Cryptocurrencies have made a tremendous impact on the financial industry. Currently, there are over 18,000 different cryptocurrencies with a current market value of just under $1 trillion US. Generally speaking, cryptocurrencies are a type of digital money tracked using a decentralized computer network. Bitcoin, Ethereum, and Dogecoin are just a few examples. Two emerging tools helping to drive crypto interest include crypto debit cards and crypto credit cards.
Crypto cards is an important usage of cryptocurrencies today, as it works very similar to ordinary debit cards. They can either be pre-funded with money or linked to an account. With such a card, you are rewarded as you make purchases with your card. Crypto credit cards extend you a credit line, allowing you to borrow money to make purchases. Of course, this money must be repaid.
Card issuers offer varying types of crypto debit and credit cards. So, before you decide on a crypto card, read on to understand the differences between these two card types.
Some of the Best Crypto Debit and Credit Cards
Below, we summarize some of the most popular crypto cards, both credit and debit cards. We focused these reviews on each card’s main features as well as factors you should consider when opting to get one.
Uphold
Uphold offers a debit Mastercard that functions similar to ordinary debit cards. One key difference is the number of options this debit card offers over ordinary debit cards.
This Uphold debit card is perhaps one of the most flexible debit cards on the market. Indeed, that is how Uphold currently markets these cards: “your money, your choice.”
In other words, you can select any type of asset that you hold to use as the basis for your purchase.
Uphold’s card allows a wide selection of funding options for making your everyday purchases. You can select to pay for your purchases from over 200 different types of cryptocurrencies and over 20 different types of national currencies.
You can even use your precious metals such as gold, silver, palladium, or platinum.
Rewards with this card are also attractive. For example, you will earn a mind-blowing 2% back in the cryptocurrency that you used for crypto-backed purchases. And you will earn 1% back in US dollars for every USD-sourced transaction.
Fees for this card are also negligible. For example, the card will initially cost you $9.95 and there are no charges for either domestic purchases or foreign exchanges. There is, however, a $2.50 charge for domestic withdrawals and a $3.50 charge for international withdrawals.
If you are interested in this card, you may have to join a waiting list but note that this card is only available in the US and not available in Europe or the UK.
The Uphold website touts that other jurisdictions are “coming soon,” so go ahead and put your name on their waiting list if you are interested in the flexibility and rewards that this card offers.
Visit Uphold website for more details on its crypto cards
SpectroCoin
If you want widespread usage of a crypto debit card, check out the card offered by crypto exchange SpectroCoin. This Visa-based debit card can be used at over 40 million sites and at over 30 million ATMs worldwide.
ATM withdrawals require the payment of a service fee that is based on whether the withdrawal takes place in the UK, Europe, or is designated as an international withdrawal.
SpectroCoin debit cards can only be denominated in Euro but can be loaded directly from your SpectroCoin wallet. You can use the Euros that you receive when you convert your virtual currency. But note that the card only supports a limited number of cryptocurrencies, including Bitcoin, Ethereum, NEM, Bankera, Dash, Litecoin, Tether, TrueUSD, USD Coin, Paxos Standard, Ripple, and Stellar Lumens.
The card costs $50 and there is a 1% fee for charging the card using cryptocurrency. The company also charges a 3% currency exchange fee and a monthly $1 card fee.
Importantly, this card is not available to US-based investors. Rather, the card can only be issued and delivered to citizens and permanent residents of the European Economic Area (EEA).
Visit SpectroCoin website for more details on its crypto cards
AdvCash
AdvCash offers an assortment of virtual and plastic debit card options. They advertise that they offer more prepaid cards in more currencies in more countries than any other card provider.
Both virtual and physical debit cards allow you to make payments with stored assets. However, virtual debit cards are limited to online purchases. Physical debit cards can be used for both virtual and in person purchases.
Note that none of the AdvCash debit cards offer any type of cryptocurrency rewards or cashback rewards.
The AdvCash EuropePlastic card may be used for EUR and USD and can be used in the European Union, Turkey, and Israel. There is no charge for this card and there are no monthly fees. This card can only be loaded or topped off using fiat from linked AdvCash e-wallets.
