Crypto reward cards are the new payment method in the market. And the wonderful thing is, besides facilitating you spending crypto in any stores that accept Visa, Mastercard and UnionPay, many of them reward users through earning cryptocurrencies. Indeed, if you’re a crypto enthusiast, these cards can prove to be remarkably beneficial to you.
It is important to point out that not all crypto credit and debit cards give rewards based on transactions. Some like, for example, Club Swan have chosen to benefit users through unique services as well as affiliate commissions.
How do Crypto Reward Credit Cards work?
So far, these are some of the newest tools in the crypto market. And up to this point, their rewards look pretty enticing. Even better, with the rapid increase of crypto value lately, the rewards look even more promising. But what is a crypto reward credit card?
Crypto reward credit cards might sound confusing to understand. But the truth is, they are so much like traditional reward credit cards. The main difference is that traditional credit cards earn miles, points, and cashback as rewards, while these credit cards earn crypto rewards like ether and bitcoin. Also, different crypto reward credit cards have varying ways of awarding and processing crypto to the users.
For instance, cardholders of BlockFi Rewards visa signature credit card will get:
· 1.5% back in crypto for any eligible purchase
· 3.5% back in crypto rewards for your first 90 days of card membership
· 2% back in crypto for over $50,000 that you spend in purchases per year
And since there are many types of crypto, you get awarded with BlockFi crypto reward points. Afterward, you can convert the points to your desired type of crypto once they are in good standing.
On the other hand, you don’t have to wait for a monthly statement with most of them. So every time your card gets swiped, you directly get crypto rewards into your account. This way, you can instantly get access to your crypto reward.
Do you want to add a crypto reward credit card to your list of cards? Then be sure to look into the rewarding process of these cards before you get one. Compared to most traditional credit cards, some may have more than one step to reward the user. Furthermore, some of these credit cards bypass the usual method of buying and paying off with cash in your card. Some of these credit cards allow you to purchase and pay with crypto from the linked crypto account.
Furthermore, like traditional credit cards, the cards also affect your credit score. Also, there may be fees such as transaction fees and annual fees associated with using the cards. Make sure to go through the terms and conditions before you get one.
What are the Benefits of Using Crypto Reward Credit Cards?
1. Easy way to get started with crypto. Crypto reward credit cards typically are already linked with cryptocurrency exchanges. Thus you don’t require a different crypto exchange to sell or buy your digital currency. So if you are a newbie in the crypto world, this might be an easy way for you to get started.
2. Ability to appreciate. Unlike rewards earned by traditional credit cards, crypto stands a chance to appreciate. For instance, merchandise bought with traditional credit card rewards ends up losing value in the long run. But, with crypto rewards, it is the exact opposite.
3. Passive investment. Other investments might require your time to manage. But, by having this credit card, you accumulate value without putting in too much thinking and time.
4. Bypassing trading fees. You can always use the cash back rewards from traditional credit cards to buy crypto. But this way, you undergo trading fees when converting your cash backs to crypto. On the other hand, you can use a crypto reward credit card to bypass the trading fees.
5. Secure and convenient. Issuance of Credit cards results from processing networks, visa and MasterCard, and banks partnering with digital asset platforms. Thus it makes credit cards pretty much secure and widely acceptable.
What Are The Arguments Against Crypto Rewards Credit Cards?
1. Flexibility. Some credit cards limit you to a single or a certain number of digital currencies you can earn as rewards. But with cashback rewards, you can easily buy your desired crypto.
2. Taxation. The crypto rewards earned through your credit card can’t get taxed. But if you want to sell your appreciated crypto, you have to pay tax on the capital gain. This capital gain tax is similar if you sold or bought crypto through an exchange with cash.
3. Timing. You automatically lose control of your crypto purchases by getting a market-timer with crypto. And at the time your crypto of choice has a high price, an automatic crypto purchase might happen. This situation isn’t ideal. At the same time, there are credit cards that you only get crypto rewards at the end of its billing cycle. Thus the price of your chosen crypto could have changed significantly between the time you earned the reward and the time of possessing the currency.
4. Fees. Are you considering acquiring a crypto reward credit card? If you are lookout for fees involved in redeeming the crypto. If there is a fee for redeeming crypto, then in the case of a 1:1 ratio, it will be unable to redeem the rewards. Building a redemption fee in the credit cards reduces the earned rewards.
5. Uncertain value of rewards. The prices of cryptocurrencies are extremely volatile. For example, if you earn a 1.5% crypto back and the crypto of choice dives by half, you end up earning 0.75% on your purchase.
6. Spend-ability. In most cases, you’ll have to use cash for your day-to-day purchases despite the ability to use your crypto rewards to buy goods and services. Thus, you’ll have to convert your crypto rewards to cash to make purchases.
Digital currencies are here to stay. And if you think that they are the way of the future, you might as well get yourself a crypto reward credit card. Also, you might as well find having a crypto reward card a significant step to growing digital assets. Additionally, crypto newbies can test the crypto waters by getting crypto reward credit cards.
