What Are Crypto Cards and How to Choose the Best One?
Crypto cards are a unique payment card category enabling users to execute purchases using cryptocurrencies. They function similarly to traditional bank cards and are categorized into credit and debit types.
Cryptocurrency Credit Cards
Cryptocurrency credit cards offer more than just a primary balance – they provide a credit amount that you can borrow from the issuer, coupled with rewards for certain types of purchases. However, rewards are doled out in cryptocurrency, not in traditional rewards like miles or cashback.
Advantages:
- Earn rewards in cryptocurrency.
- Access to a line of credit.
- Higher cashback rates compared to conventional bank cards.
- Extra perks for cardholders, such as complimentary Netflix or Spotify subscriptions.
Disadvantages:
- Higher interest rates for credit lines compared to regular bank cards.
- Lower interest rates on unused deposits (around 2.5%-3%).
- The fluctuating nature of digital assets can significantly impact the value of rewards and the interest amount on the credit (in dollar terms).
- The reward size may depend on your credit history.
Cryptocurrency Debit Cards
Cryptocurrency debit cards enable payments at stores, restaurants, and various venues where traditional bank cards are accepted. Unlike regular cards, these use digital assets instead of fiat currency for transactions.
Advantages:
- The convenience of using cryptocurrency for daily purchases.
- Seamless conversion from cryptocurrency to fiat currency.
Disadvantages:
- Risk of losing access to funds if the card is lost.
- Higher transaction fees than traditional credit cards.
How to Choose a Cryptocurrency Card
When selecting a crypto card, consider these aspects:
- Rewards: Some cards offer cashback, while others provide points exchangeable for cryptocurrency.
- Interest Rates: If you're unlikely to settle the full credit card balance monthly, opt for a card with a lower interest rate.
- Annual Fees: While some cards are free of annual charges, others might cost between $50 to $100 annually.
- Sign-Up Bonuses: Consider that initial bonuses may later affect the interest rates on credit (it could be higher) or reduce the reward amount for locked deposits.
Keep in mind that card issuers balance between enticing user rewards and their own financial gains. Therefore, a cost-free crypto card might not always be more advantageous than a paid one.
Popular Cryptocurrency Cards and Their Benefits
Crypto.com Visa Card: This offers cashback in CRO cryptocurrency and other perks like free shipping, instant cashback, retail discounts, airport lounge access, etc. Benefits vary based on the card tier, distinguished by color, design, and the amount of CRO tokens locked.
Coinbase Card: A debit card that allows spending of crypto from the user's exchange account. It's fee-free and offers USDC stablecoin cashback. Accepted globally at most ATMs and payment terminals. Reloadable via PayPal or a bank account.
Wirex Card: A crypto debit card that allows the spending of crypto from the Wirex wallet without transaction fees. Offers up to 8% cashback on all purchases and fee-free ATM withdrawals up to $200.
Venmo Card: A crypto credit card that provides 1% to 3% cashback on purchases. It's free for Venmo trading app users who deal in digital assets. However, the exchange rate includes an additional spread earned by Venmo on each transaction.
Before making a choice, think carefully about how often you'll actually be using cryptocurrency for transactions. Remember, card issuers make money from fees and exchange rate margins, making various rewards and additional perks part of their marketing strategy. If your daily transactions don't necessitate cryptocurrency payments and you don't plan to lock your assets on the card, you might not actually need such a card.
