If you’ve been following cryptocurrency, you’re likely to have seen the rise of crypto rewards credit cards. With large companies such as Gemini, SoFi, and BlockFi coming out with crypto cards, you might be thinking about applying for one. However, before applying it is important to understand the ins and outs of these cards, especially how they work.
What Are Crypto Rewards Cards?
Crypto rewards credit cards are much like any other rewards credit card in that they offer cash back or points for every purchase made. The difference lies in what the rewards are paid out in. With a traditional rewards card, you might get cash back or points that can be used for travel. With a crypto rewards card, you’ll get your rewards paid out in cryptocurrency. Typical credit card rewards will not have the potential to increase in value like crypto rewards will.
A lot of the top crypto exchanges offer some sore of crypto rewards card. Some popular crypto cards include the Gemini Credit Card, Sofi Credit Card, and Blockfi Credit Card.
How Do Crypto Rewards Cards Work?
As mentioned above, crypto rewards cards function similar to other rewards credit cards. As you spend money using the card, you’ll earn a percentage of the amount you spend back as cryptocurrency. Most crypto card companies let the user choose which cryptocurrency you’ll earn as a reward. It’s important to see what crypto they company offers before you sign up for their card.
A big differentiator between card companies is the rewards rate at which they give you crypto they give you on each purchase. Certain companies have a larger rewards rate on purchases at certain stores or websites. Others just give a flat rate percentage cash back on all purchases.
Like a regular credit card, a crypto rewards credit card may have an annual fee. It’s important to read the details about the credit card before signing up to see if there is an annual fee. We are seeing that a lot of crypto credit cards are forgoing an annual fee. Other types of fees to look out for are the foreign transaction fees.
What Is The Difference Between Crypto Credit Cards & Crypto Debit Cards?
One important thing to note is that there is a difference between crypto credit cards and crypto debit cards. With crypto credit cards you are allotted a credit line, like a traditional credit card, and you are charged interest at a specified amount as you pay back the credit. With crypto credit cards, you earn rewards as you spend like traditional credit cards. Crypto credit cards make users apply before they are approved for the card.
Crypto debit cards similar to a normal debit card where you aren’t borrowing money to spend. Crypto debit cards are often offered by companies who also own crypto exchanges. The ability to integrate a crypto card and an exchange allows users to directly use crypto for purchases.
Before signing up for any type of credit card, it is important to understand what the card is, what the fees are, and how the card will benefit you.
Why Should I Sign Up For A Crypto Credit Card?
Why Should I Sign Up For A Crypto Credit Card?A good reason to sign up for a crypto credit card is the rewards. Usually, credit card rewards are earned in cash back or airline miles. These types of rewards don’t have the potential to increase in value as an investment. With crypto credit cards, you can earn rewards in crypto. Crypto rewards are great because you can often choose what crypto you want to receive. Crypto rewards also have the potential to increase in value over time, making earning crypto rewards a type of investment.
Do I Get Taxed On Crypto Rewards?
You aren’t taxed on the crypto rewards you earn from your credit card. However, if these rewards increase in value, you will be taxed on the marginal gains you receive when you choose to sell the crypto. If you are wondering how crypto plays into taxes, check out our article on the best crypto tax software.
What Are The Best Crypto Credit Cards?
There are a lot of crypto cards on the market, so it can be hard to choose the best one. We have gone through and created a list and found what we think is the top crypto credit card and crypto debit card.
How Do I Sign Up For A Crypto Rewards Credit Card?
Similar to signing up for a cryptocurrency exchange, signing up for a crypto credit card isn’t a crazy hard process. Following the instructions provided in the process is your best best. Make sure you give the most accurate information to help you in the approval process.
Wrap Up.
Crypto credit cards are a newer type of credit card that allows you to earn rewards in cryptocurrency. These cards have the potential to increase in value over time, making them a great investment. Credit card rewards programs can alleviate the pain on your bank account as you make purchase. Crypto cards are a great way to earn rewards that will continue to benefit you in the future.
