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Cryptocurrency, in all its variations, is moving into the mainstream alongside stocks and bonds as an investment option. In fact, 41% of adults say they’re interested in crypto, according to Gemini’s 2022 State of U.S. Crypto report.
Credit card companies are capitalizing on that interest by offering credit cards that reward you with Bitcoin and other cryptocurrencies. If you’re used to earning cash back, points, or miles, earning crypto offers a new take on traditional credit cards.
But is a crypto credit card right for you? And how do they work?
Here’s a closer look at this up-and-coming credit card trend.
A crypto rewards card is simply a credit card that rewards you with cryptocurrency when you make qualifying purchases. These cards work much the same as any other rewards credit card; the difference is that you’re earning crypto versus cash back, points, or miles.
So why would you want a crypto credit card?
Earning cryptocurrency rewards with a credit card could appeal to you if you’re interested in investing in Bitcoin or other digital currencies, but you don’t want to invest cash directly. Instead, you could earn back some of what you’re already spending in crypto, with no other investment required.
When you open a rewards credit card, you make purchases. Your credit card company then pays back some of those purchases to you in rewards.
For example, you might have a card that pays you 3% cash back at grocery stores. You spend $100 on groceries and get $3 of that purchase back in the form of cash rewards. It’s sort of like getting a discount on what you spend.
Or you might have a card that pays you double miles on travel expenses. So, you book a $1,000 vacation package and earn 2,000 miles on the purchase.
A cryptocurrency rewards card works much the same way. Again, the biggest difference is what form your rewards take.
The reward structure and the kind of cryptocurrency you’ll earn can vary from card to card. Some cards can offer a higher reward rate than others, for example. And some may reward you with points that you can convert to crypto. But the idea is still the same: getting crypto rewards for purchases.
As crypto is still relatively new, it’s natural to have concerns about its safety, especially if you’re earning crypto rewards with a credit card. So here are answers to commonly asked questions about crypto cards.
Crypto rewards cards can offer the same protections and security measures as traditional rewards cards. That includes things like data encryption, secured logins, and on/off switches. So, if your card is lost or stolen, you have protections in place to prevent fraud.
The answer to this depends on the card you’re using. But typically, crypto credit cards allow you to earn points that you can then convert to cryptocurrency. Your crypto is then stored in a separate account at a cryptocurrency exchange.
That means the credit card company is not responsible for your crypto rewards. Instead, the exchange implements its own security measures to keep your crypto assets safe and protect them from hackers.
It can be for investors who have a higher risk tolerance. Cryptocurrency is not regulated, and it’s very volatile; prices can change from minute to minute, with investors seeing wild gains or losses in the span of a day. So, if you lean toward more conservative investments or prefer to go the traditional route with stocks and bonds, a cryptocurrency rewards card may not be right for you.
Since crypto credit cards are fairly new, there are only a handful of options to choose from. If you’re interested in getting a cryptocurrency rewards card, here are a few to consider.
The SoFi Credit Card offers unlimited 2% cash back on purchases when you redeem rewards for crypto in a SoFi active investment account. There’s no annual fee, and if you make 12 on-time monthly payments of at least the minimum due, SoFi will reduce your APR by 1%.
The Gemini Credit Card is accepting sign-ups for its waitlist and is expected to launch later in 2021. This card will allow users to earn up to 3% back on qualifying purchases in Bitcoin or 30+ other cryptocurrencies offered on the Gemini exchange. There’s no annual fee and the card is set to pay out rewards in real-time.
If you’re specifically interested in earning Bitcoin, then you might consider BlockFi’s cryptocurrency rewards card. This card offers unlimited 1.5% back in Bitcoin on all purchases, with no annual fee and no foreign transaction fees. There’s currently a waitlist to apply for this card.
Upgrade offers personal loans and rewards checking accounts, and they’re now venturing into the crypto rewards card market. The Upgrade Bitcoin Rewards Card offers unlimited 1.5% back in Bitcoin on purchases with credit lines from $500 to $25,000. This card also touts a lower APR compared to traditional rewards cards.
The Unifimoney Visa Card offers Visa Signature benefits with cryptocurrency rewards. This card gives you the option of redeeming rewards for Bitcoin, gold, or equity investments so you can build a diversified portfolio as you spend. The card is expected to launch sometime later in 2021.
If you’re interested in getting a cryptocurrency rewards card, it helps to know how to use it to your advantage. These tips can help you make the most of your card:
Cryptocurrency rewards cards can offer both advantages and disadvantages. If you’re on the fence about whether to apply for one, here are a few final thoughts to keep in mind.
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