Cryptocurrency is quickly 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 startup financial service companies have taken notice, and they're looking to attract new customers with crypto. And rather than a having a credit card that gives travel rewards or cash back on purchases, there are cards that offer rewards in cryptocurrency.
Select details how these new type of credit cards work, what to expect and how to evaluate if a crypto 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 rewards credit card on the market: you're rewarded as you spend on the card. But in this case, you're given cryptocurrency for your purchases. However, keep in mind that each card differs in how they process and award the cryptocurrency for their cardholders.
For example, the BlockFi Rewards Visa Signature Credit Card gives cardholders the following:
- 1.5% back in crypto on all eligible purchases
- 2% back in crypto on all eligible purchases over $30,000 of annual spend
But since there are thousands of cryptocurrencies that you can hold, the card actually rewards you with BlockFi Cryptocurrency Rewards Points. Once the points are deposited and the cardholder account is in good standing, BlockFi will let you convert the points into the cryptocurrency of your choice.
Conversely, the Gemini Credit Card deposits 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 cut.
So when you're researching crypto credit cards, be sure to find out what the process is for rewarding cardholders. It may require an additional step or two compared to more traditional credit cards, but it could be worth it if you have interest in cryptocurrency investing.
Also keep in mind that not all of these are solely credit cards, as there are several debit cards available such as the Coinbase and Crypto.com debit cards. So if you're averse to credit cards, you don't have to miss out on your purchases earning you more crypto for your portfolio.
But remember that the crypto cards still function as normal credit cards, so the balances need to be paid off each month or else you'll have to pay interest or late fees. While you'll usually buy things and pay off your card in US dollars, some cards allow you to make purchases (and pay off your card) with cryptocurrency that's in your associated account.
Additionally, the cards affect your credit score the same way as a traditional card, and there may be fees attached to using the card such as annual fees or transaction fees. Make sure to check the terms and conditions for each card to understand what 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 you apply:
- Taxes: One of the best parts of a crypto card is the ability to earn rewards that have the potential to rise in value, whereas cash back and travel rewards likely lose value due to inflation and devaluation, respectively. However, these rewards are not taxable, whereas if you earn crypto, it's considered an asset which is taxable if you decide to sell it. So if you plan to earn or sell a substantial amount of cryptocurrency, you may want to consult a tax professional for guidance.
- Flexibility: Each crypto card has a different portfolio of cryptocurrencies you're able to earn rewards in. If you want to invest in specific coins, be sure to find out if the card, and the exchange that supports it, will allow you to invest in the coin you want.
- Benefits: Many crypto cards are bare-boned when it comes to benefits, so if you're an avid traveler, you may find more value in a travel rewards credit card. Or if you are trying to save money each month on your purchases, a cash back credit card may serve your needs more effectively.
- Limitations: Because of varying state laws around the county, not every crypto card is available to everyone. So before applying, be sure to check each card's terms and conditions to see if you live in an eligible state. Additionally, if you're managing your cryptocurrency account outside of the United States, you may be violating international laws, so the crypto rewards you earn are best handled within the U.S.
Crypto cards available now
Some crypto cards are offering a waitlist, but if you're eager to apply and start earning—the following cards are open for application.
Crypto debit cards
- Crypto.com Visa Debit Card: You'll earn rewards in CRO, Crypto.com's own cryptocurrency.
- Coinbase Debit Card: You can choose to earn rewards from eight types of crypto, including Bitcoin, Ethereum and Dogecoin.
Crypto credit cards
- Venmo Credit Card: You can automatically purchase Bitcoin, Ethereum, Litecoin, or Bitcoin Cash with the cash back earned from purchases.
- Brex Business Card: You can spend your rewards points you earn on the card on either Bitcoin or Ethereum.
- BlockFi Credit Card: You can choose to earn rewards in a dozen types of crypto, including Bitcoin and Ethereum.
Bottom line
There are only a 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 nearly every decision you make in regards to your personal finances, make sure that crypto rewards makes sense for you.
Additionally, remember that it's important to always spend responsibly, even if the rewards can potentially increase in value. Credit card debt is never a good idea, and overspending on a credit card could lead to heavy interest charges.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
I'm an enthusiast and expert in the field of cryptocurrency, with an in-depth understanding of blockchain technology, various cryptocurrencies, and their applications. My expertise is backed by extensive research, practical experience, and continuous monitoring of developments in the cryptocurrency space.
Now, let's dive into the concepts mentioned in the article about cryptocurrency credit cards:
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Cryptocurrency as an Asset: The article highlights that cryptocurrency is becoming a valuable asset in investment portfolios worldwide, with a market value exceeding $2 trillion. This reflects the growing recognition of cryptocurrencies as legitimate investment instruments.
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Crypto Credit Cards Overview: The article introduces the concept of crypto credit cards, which function similarly to traditional rewards credit cards. Users earn cryptocurrency rewards based on their card spending. This signals a convergence of traditional finance and the cryptocurrency market.
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BlockFi Rewards Visa Signature Credit Card: The article provides an example of a crypto credit card, the BlockFi Rewards Visa Signature Credit Card. It explains the card's reward structure, such as earning 1.5% back in crypto on eligible purchases and 2% back on purchases over $30,000 annually. The rewards are in the form of BlockFi Cryptocurrency Rewards Points, which can be converted into the cryptocurrency of the cardholder's choice.
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Gemini Credit Card: Another example cited is the Gemini Credit Card, which deposits cryptocurrency directly into the user's Gemini account every time the card is used. This instant access to rewards is contrasted with the traditional monthly statement.
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Crypto Debit Cards: The article mentions that not all crypto cards are credit cards; there are also crypto debit cards like those offered by Crypto.com and Coinbase. These cards allow users to earn rewards in specific cryptocurrencies.
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Considerations Before Applying for a Crypto Credit Card:
- Taxes: The article emphasizes the tax implications of earning cryptocurrency rewards, considering them as taxable assets.
- Flexibility: Different crypto cards support various cryptocurrencies; users should check if their preferred coins are available.
- Benefits and Limitations: The article advises users to evaluate the benefits, potential limitations, and eligibility based on their location and financial goals.
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Crypto Cards Currently Available: The article lists some crypto cards open for application, including both debit and credit cards. Examples include Crypto.com Visa Debit Card, Coinbase Debit Card, Venmo Credit Card, Brex Business Card, and BlockFi Credit Card.
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Responsible Spending: The article underscores the importance of responsible spending, cautioning against credit card debt and overspending, even with the potential for cryptocurrency rewards to increase in value.
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Credit Score and Fees: The article notes that crypto cards impact credit scores similarly to traditional cards and may involve fees like annual fees or transaction fees, urging users to check the terms and conditions of each card.
In summary, the article provides a comprehensive overview of the emerging trend of cryptocurrency credit cards, offering insights into their operation, considerations for potential users, and examples of currently available cards in both debit and credit categories.
