All You Need To Know About Crypto Credit Cards

Over the previous years, cryptocurrency has taken the spotlight of the financial market. And lately, popular cryptocurrencies like Bitcoin have been making insane value swings. And most recently, cryptocurrency made its mark in the payment and banking spheres by coming up with Crypto credit cards. 

The demand for Crypto credit cards has been on a high due to their remarkable benefits. With the consumer interest in these cards growing every day, they are likely to become the new normal.

So, are you new to crypto, or are you considering having a crypto credit card? Here are all the things you need to know about crypto credit cards. 

What Are Crypto Credit Cards And How Do They Work? 

Crypto credits are so much like traditional credit cards. However, unlike traditional credit cards, these cards use crypto as their primary currency. 

With a crypto credit card, you can spend crypto and at the same time earn crypto rewards. The crypto rewards earned get deposited directly to your crypto wallet associated with the credit card. 

First, you need to preload funds directly from your crypto wallet to use the crypto credit card. And when it comes to purchasing goods or services, the crypto is automatically converted to the U.S dollar. The conversion is at per with the crypto market value at the time of your purchase.  

Also, in the crypto market, there are crypto debit cards too. However, different from crypto debit cards, you can use these credit cards to borrow from the issuers and then pay later.  

What Are Some of the Rewarding Strategies Of Crypto Credit Cards?

Different crypto credit cards have varying rewarding strategies. For instance, if you have a Gemini credit card, you earn a 3% reward payback in Bitcoin for any purchases you make. Any crypto reward earned is instantly and directly deposited to your Gemini account.

Meanwhile, with a BlockFi credit card, you earn a 1.5% cashback reward. And you can do this with more than ten crypto coins, including the popular ones, Bitcoin and Ethereum.

On the other hand, there is the Club Swan credit card, a card that allows you to earn free crypto rewards through referrals. You earn a reward equivalent to 20% of the membership fee paid for every person you refer.  

SoFi credit cards, on the other hand, only allow you to redeem your reward points for either Ethereum or Bitcoin. And in the case of Venmo credit cards, you can purchase only four crypto coins with your cashback. These coins are Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. 

Like the SoFi credit card, the Brex Business card allows users to redeem their reward points for Ethereum and Bitcoin.  

Advantages of Crypto Credit Cards

1.   Ability to Earn Rewards

As you already know, the major benefit of these credit cards is earning crypto rewards. So whenever you purchase anything with the card, you instantly earn crypto rewards.  

2.   Easy way to Get into crypto

 Considering to get into crypto space, but you don’t want to go all-in? Crypto credit cards are for you. This card helps you get into the crypto space without getting into the deep water of crypto. Also, you get to avoid the complex side of crypto since this card offers you a simple option to venture into the crypto world.  

3.   Ability to Appreciate 

The value of crypto rewards earned through your purchases can appreciate. Unlike normal rewards- cashback, miles, and points, your crypto rewards appreciate hand in hand with the crypto market value. 

4.   No trading Fees 

You can always use your cashback rewards from traditional credit cards to buy yourself some crypto. But with a crypto credit card, you can bypass trading fees. It’s because these cards let you earn crypto rewards directly into your account. 

5.   Ability to Borrow

With traditional credit cards, you can borrow money from card issuers. And crypto credit cards are no exception. So are you running out of crypto in your account? Feel free to borrow some from the card issuers if the credit score is in your favor.  

Disadvantages of Crypto Credit Cards

1.   Subject to Taxation

Crypto rewards earned through your credit card might not be subject to taxation. However, you will have to undergo taxation when selling your appreciated crypto.

This tax is the crypto gains tax. Capital gain is the difference between the crypto selling price and its acquisition price. 

The crypto gain tax you pay is similar to the one you pay when you sell or buy crypto via a crypto exchange. 

2.   Uncertain Crypto rewards

Cryptocurrencies are volatile in nature. Therefore if the value of your preferred crypto drastically falls by half, your crypto reward also falls by half.

For instance, your credit card allows you a 3% reward back after purchase. But when the crypto value falls by half, you earn a 1.5% reward back.  

3.    Limited Flexibility 

 Most crypto credit cards have a limited number of cryptocurrencies that you can earn as a reward. Yet you can buy any crypto you want with money from your cashback rewards.  

4.    Limited Locations

 As the cryptocurrency market continues to reach greater heights globally, this is contrary in other places. As a matter of fact, countries like China and Turkey have entirely banned the use of crypto.  

Thus, you certainly can’t use your credit card for purchases in these countries.

5.    Limited Availability

Some countries like the U.S and Canada have authorized and enthusiastically supported the use of crypto. Yet some crypto credit cards are not available everywhere in these countries and many others.  

The crypto world is growing fast, with amazing developments once in a while. And if you think that crypto is the currency of the future, you would like to grab yourself a crypto credit card. Also, if you’re a crypto newbie and you don’t want to go all-in, try these cards out. Getting one of these cards can be a great and simple way to start your crypto journey. Lastly, makes sure you go through the terms and conditions before choosing your credit card.