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Instead of cash back, points, or miles, some newer credit cards offer cryptocurrency rewards for your spending.
Crypto credit cards are rapidly becoming available to US consumers, and their easy access to cryptocurrencies may appeal to both existing crypto enthusiasts and curious crypto investors looking to enter the market.
But while these cards are becoming more common, they leave a lot to be desired when it comes to reward value. Many offer only tepid rewards rates, and with the volatility of cryptocurrency, there is a huge potential opportunity cost in forgoing guaranteed points or cash back redemptions that come with regular old rewards cards.
In fact, many experts we’ve spoken to believe that crypto cards have a long way to go before their value can match many cards on the market today. Before you decide to open a crypto credit card, make sure you understand how crypto credit cards work and what risks your wallet may be subjecting.
Crypto Credit Cards vs. Rewards Credit Cards
Crypto credit cards can be an attractive option for those who have already invested in crypto, or who are looking to get into it without a huge upfront cost, but they lack many of the benefits that make many rewards cards so valuable.
Rewards credit cards often have numerous advantages over their crypto counterparts, including:
- Welcome Offers: Rewards credit cards often come with lucrative sign-up bonuses worth hundreds of dollars. Some offers can even be worth more than $1,000. Few crypto credit cards offer significant welcome offers.
- 0% APR introductory offers: Traditional credit cards can also be great tools for consolidating debt and financing large purchases, thanks to 0% APR offers on purchases and balance transfers. Crypto cards charge the same high ongoing interest rates as other credit cards, with no introductory period for reduced interest.
- Premium Benefits: Credit card perks like annual credits and status upgrades, airport lounge access, and travel and purchase protections can provide great value to frequent travelers. You might find some extra benefits with crypto cards, but they won’t be as comprehensive as some of the better rewards cards.
- Guaranteed value: With a regular rewards credit card, you’ll earn guaranteed returns in the form of cash back, points, or miles. Crypto rewards are volatile at best, and your 2% return on spend could end up being worth much less by the time you cash out, depending on market fluctuations.
Benefits of crypto credit cards
Cryptocurrency credit cards offer cryptocurrency rewards instead of traditional cash back, points, or miles.
For example, the Upgrade Bitcoin Rewards card earns a flat 1.5% cash back in bitcoin. The BlockFi Rewards Visa® Signature Card offers the same 1.5% back on every purchase, but allows you to redeem your rewards for multiple types of cryptocurrencies.
Other crypto credit cards have tiered reward structures. The Gemini Credit Card, for example, earns 3% on meals, 2% on groceries, and 1% on everything else, with the option to redeem rewards for any cryptocurrency available on Gemini.
Crypto credit cards can be a tool for those looking to enter the crypto market, according to Ted Rossman, senior industry analyst at CreditCards.com. Like NextAdvisor, CreditCards.com is owned by Red Ventures. He likens investing only the rewards you earn with a crypto card to “playing with house money.”
“For a certain type of person, they’re looking for that edge… They want to get into crypto and they’re confident in the fact that it’s going to be worth more in the future.”
Rossman adds that crypto credit card holders can also benefit by avoiding some fees charged by crypto exchanges. “It could actually be a pretty practical way to get into the market,” says Rossman. “That’s an underappreciated benefit of some of these cards.”
Risks of crypto credit cards
Najah Roberts, founder and CEO of Crypto Blockchain Plug, a cryptocurrency exchange and education center in Inglewood, California, loves earning rewards with her crypto credit cards. In about five months, she estimates that she has earned more than $400 in bitcoin rewards.
At the same time, Roberts recommends caution when using crypto credit cards, especially when it comes to crypto tax liability.
While you likely won’t pay taxes on crypto rewards earned, you will pay when you collect them. When you sell a cryptocurrency that has appreciated in value, it will be subject to capital gains tax, or the difference between how much the coin was worth when you “bought” it with your rewards, and the selling price.
The points or cash back you earn with rewards credit cards on purchases you make, on the other hand, are rarely taxable.
Another major setback of crypto rewards is the potential loss of value. Many cryptocurrency enthusiasts buy on the chance that its value will skyrocket, but it remains a volatile asset and growth is not guaranteed.
In fact, the price of bitcoin has fluctuated between $30,000 and $60,000 in recent months. If you had earned 1.5% back on bitcoin when the price was $60,000 per coin, and then decided to cash out when the price dropped to $30,000, you would have lost half the value of your rewards.
Rewards credit cards offer even more value
Many experts we’ve talked to about crypto credit cards remain skeptical about their value compared to rewards cards.
The main benefits of these cards are the option to earn rewards as crypto directly, forgoing the need to purchase crypto with cash, and using them as a relatively low-risk way to invest in crypto. With less lucrative rewards, fewer perks, and a lack of welcome bonuses or introductory offers, you’ll still get much more value from many of the best credit cards on the market today than you would with a crypto card.
Another crypto-adjacent credit card option is a card like the SoFi Credit Card or Venmo Card, which earn rewards like cash back, but offer crypto as one of several redemptions. That way, you can dabble in crypto rewards, but you also have the flexibility to choose cash back or statement credits.
If you’re really interested in crypto, you’d better open a rewards card that aligns with your spending habits and budget, and then use your rewards to invest in crypto. You will still be subject to the ups and downs of the crypto market, but you may get a better rewards rate on your spending and be able to take advantage of other benefits of more general rewards cards.
Plus, you’ll still have the option to redeem your rewards as a statement credit or toward future travel, if you change your mind.
As with all of our credit card reviews, our analysis is not influenced by any association or advertising relationship.
- Introductory offer:
- Annual quota:
$0 introductory annual fee for the first year, then $95.
- ordinary APR:
14.74% – 24.74% Variable
- Recommended Credit:
670-850 (Good to Excellent)
- Learn moreexternal link icon On our partner’s secure site View Rates & Charges, terms apply.
The future of crypto credit cards
As public interest in crypto continues to grow, it is likely that crypto credit cards are here to stay. Many crypto cards on the market have only been around for a year at most, meaning there is plenty of room for future growth.
Roberts is “optimistically cautious” but advises cardholders to do their due diligence. “I’m on tiptoe to see how these companies can help the average consumer every day,” he says.
And if crypto markets continue to grow, there could be even more flexible ways to incorporate crypto into our spending. While it’s not a good idea to spend your bitcoin cash today, that may add another unique offering to crypto credit cards in the future.
Rossman is curious to see if there will be cryptocurrency credit card products in the US that allow direct spending of cryptocurrency, in addition to just earning rewards with cryptocurrency.
“I think they need to make it easier and more accessible,” he says. “So you wouldn’t really sell stocks every time you made a small purchase. That’s very confusing.”