When selecting the right card, consider the rewards rates, spending limits, regional restrictions, and other requirements such as staking.
If you own cryptocurrency, you may be wondering how and where you can spend your digital funds in the real world. Crypto credit and debit cards can help create a seamless transaction experience holding, earning, and spending crypto, and may be the right choice for those of us looking for an easier way to spend our funds.
This is how they work.
Bitcoin debit cards vs. Bitcoin credit cards
The use of crypto credit and debit cards is increasing, with Visa (V) customers making $2.5 billion in crypto-linked card payments in the first fiscal quarter of 2022. Holders of both crypto credit cards and debit cards can pay for goods and services by converting cryptocurrency into fiat currency at the point of sale.
Crypto debit cards work similarly to traditional debit cards in that they immediately withdraw funds from the account, so the account must be topped up with cryptocurrency linked to an individual exchange account or crypto account. Traditionally, users had to convert their cryptocurrency through centralized exchanges, which then wired them funds that could be spent – a process that could take hours or days. Crypto debit cards enable you to spend your cryptocurrency without first transferring funds.
Both Visa and Mastercard (MA) provide crypto debit cards in collaboration with well-known exchanges such as:
Coinbase Card is a Visa debit card that allows users to earn cryptocurrency for every purchase they make.
BitPay Debit Card is a prepaid Mastercard that allows you to reload your balance instantly with no conversion fees.
Crypto.com Visa Card, a prepaid card that allows users to load funds from their bank accounts, other credit or debit cards, or cryptocurrency.
Some crypto debit cards, such as the Crypto.com Visa card, require users to stake tokens native to their platforms for a set period of time in order to qualify for a card, whereas others, such as the Binance Visa Card, offer cashback rewards based on a user’s BNB monthly average balance.
Crypto credit cards, like traditional credit cards, require a completed application and a credit check before the issuer will allow users to borrow money. Furthermore, you can earn crypto rewards with every purchase, whether in the form of points or cashback.
To apply for most popular crypto credit cards, you must have at least good credit. They are as follows:
Gemini Credit Card, which has no annual fee and allows users to earn rewards in over 60 cryptocurrencies.
The BlockFi Rewards Visa Signature Card has no annual fee or foreign transaction fees and offers 1.5% back in cryptocurrency on all purchases.
Nexo Card, which uses digital assets as collateral to deduct purchases from your available credit line.
Is it worthwhile to obtain cryptocurrency debit or credit cards?
Since their introduction several years ago, cryptocurrency credit and debit cards have come a long way. Visa announced last year that it had partnered with 50 of the leading crypto platforms on card programs that allow for the seamless conversion of digital currency to fiat currency around the world, whereas Mastercard allows for real-time use of digital currency at over 90 million acceptance locations.
Both crypto debit and credit cards allow ATM withdrawals and are widely accepted around the world, but there are a few things to keep in mind:
Volatility: Because most cryptocurrencies are volatile, the rewards you earn in crypto may fluctuate in value depending on market conditions, as opposed to rewards points or miles, which usually remain constant.
Taxes: For tax purposes, cryptocurrency is classified as “property” by the Internal Revenue Service in the United States. Each time you use a crypto debit card, you may be subject to taxation. Although rewards are not taxable, you may be required to report gains or losses from card use on your tax return.
Cryptocurrency offerings: Because each card has a different portfolio of cryptocurrencies, make sure to pick one that supports the currency in which you want to invest.
Limitations: Depending on local laws, different crypto cards may have regional restrictions or not be available in all jurisdictions.
Ultimately, the decision to obtain a crypto credit or debit card is determined by your spending habits and financial portfolio. When selecting the right card, consider the rewards rates, spending limits, regional restrictions, and other requirements such as staking, as well as the platform the card is linked to and the cryptocurrencies you interact with the most.