Consumers used to take advantage of miles, points, and cashback on regular credit cards. Nowadays, new cryptocurrency rewards are offered by crypto credit cards on your spending. Although most people still prefer the usual small loans taken from small companies such as Trice loans, cryptocurrency credit cards are taking over the market more and more. In this article, we are going to talk about the basis of crypto credit cards, how they work and whether you should get one.

How Do Crypto Credit Cards Work?

Let’s cover the basics. These credit card options work similarly to those tied to your investments. A consumer earns a particular percentage back each time he or she uses the crypto card to make a purchase, like with a regular credit card. 

Crypto cards work like normal rewards cards. Some of them offer bonus rewards in different categories, like groceries or dining out. Others let the client earn a flat rate on each purchase.

As you already know, rewards cards are similar to crypto cards. So, crypto credit cards are associated with the same risks of accumulating high-interest debt. If the owner doesn’t pay the balance when their monthly statement is due, they risk falling into the debt cycle. 

Crypto cards also have variable interest rates. They can range from 10% to 20% APR. Over time, rewards on crypto card tools can offer higher value. However, if your balances accumulate and you fail to pay them down, these rewards may be wiped out fast.

Source: https://www.finder.com/crypto-credit-card-statistics

Speaking of Americans who have or are interested in cryptocurrency credit card rewards, those aged 25-34 (23%) and 35-44 (23%) are most likely to have already or be interested in them. This is followed by those aged 18-24 (21%) and those 45-54 years old (19%). The redemption process is what differentiates crypto rewards from regular rewards cards. You will get the percentage back in crypto instead of statement credits or cash back.

Benefits of Crypto Credit Cards

  • Lottery-ticket high. You may benefit from getting outsized value with funds you didn’t expect to have in any case. It works similarly to purchasing a lottery ticket. Of course, the chances of winning this lottery aren’t guaranteed, but it can be enjoyable to dream about spending these funds.
  • A quick way to begin. If you are already interested in cryptocurrency, getting a crypto card will help you purchase Ether, Bitcoin, and other digital currencies without the need to opt for a cryptocurrency exchange. These cards already offer digital currency as rewards. You will be able to avoid the hassle and try working with cryptocurrency.
  • Appreciation. The rewards on crypto cards have a high chance of rising in value over time. On the contrary, cash back on regular cards will most likely remain in value or even decrease due to inflation. If a client books a hotel room using points or purchases a flight ticket with miles, they won’t be able to resell them at a profit.
  • Passive investing. Some people have doubts about whether purchasing digital currency is considered investing. Yet, you can stash value using your crypto card without worrying too much.

Drawbacks of Crypto Credit Cards

  • Uncertain rewards value. The prices of digital currency are rather volatile. A client can earn 2% back on a crypto credit card, but the value of this digital currency might lower suddenly by half, so the person will earn only 1% on purchases.
  • Regular credit cards have more options. If you want to receive more rewards and bonuses, you should opt for a regular credit card. You can use the money you earn from this card to invest in digital currency. Overall, you will earn fewer rewards using just a crypto card.
  • Flexibility. The owner of the crypto card can be locked into a certain currency. You may take advantage of having a cashback credit card for your rewards and use the money you earn to purchase crypto. This way, you will have more flexibility.
  • Taxes. Those who sell digital currency may have more challenging tax returns. The owner of the crypto card won’t be taxed on digital currency rewards. However, the person will be taxed on the capital gain in case he or she sells digital currency. The same taxes apply when you sell or buy crypto through a digital currency exchange.

Crypto Credit Cards vs. Rewards Credit Cards

You may be tempted to try a crypto card instead of a regular credit card. Here are some of the advantages of rewards credit cards over their cryptocurrency counterparts:

  1. 0% APR introductory offer. You may utilize regular credit cards to cover big-picture purchases or debt consolidation. Many of them offer a 0% APR introductory rate on balance transfers or purchases. Crypto cards don’t have reduced interest rates or such intro periods.
  2. Welcome offer. You may also be offered lucrative bonuses if you sign-up for a regular credit card. Some providers even offer bonuses of $1,000 or more.
  3. Guaranteed value. The owner of the credit card can get regular bonuses and guaranteed returns. These returns can be in the form of miles, points, or cash back. At the same time, rewards on crypto cards are rather volatile.
  4. Premium bonuses. Besides the rewards mentioned, regular credit cards can offer premium perks such as status boosts, purchase and travel protections, airport lounge access, and annual credits. Some crypto cards offer additional bonuses, but they can’t compete with the number of premium perks offered by regular cards.

Conclusion

Although crypto credit cards are becoming increasingly popular among consumers, they don’t offer the same level of rewards value as regular credit cards. There are some benefits of crypto cards, but they still leave much to be desired. 

Keep in mind their volatility and lukewarm rewards rates when considering if you should get this crediting tool. Regular credit cards can offer more bonuses and guaranteed value compared with their crypto counterparts.