Crypto Credit Cards: Still Worth Considering?

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As the world increasingly digitizes, cryptocurrencies have emerged as a popular digital currency. Alongside this trend, cryptocurrency rewards credit cards have gained attention, allowing users to earn digital assets while making everyday purchases. This article delves into the benefits and drawbacks of these unique credit cards, helping readers make informed decisions about their financial strategies.

At a Glance

Pros Cons
Earn rewards in cryptocurrency Cryptocurrencies are volatile and may decrease in value
Easy way to start crypto investing as no initial stake is required Crypto investing is automatic, meaning you have less planning ability
Rewards may increase in value vs. a traditional rewards credit card Requires a hard inquiry on your credit report
Build credit May charge an annual fee

What is a Crypto Credit Card?

Cards offering cryptocurrency or Bitcoin rewards, or crypto credit cards, were heralded as the cutting edge of fintech credit cards when launched several years back. These cards operate like traditional credit cards but have a unique rewards structure.

Crypto credit cards specialize in offering digital currency as a cash back reward. This rewards structure differs from other cash back credit cards, which give what is known as fiat money. Fiat money is a sophisticated way of saying “government-regulated currency.” This applies to rewards in U.S. or Canadian dollars, Euros, British Pounds, or the card issuer distributes cash back rewards.

The premise behind crypto and Bitcoin credit cards is that they provide an easy way to earn additional crypto assets anywhere Visa or Mastercard is accepted. In this regard, crypto credit cards and crypto debit cards differ significantly. A crypto debit card allows users to spend their digital assets wherever the payment network is accepted. In contrast, the credit card option earns these digital assets.

But are crypto rewards worth it?

When Does a Crypto Credit Card Make Sense?

A cryptocurrency-earning credit card might make sense if any of the following apply to you:

Your Spending Habits Align with the Card’s Rewards Structure

One of the best ways to tell if a cryptocurrency credit card is right for you is by closely examining your spending habits. For example, the Gemini Mastercard® earns crypto rewards of 3% back on dining, 2% back on groceries, and 1% back on all other purchases. Cardholders can opt o redeem their rewards in any of the 60+ cryptos supported by the Gemini platform, such as Bitcoin, Ethereum, Litecoin, and more.

On the other hand, the Upgrade Visa® Card with Bitcoin Rewards earns an unlimited 1.5% back unlimited cash back in Bitcoin when you make payments on the card. Because of this streamlined approach, a card like the Upgrade Bitcoin Rewards makes sense for someone who typically spends little on dining out or delivery services like Uber Eats, DoorDash, and more. Conversely, if you are a big foodie and don’t want to be tethered to a single blockchain, something like the Gemini credit card is likely a more reasonable option.

You Want to Diversify Your Assets

The Upgrade Card with Bitcoin Rewards is a reminder of another consideration you need to make when deciding if a crypto credit card is right for you: the rewards redemption options. Read the terms and conditions of each card’s loyalty program closely to ensure you understand the options available and the program’s limitations.

Cryptocurrency rewards credit cards offer a chance to diversify your investment portfolio. By earning and accumulating different cryptocurrencies through credit card purchases, you can lessen the potential impacts of a decline, or collapse, in traditional investment avenues. This can be particularly appealing if you want to “test the waters” of cryptocurrencies without making large upfront investments.

You Want Enhanced Transactional Security

Cryptocurrency rewards credit cards often incorporate blockchain technology, which can offer enhanced security and privacy features. The cards also offer much greater support and protection thanks to the credit card networks they operate.

All credit cards provide some basic protections, including liability from fraudulent transactions, purchase protection, and the ability to chargeback questionable transactions. Credit cards also provide comprehensive customer support through services like Mastercard Global Services and Visa Concierge.

Why a Crypto Credit Card Doesn’t Make Sense

But sometimes a crypto credit card just isn’t the right choice for you, including for the following reasons:

You are Risk-Averse

Crypto is like a stock in that the value fluctuates over time. Cryptocurrencies are known for their price fluctuations, which can lead to significant gains and substantial losses. Before getting a crypto card, be sure to account for the potential depreciation of your accumulated rewards, as the value of cryptocurrencies can fluctuate rapidly and unpredictably.

Risk aversion doesn’t only apply to the rewards values, however. Cryptocurrencies as credit card rewards can have serious tax implications depending on how much you plan to use your new credit card. Different jurisdictions have varying regulations regarding the taxation of digital assets, and it can be difficult to track and report cryptocurrency earnings accurately.

You are Conscious of Your APR and Have Average Credit

Rewards credit cards have higher interest rates than traditional, non-rewards credit cards. Anticipate a higher APR, the potential for foreign transaction fees, annual fees, and account maintenance fees ahead of time so you don’t get caught off-guard.

This is especially true if you often don’t pay your monthly balances in full, the accrued interest charges may offset the value gained from the crypto rewards themselves. For someone with average credit, that APR increase could be as much as 10% higher than an applicant with excellent credit. Always make sure the juice justifies the squeeze before applying and keep an eye out for no annual fee offers.

Summing It Up

Cryptocurrency rewards credit cards offer a unique way to earn digital assets and explore the world of cryptocurrencies. The potential benefits, such as earning potential and diversification of investments, can be attractive to those interested in crypto. However, it’s essential to consider the drawbacks, including market volatility, limited acceptance, complex tax implications, and higher fees. Prospective users should carefully assess their risk tolerance, financial goals, and the specific terms and conditions of the credit card before deciding.

Related Article: The Ultimate Guide to Debit Cards

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About: Cory Santos
Cory Santos

Cory is the senior credit card editor at BestCards, specializing in everything credit card-related. He’s worked extensively with credit cards and other personal finance topics, including nearly five years at BestCards. Cory’s extensive knowledge is an essential part of the BestCards experience, helping readers to live their best financial lives with up-to-date insights and comprehensive coverage of all facets of the credit card space, including market trends, rewards guides, credit advice, and comprehensive credit card reviews.

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