Are Crypto Rewards Credit Cards A Good Idea?
Crypto rewards credit cards are the most recent incentive-style payment option that allows users to earn bitcoin in exchange for benefits. These cards can benefit a wide range of crypto enthusiasts, from the crypto curious who is finally ready to dabble in cryptocurrency but lacks the risk tolerance to enter the market to those who are deeply invested in cryptocurrency and have a strong belief in the digital currency movement’s longevity and potential for growth and profit. An Overview and a Brief History
Cryptocurrencies have only been around for a short period, yet they have already had a significant impact.
Despite the fact that electronic money first debuted in the late 1980s, it wasn’t until 2009 that a truly decentralised cryptocurrency known as Bitcoin joined the market. Bitcoin was invented by an unknown individual or group of individuals under the moniker Satoshi Nakamora, who is widely recognised as the movement’s forefather. When Bitcoin first entered the market, it was nearly worthless. That’s right—when it came to monetary value, it was almost useless. In 2010, it was worth around 0.0008 USD. In February 2021, the value of a single Bitcoin currency topped $50,000.
As Bitcoin’s popularity grew, a rush of other cryptocurrencies emerged, with over 4,000 projected by early 2021. Users now have more options than ever before when it comes to cryptocurrencies.
Crypto Rewards Credit Cards
Crypto rewards credit cards are the newest tool to emerge in the arena of digital currencies, and its rewards incentives look to be rather appealing thus far, especially if cryptocurrencies continue to gain value at the rate they are already rising. But what precisely are crypto rewards credit cards?
Although they may look baffling on the surface, crypto rewards credit cards are no different from most ordinary rewards credit cards. The transactions, like the vast majority of credit card transactions, are made possible through the world’s primary payment processing networks: Visa or Mastercard. As a result, if your crypto rewards card is issued by Visa, it will be accepted in any location that accepts Visa credit cards.
Depending on the processing network, crypto rewards cards may also be eligible for Visa or Mastercard advantages and card protections. A crypto rewards card, like any other sort of credit card, may be used to make transactions. Every time you use your crypto rewards credit card to make a purchase, you will be able to receive rewards. Unlike traditional credit cards, which provide airline miles or cash back, crypto credit cards provide Bitcion and other cryptocurrencies as rewards or, in certain cases, the option to exchange your earnings for cryptocurrency.
What is a Crypto Debit Card
The increased popularity of bitcoin has created a need for cryptocurrency holders to be able to utilise their funds quickly. Until recently, bitcoin owners had just two choices: invest and hold for the long term (HODL) or trade speculatively. To convert their cryptocurrency to fiat money for daily spending, holders must first convert their coins to a fiat currency and then wait for the funds to appear in their bank account. This is a time-consuming and inefficient way to get funds.
Crypto debit cards began to appear on the market to suit this demand. Their debut changed the course of the movement, attracting notoriety and, eventually, widespread approval. Despite the fact that we have all witnessed the emergence of cryptocurrencies, many people view them as “Monopoly” money since they cannot be employed in real-world circumstances.
Crypto rewards debit cards may be used in stores just like regular debit cards, but instead of being backed by a bank account, they are backed by your own crypto wallet. Consider it a prepaid debit card rather than a standard debit card.
The cryptocurrency is first converted into the user’s selected fiat currency before being loaded onto the debit card. Purchases are made in the loaded and ready-to-use money. Rewards, on the other hand, are issued in the form of a specific digital token, depending on the debit card.
Many of these cryptocurrency debit cards also provide daily spending bonuses in the form of bitcoins. Depending on how you value digital currency, certain cards might provide significant incentives.
Major payment processing networks such as Visa and Mastercard allow crypto debit cards, as well as crypto credit cards and other traditional payment methods. If you have a Visa crypto rewards debit card, you may use it everywhere Visa is accepted. You may even withdraw cash from ATMs all across the world using crypto debit cards.
Crypto Rewards Credit Cards vs. Crypto Rewards Debit and Prepaid Debit Cards
Despite the fact that they run on major processing networks and allow you to earn rewards in the form of cryptocurrency, crypto rewards credit cards are not the same as the available prepaid debit options.
The main difference is that with crypto credit cards, cardholders make purchases on credit utilising the credit limit granted by the issuing institution and are responsible for repaying the balance. Crypto debit cards need the user to utilise their own funds; if they do not have cash on hand, they will be unable to use their card.
One downside of crypto prepaid debit cards, as compared to crypto rewards credit cards, is that they often earn rewards in a bank-specified crypto, which is typically significantly less valuable than some of the more popular cryptos, such as Bitcoin and Ethereum.
