The rise of the crypto credit and debit cards are here and there’s no turning back. According to Visa, crypto-linked card usage hit $2.5 billion in Q1 of 2022. This raises lots of questions—the main ones being, should you get in on the crypto credit card craze and are they worth it?
If you are an avid crypto enthusiast, you may be wondering if you can continue to reduce your reliance on traditional finance and go even more bankless than ever before with a crypto credit card. Let’s discuss some background on how crypto credit and debit cards work, so you can decide if you should open one up:
Crypto credit cards are rewards credit cards that give you rewards in cryptocurrency instead of traditional credit card points that can be redeemed for things like travel or cashback in fiat. These cards work more like cashback reward cards, but instead of earning a percentage of your purchase back in fiat, you can earn the equivalent amount in crypto, such as Bitcoin and Ether.
In the early days of cryptocurrency, crypto users who wanted to use their digital assets to pay for goods and services would have to convert their crypto manually to fiat through third-party platforms and exchanges. This cumbersome process relies on exchanges and ACH transfers that take multiple business days and are a hassle for crypto users. Additionally, these transfers can be prohibitively expensive as more transactions means more fees. Crypto credit and debit cards are the crypto world’s first attempt to solve this problem.
One of the earliest attempts at this was the Coinbase Shift card, which worked by deducting the value of the purchase from the user’s Bitcoin balance. The card was launched in the fourth quarter of 2015 and deducted the funds directly from the Coinbase user’s account based on the spot price of the cryptocurrency in real-time. The card had a few issues and, unfortunately, ceased operations in April 2019.
users mustThe crypto world often uses the term crypto credit card interchangeably for both crypto credit and debit cards. However, there is a stark difference between the two types of cards When you use a crypto debit card, the funds are drawn from your wallet or account. Many crypto debit cards are prepaid, which requires users to load money onto the card before being able to use it, similar to how you would load a Visa gift card or other pre-paid credit card.
With crypto credit cards, you are taking out a loan with the card issuer that you pay back either at the end of the month or over time. Crypto charge cards charge no interest on purchases, but users must pay the statement balance in full at the end of the month. Actual transactions are handled in fiat currency—including how you can pay your bill, but the perk is that you can earn rewards in cryptocurrency.
Since crypto credit cards can’t be paid off with crypto, Spritz is the best way to pay credit cards with crypto, as well as other bills like your utilities, mortgage, or car payment.
Most credit cards provide users with some benefits. Crypto credit cards are no exception. Here are some of the most common benefits you’ll find with crypto credit cards:
Reducing Financial Risk: Lastly, many people are interested in investing in crypto, but many are reluctant due to the fact that it’s such a new and unpredictable asset. However, using a crypto credit card can allow you to try out crypt trading without actually putting your own money at risk.
Most credit cards also come with their share of drawbacks. Although there are a variety of benefits to using crypto credit cards, there are also some limitations to consider. Here are some of the most prominent:
The number of crypto credit and debit cards on the market is expanding month after month. Here are a few of the most common crypto credit and debit cards that crypto users have embraced:
Crypto Debit Cards
Crypto Credit Cards
Choosing to open a crypto credit or debit card is a financial decision that can affect your ability to build wealth and embrace Decentralized Finance (DeFi). The point of DeFi is to move away from traditional financial institutions. Some crypto cards ensure that you continue to operate in the traditional financial system. Here are a few factors you should consider when deciding to open a crypto credit or debit card.