What is a crypto credit card?
A crypto credit card is a credit card that lets you spend cryptocurrency as well as earn cryptocurrency rewards.
Cryptocurrencies are digital currencies that have become increasingly popular in recent years. The best-known is Bitcoin, which launched in 2009, but there are over 4,000 different currencies out there. These digital currencies can be spent, just as you would a U.S. dollar, but they can also be treated as investments. Cryptocurrencies are extremely volatile and often don’t have the same protections as money you keep in the bank.
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Right now, there are no crypto rewards credit cards in the United States. However, a few will launch later this year. We can expect to see more as cryptocurrency becomes even more widespread.
How does a crypto rewards credit card work?
A cryptocurrency rewards credit card works in a similar way to an ordinary rewards card. When you swipe your card and make a purchase, you’ll earn rewards. The big differences with crypto rewards credit cards are that you’ll likely be able pay off your balance with crypto. Plus, you’ll be able to earn rewards in Bitcoin and potentially other types of crypto as well.
The trick is to compare credit cards and pick the right type of rewards for your spending habits. For example, if you travel a lot, you might use a travel rewards card and put the points toward a flight or hotel. If you’re a crypto enthusiast, earning Bitcoin rewards may appeal.
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A few retailers have begun to accept Bitcoin payments. But if they don’t, it’s a bit like spending money abroad. Crypto cards convert your crypto into what’s called fiat currency (like dollars or euros) to process the transaction.
Crypto credit vs. debit card
Crypto debit cards are similar to ordinary debit cards. Some cryptocurrency exchanges and wallets provide them instead of crypto credit cards.
When you use a crypto debit card, the funds will be drawn from your wallet or account. That means you’ll need to have crypto available to make a purchase. Many are prepaid debit cards, so you need to load money onto the card before you can use it.
In contrast, when you spend with a crypto credit card, you borrow money from the card issuer which you then pay back. Both types of cards can pay cryptocurrency rewards.
When can I get a crypto credit card?
The first two crypto credit cards will be available in the U.S. later this year. If you want to earn crypto rewards on everyday purchases, you can already join the waitlist for either of them.
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Here’s what we know so far:
- The Gemini Credit Card: This card will pay up to 3% back in Bitcoin or another crypto on purchases. Gemini has not yet announced its rewards categories or annual fee. This card promises no exchange fees on crypto rewards. It will be available in all 50 states.
- BlockFi Bitcoin Rewards: Cardholders can earn 1.5% cash back in Bitcoin on purchases. There’s a signup bonus of $250 in Bitcoin if you spend $3,000 within the first three months. Plus, you can earn extra rewards of up to 3.5% in months four to six of card ownership. Also, this crypto rewards card lets you earn interest on your rewards and get crypto rewards for referring friends. You can even earn Bitcoin back on eligible trades. However, it comes with a hefty $200 annual fee.
Should I get a crypto credit card?
As with any cash back cards, you should only get a crypto credit card if it will reward your spending habits. If you are interested in cryptocurrency, being able to earn crypto rewards might work well for you.
But make sure you weigh up what each card offers against its costs. Here are some questions to ask yourself:
- What is the rewards rate?
- Is there an annual fee?
- Are there any other fees?
- Do any other benefits or perks come with the card?
- Can I get better value with another card?
You may be able to get more benefits and more valuable rewards from one of the top rewards credit cards on the market. Don’t forget that you could simply buy Bitcoin with your cash back rewards from an ordinary credit card. If one of the best credit cards pays a higher cash back rate for a lower annual fee, that may make more sense.
Cryptocurrency rewards may seem attractive, but they are also extremely volatile. Just like a stock market investment, the value of the coins can go up and down. So cryptocurrency isn’t a great way to keep money you might need in the short term.
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