For example, the Crypto.com Rewards Visa card* offers up to 8% back on all transactions, but the reality is less exciting. It recoups that 8% in the form of CRO awards, Crypto.com’s own currency token, which are valued around $0.08 USD. A $100 transaction generates 8 CRO, however it is closer to $6.40 when converted to USD. Still, a 6% reward card on purchases is a terrific deal, but in the volatile crypto market, if the coin’s value falls, that percentage can plummet drastically.
Another key contrast is that many prepaid debit cards need evidence of stake. Proof of stake occurs in its most basic form when a crypto holder transfers a portion of their digital currency to a specific blockchain network in order to maintain that network. Certain debit cards require proof of stake as a requirement of card membership.
These rules can be rather severe, and tying up your money with the issuing bank may not be worth the risk. Rewards may not be enough to make up for the losses incurred as a result of tying up your capital.
Comparing Crypto Credit Cards
BlockFi Rewards Visa® Signature Card
Potential applicants can perform a soft credit check before formally applying for the BlockFi Visa credit card to determine whether they are likely to be accepted. This is rare among cryptocurrency card providers.
The BlockFi Visa credit card comes with a three-month introductory offer of 3.5 percent cash back, up to $100 in bitcoin. This card does not have an annual fee. In bitcoin, all purchases earn a base rate of 1.5 percent. Every purchase worth more than $50,000 in annual expenditure gives you 2% back in bitcoin. Your yearly spending is reset at the start of each card anniversary year.
Although it does not earn cryptocurrency on its own, the Brex cards now allow redemptions for Bitcoin (BTC) and Ethereum (ETH) in addition to other options such as miles, gift cards, cash, or travel, making it the first business card to offer cryptocurrency as a redemption option.
Brex offers two styles of business cards, each tailored to a certain type of company. The monthly Brex Card allows well-funded firms to readily access cash, whilst the daily Brex Card has no minimum balance requirement and allows a firm to charge up to 80% of their limit. Earnings on both cards may be redeemed for Bitcoin or Ethereum in the same way as miles, gift cards, cash, or trips can.
Gemini Credit Card™*
Like the Block Fi Visa, the Gemini Credit Card allows you to earn Bitcoin and other cryptocurrencies as rewards. Cardholders pay in USD but can obtain bitcoin incentives.
Gemini’s new card will earn 3% bitcoin back on dining, 2% cryptocurrency back on groceries, and 1% cryptocurrency back on all other transactions, with profits quickly credited to their Gemini account. World Mastercard features such as identity theft protection, zero liability, and price protection are included with the card. It will also have no exchange fees for bitcoin rewards and will be available in all 50 US states.
Crypto.com Visa Card**
The Crypto.com Rewards Visa card is a prepaid debit card that comes in five different “flavours,” each with their own set of perks and rewards. The amount of money you “stake,” or loan, to the crypto card issuing corporation determines your tier level. There are no staking restrictions at the lowest tier, however the rewards are tiny. The top tier requires 5,000,000 CRO, Crypto.com’s digital currency, as staking. The top tier, 5,000,000 CRO incentives, is equivalent to $400,000 USD, making it out of reach for anyone but a limited group of Crypto investors.
Bonuses on Crypto.com Visa’s mid-tier cards appear to be the most sensible, as the staking conditions are less stringent but the benefits are still enticing. There are free Amazon Prime, Spotify monthly subscriptions, Netflix, airport lounge access, and other perks.
SoFi Credit Card
If you have a current SoFi investing account, you may use the SoFi Credit Card to redeem your points for bitcoin. All eligible purchases will earn you 2% cash back, which you may then use to purchase one of the 20 different types of cryptocurrencies accessible through SoFi Invest.
Tomo Credit Card*
Customers who have accumulated at least $10 in Tomo Card rewards can choose to redeem their earnings for any of the three major cryptocurrencies: Bitcoin, Ethereum, and Litecoin, with more options on the way, according to Kristy Kim, CEO and founder of TomoCredit, in an interview with Forbes Advisor. You have 28 days after paying the previous month’s statement in full to redeem your gains.
Upgrade Bitcoin Rewards Visa®
Payments made with the Upgrade Bitcoin Rewards Visa® earn a flat rate of 1.5 percent in Bitcoin. You can keep the Bitcoin as an investment or sell it at any time to receive a statement credit. NYDIG, a Bitcoin-only technology and financial services startup, will hold your Bitcoin. You will be charged a transaction fee if you opt to sell your Bitcoin.
You may select “Cash Back for Crypto.” This allows you to use your ordinary Venmo cash back to buy the cryptocurrency of your choosing. You are free to retain that bitcoin, acquire more cryptocurrency, or sell it whenever you choose. As of this writing, you may purchase Bitcoin, Ethereum, Litecoin, or Bitcoin Cash. Although Venmo does not charge a purchase transaction fee when you acquire cryptocurrencies in this manner, they do charge a fee if you buy or sell your holdings.