It allows you to automatically convert your cash-back rewards to a crypto asset. You can choose the following cryptocurrencies for your rewards—bitcoin, ethereum, litecoin or bitcoin cash.

As far as fees go, the Venmo credit card doesn’t charge extra to convert your cash-back rewards through the Cash Back to Crypto means, however, a conversion spread based off of the current price and exchange rates will be built-in and deducted monthly from your account.

Unifimoney

The Unifimoney card is not currently available and there aren’t many details beyond it being a Visa Signature card. The card’s targeted release was Q1 2022 and the card is slated to be rolled out to current Unifimoney customers first.

Bottom Line

No doubt, cryptocurrencies are here to stay, but are they the way of the future? How you feel about this question could very well decide if a cryptocurrency-rewards credit card is right for you. More established crypto enthusiasts may find that crypto-rewards credit cards are a rewarding addition to their wallets and offer help growing these digital assets. However, given the relatively low risk of crypto-rewards credit cards, they may appeal to those wanting to take their first steps into the world of digital tokens.