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What are cryptocurrency cards? Should you use them?

by Shatakshi Gupta

If you  own cryptocurrencies, you may be considering how and where to use your virtual money in the real world. Crypto credit and debit cards may be the best option for those of us looking for a simpler way to spend our money, from making a coffee purchase to earning crypto rewards. They can help create a seamless transaction experience when holding, earning, and spending cryptocurrency. In this article, we will know about crypto debit and credit cards.

How do these cards work?

Visa customers made $2.5 billion in payments using cards linked to cryptocurrencies in the first fiscal quarter of 2022, demonstrating the continued growth in the use of cryptocurrency for credit and debit cards. Both cryptocurrency debit cards and credit cards allow users to make purchases using fiat money that has been converted from bitcoin at the point of sale.

Since bitcoin debit cards operate similarly to traditional debit cards in that they immediately deduct monies from the account, the account must be topped off with cryptocurrency linked to a personal exchange account or cryptocurrency account. In the past, users had to convert their cryptocurrency through centralised exchanges, which then wired them funds that could be spent. This process could take hours or days. You may use cryptocurrency debit cards to spend your cryptocurrency without having to transfer money first.

Debit cards for cryptocurrencies are provided by Visa and Mastercard in collaboration with well-known exchanges like:

  • Using the Coinbase Card, a Visa debit card, users can get cryptocurrency back on every purchase.
  • A prepaid Mastercard that quickly reloads your balance without any conversion is the BitPay Debit Card.
  • Crypto.com Using bank account transfers, other credit or debit cards, or cryptocurrency, users of the prepaid Visa Card can add money to the card.
  • Other cards, like the Binance Visa Card, will offer cashback rewards based on a user’s BNB monthly average balance. Some cryptocurrency debit cards, like the Crypto.com Visa card, require users to stake tokens native to their platforms for a period of time in order to qualify for a card.

Like conventional credit cards, cryptocurrency credit cards require an application and a credit check before the provider will permit users to borrow money. Additionally, you may use the cards to gain crypto rewards for every purchase in the form of cashback or points.

The majority of widely used crypto credit cards require applicants to have at least excellent credit. Among these is the Gemini Credit Card, which has no annual charge and enables users to earn rewards in more than 60 cryptocurrencies.

  • BlockFi Rewards Visa Signature Card, which offers 1.5% back in cryptocurrency on every purchase and has no annual charge or international transaction fees
  • Nexo Card, which uses digital assets as collateral and deducts expenditures from your available credit line

Do cryptocurrency debit or credit cards merit purchase?

Read more: Crypto guide: Here’s how you can transfer your crypto tokens from exchange to wallet

Since they were first introduced a few years ago, cryptocurrency credit and debit cards have advanced significantly. Mastercard offers real-time use of digital currency across over 90 million acceptance locations, while Visa offers seamless conversion of digital currency to fiat currency worldwide. Visa announced last year that it had partnered with 50 of the top crypto platforms on card programmes.

 Benefits of Crypto Cards

  • Using a cryptocurrency debit card can save you time transferring money around and has other benefits as well. 
  • Everyday You can use the same account you use for trading to pay for items made online, in stores, or while travelling. Even your ordinary bank account can be used to make purchases if you have an account with one of the exchanges that issues these cards.
  • Additionally, you never have to worry about going over your account balance.
  • Debit cards for cryptocurrencies instantly exchange cryptocurrency for dollars or any other fiat currency. If you get paid in cryptocurrency, for instance, you might use your account to get your salary and use your debit card to make purchases. You must still pay taxes, of course.
  • The finest aspect of cryptocurrency debit cards is the significant cashback programme that many providers offer; when you use the card to make a purchase, the provider will return between 1 and 8% of the purchase price in cryptocurrency. While some exempt card ATM costs, some additionally provide reward schemes for streaming services or other offerings. In general, crypto card issuers are competing for customers, so if you shop around, you can get a great bargain on cashback.

The drawbacks of a cryptocurrency card

Comparing crypto cards to conventional cards, there are a few disadvantages as well.

  • Unlike rewards points or miles, which typically remain at a constant rate, the value of the incentives you earn in cryptocurrencies may alter based on market conditions.
  • Use of a crypto debit card could be viewed as a taxable event each time. Although incentives are not subject to taxes, you might need to record gains or losses from card usage on your tax return.
  • Because each card has a unique selection of cryptocurrencies, make sure to pick one that accepts the kind of cryptocurrency you want to invest in.
  • There are limitations on these cards by region. The Binance debit card, for instance, is only offered in that region. The cards are still usable anywhere, just like a standard debit card. But availability can be an issue, particularly for customers outside of Europe or the US.

Takeaway

The choice of whether to obtain a crypto credit or debit card ultimately depends on your spending patterns and financial situation. In addition to the network the card is linked to and the cryptocurrencies you use most frequently, it’s crucial to take into account the rewards rates, spending limits, regional restrictions, and other criteria like staking when selecting the correct card.

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