The AdvCash EuropeVirtual card can also be topped off with EUR or USD. It is only available for use in the European Union, Turkey, and Israel. Like the EuropePlastic card, there are no monthly maintenance fees and provides instant loads from fiat-based AdvCash e-wallets only.
The AdvCash GlobalPlastic UnionPay cards are used with USD and are available in all supported countries. The card offers free card delivery and there is are point of sale (POS) payment fees.
The Crypto WorldCard is a virtual debit card particularly geared towards the international crypto community. This card costs $95 to order and can be used at any Visa accepted POS or ATM.
The card charges a yearly maintenance fee of $60 and POS/ATM fees of 0.75%. This card offers multiple funding options, and does not charge a currency exchange fee.
This WorldCard is available for global use. To apply for this card, you will need to provide a valid, legible English only passport along with a selfie holding your passport. Other user verification may be required.
Visit AdvCash website for more details on its crypto cards
Nexo
Instead of using your own money to fund a debit card, crypto credit cards extend users a line of credit to make purchases. However, to tap into that line of credit, crypto credit card providers typically require access to your financial history and then check your credit history.
Nexo is different from these credit card providers. It allows you to deposit your crypto as collateral. In exchange, Nexo provides a line of credit in the form of a spending limit up to the deposited crypto’s value. Therefore, you do not need to sell your crypto.
But, if your crypto collateral’s market price falls below a certain threshold, Nexo can request partial payment of your outstanding balance or request an increase in the deposited crypto collateral. If timely payment is not made, Nexo has the option of selling the deposited collateral.
One advantage of using such a collateral-backed crypto credit card is that your credit score will not be affected since you are not tapping a line of credit.
Aside from being accepted at more than 40 million merchants worldwide, the Nexo card pays out a 2% cash back on all purchases.
There is no cost to obtain the Nexo card and there are no fees related to account maintenance, inactivity, purchase surcharges, or foreign exchange. But be advised that Nexo administers a full identity verification process before users are granted a Nexo card.
Currently, the Nexo card is only available to certain citizens and residents of the EEA.
Visit Nexo website for more details on its crypto cards
What is a Crypto Debit Card?
It is estimated that 1 in 5 investors have either invested, traded, or used cryptocurrencies. Crypto debit cards make it easier for these investors to access their funds while earning additional rewards as well.
If you are a crypto investor, it is not easy for you to use your crypto for your everyday purchases. First, you will need to find a platform that allows you to convert your crypto to a usable fiat currency like US Dollars or UK Pounds. Then, you must wait for these funds to clear your bank account so that you can use these funds to make a purchase. Crypto debit cards short circuit this process. These crypto debit cards can be used to make purchases just like an ordinary debit card. And these cards can be directly linked to a hard or soft wallet containing your crypto. Therefore, if you have Bitcoin or Ethereum in your crypto wallet that you would like to sell, you can use these coins to fund your crypto debit card.
With debit cards, there is no line of credit extended to the cardholder. Therefore, before a purchase can be made using a debit card, the cardholder will have to add value or “top off” the card.
Crypto debit cards earn crypto rewards based on the amount of purchases you rack up with your card. The more you use your card, the more crypto you accumulate.
Most crypto debit card issuers allow you to earn cryptocurrencies as a percentage of your purchases. However, note that these percentages vary based on the debit card provider, and can range from 1-8% of the purchase amounts. In addition, some card issuers award points that a cardholder can later redeem for a cryptocurrency of their choice. Other card issuers offer perks such as free streaming services or waiving ATM fees.
One attraction to using crypto debit cards is being rewarded with rewards that can appreciate. This is a major difference with respect to non-crypto cards, where you earn cash back or travel rewards which are likely to lose value over time, especially considering the US inflation rate hovering above 8.2%. But keep in mind that these digital asset rewards can also quickly lose their value.
There is also a potential cost associated with earning these types of crypto rewards, at least in the US. For example, assume that you are awarded cryptocurrencies and these go up in value. Then, you cash in your crypto rewards. This scenario may give rise to a taxable event where you might be required to pay income taxes. Therefore, if you are more interested in selling your rewards rather than HODLing, you should seek guidance from a tax professional.
Another potential complication of owning a crypto debit card is that you could owe taxes if you fund your card with your existing crypto. For example, you could initiate a taxable event if you fund your debit card by selling your crypto. If you purchased Bitcoin at $30,000 and then used it to top off your debit card at Bitcoin’s all-time high of over $68,000, you would owe capital gains tax on this difference ($68,000 – $30,000).
Pros and Cons of Crypto Debit Cards
These are some of the factors you should consider before getting a crypto debit card:
Pros:
With crypto debit cards, there is no risk of getting into debt since these cards do not extend you a line of credit. And since you cannot load up, you cannot overextend yourself by spending money that is not available.
In addition, most crypto debit cards have no application fee and do not charge an annual fee.
And with crypto debit cards, your credit score will not be a factor in getting the card since you will not have to undergo a credit check.
Cons:
Crypto debit cards do not have the typical fraud or purchase protection that most ordinary credit cards provide. So, if your card is lost or stolen, you may not be able to get your money (or your crypto) back.
If you do not utilize a pre-funded crypto debit card and want to use your crypto for future purchases, you need to convert your crypto for fiat (e.g., US dollars) at the time you complete your purchase. This means that you are at the mercy of market timing volatile exchange rates.
Certain debit cards may not be universally accepted, and some have regional or geographical restrictions. For example, the Binance crypto debit card is only available for Europe residents.
You will need to monitor your balance and keep your debit card funded so that you always have enough money on your card to cover upcoming purchases.
Also, note that some currency exchange providers of crypto debit cards sometimes require that an account and a wallet be established with the crypto exchange before card usage.
What are Crypto Credit Cards?
Similar to regular credit cards, crypto credit card providers extend a line of credit to you as a cardholder. Then, after making several purchases with your card, your balance will need to be paid off periodically.
If you have opened up a line of credit for a crypto credit card, this credit card may affect your credit score the same way that normal credit cards do. So, keep an eye on any interest charges or potential late fees that your account may accrue.
Some card providers allow you to deposit their crypto as collateral. In exchange, you will receive a line of credit in the form of a spending limit up to the deposited crypto’s value. However, if the deposited collateral’s market price falls below a certain threshold, the card provider could ask you to repay part of your outstanding balance or to increase the amount of your collateral. If timely payment is not made, the card provider has the option of selling a portion of your deposited collateral. One advantage of using such a collateral-backed crypto credit card is that your credit score will not be affected.
Like crypto debit cards, crypto credit cards offer users rewards in the form of a digital asset or cryptocurrency. For example, some cards award a flat percentage (e.g., 1.5) back in Bitcoin on every purchase a user makes. Other cards offer a layered or a tiered approach based on the type of purchases you make. For example, some cards offer a higher percentage reward on dining expenses versus groceries or other purchases. Some cards automatically assign your highest cash-back rate to your highest spending categories. For example, you might earn 3% back on your highest spend category, 2% on the second highest spend category, and 1% on all other purchases.
Types of rewards and how these rewards are allocated to your account may vary. For instance, some cards may award you an unlimited percentage in a certain type of crypto, like Bitcoin or Ethereum. With other types of crypto credit cards, you earn a percentage in cash back. You will then have the option to either keep the cash or you can redeem your rewards from an assortment of cryptocurrencies.
Other reward programs offer points where once these points are deposited into your account, the card issuer will allow you to convert the points into the cryptocurrency of your choice.
And some cryptocurrency exchanges offer cards that will deposit your cryptocurrency rewards directly into your cryptocurrency exchange account every time you swipe your card, giving you instant access to your rewards.
Earning points, cash back, or miles are often not taxable but that might be different with a crypto credit card. That is because although you are probably not going to have to pay tax when earning these crypto rewards, it might be different if you are using your own crypto to fund your credit card purchases. However, you might incur a tax liability when you cash in your earned crypto. That is, if your earned crypto and you sell, in the US you would be subject to capital gains tax. That is the amount that the crypto increased from the time that you earned versus when you sold it.
In addition, be aware that the legal status of cryptocurrencies varies from country to country. For example, there are currently only two countries in the entire world where Bitcoin is legal tender.
Some countries have restricted certain uses of cryptocurrencies. For example, some countries like Algeria and Bolivia have banned the use of cryptocurrencies outright. Other countries, like China and Hong Kong, place certain restrictions on how cryptocurrencies can be bought or sold. And countries like the US and Canada are quite crypto-friendly. And then, there are countries like India and Mexico where crypto is neither illegal nor legal.
Also, keep in mind that crypto regulations can and often do change rapidly. Therefore, before you invest in a crypto credit card, be sure to check your country’s regulations regarding cryptocurrencies.
Unlike other traditional credit and debit cards, some crypto card issuers require you to “stake” a certain amount of funds. “Staking” is more or less locking in your funds for a specified amount of time with the card issuer. Essentially, these card users are giving the card issuer a loan with their cryptocurrencies and in return, the card user will receive certain awards and benefits.
With certain cards that require staking, a user’s rewards will be a function of the amount of crypto that you stake. The more you stake, the greater your rewards. In addition, some crypto credit card providers require users to stake their crypto for a minimum period of time, typically six months.
After this six-month period, users can begin a new staking period. Alternatively, users can withdraw their staked amount but the potential future rewards may be reduced.
Pros and Cons of Crypto Credit Cards
Below some details of the most noticeable pros and cons of using a crypto credit card:
Pros:
If you want to add a little bit of crypto exposure to your investment portfolio, owning a crypto credit card is an easy way to begin your crypto journey. They allow the accumulation of crypto without some of the hassles associated with buying, holding, and storing crypto.
Earning cryptocurrency as an award by frequently using your card credit is a beneficial way to practice dollar cost averaging. With dollar cost averaging, you are spreading your accumulation of a highly volatile asset over a period of time.
If you opt for a crypto credit card that extends you a line of credit, this will allow you to build your credit history. Consequently, such a credit card can help you earn a higher credit score.
There are also a large number of different types of crypto credit cards, allowing you to choose a card that aligns with your investment goals and purchasing habits. So, if you are interested in a specific type of digital asset, make sure that you confirm that this asset is available as a reward by the card you choose.
Cons:
Most crypto credit cards require applicants to disclose personal information by way of a credit card application. This enables financial background information verification. A weak credit history may prevent you from qualifying for some of the best cards with some of the lowest rates and most perks. For some crypto credit cards, you’ll need excellent or at least very good credit (FICO scores of 690 or higher) to be approved for one of these crypto cards.
Some ordinary credit cards offer 0% APR on all purchases and may even extend this offer to balance transfers. In contrast, some crypto credit cards charge the same high ongoing interest rates as other credit cards. And very few crypto credit cards offer any type of introductory period at a reduced interest rate.
Some crypto cards are limited to certain geographical areas. For example, in the US, not every card can be used in every state since there are varying state laws regarding the use of cryptocurrencies.
So before applying for a certain card, check to see if you reside in an eligible state or eligible country. Also, be mindful that the use of crypto outside of the US might be a violation of certain international laws.
One disadvantage of such a card is that you are at the mercy of exchange rates at the time of your purchase. That is, if you make your purchase when the exchange rate is low, you will eat up more of your stored crypto than if the exchange rate is high.
Aside from the stated annual fee, fees for foreign transactions, late payments or balance transfers, crypto rewards cards can also have transaction fees or withdrawal fees. For instance, some cards charge a markup percentage fee to redeem your cash to purchase crypto.
Conclusion
If you are a crypto enthusiast or just a crypto-curious investor, you have several crypto debit and credit card options. Both have their advantages and disadvantages. So, when investigating, read the fine print to identify the type of card that suits your purchase history and your level of risk. So, as they say in crypto DYOR – do your own research before picking the right crypto credit card for you.
Disclaimer: This is a guest post. Coinpedia does not endorse or is responsible for any content, accuracy, quality, advertising, products, or other materials on this page. Readers should do their own research before taking any actions related to the company.
Source: https://coinpedia.org/guest-post/crypto-debit-and-crypto-credit-cards-complete-guide/