Are Cryptocurrency Credit Cards Already a Thing? [Pros & Cons]
by Arnab Dey Financial Planning 08 December 2022
Like other cryptocurrencies, cryptocurrency credit cards are also forwarding and it is also becoming readily available for everyone.
And these are easy-to-access cryptos that may be pretty appealing for both existing crypto enthusiasts and present crypto investors looking into and getting into the market. However, many experts believe 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, but also make sure that you see both sides of it, the pros and the cons. With this, you can answer the question yourself. Are credit cards for cryptocurrency already a thing?
The Pros Of Crypto Credit Cards
Instead of conventional cash back, points, or miles, bitcoin credit cards provide cryptocurrency incentives.
An example of this is the BlockFi Rewards Visa® Signature Card. This card lets you redeem your rewards, which is a 1.5% return on every purchase, for several types of crypto. Some are just limited to one type of crypto, like the Upgrade Bitcoin Rewards Card, which allows users to redeem rewards in Bitcoin.
Another example of Gemini cryptocurrency credit cards is it offers the choice of exchanging rewards for any Gemini-supported cryptocurrency. But unlike the said cards, this one offers returns of 3%, 2%, and 1% when you spend money on dining, groceries, and other purchases, respectively.
Crypto Credit Cards Can Be useful for anyone wishing to enter the cryptocurrency market.
There are several ways to enter the crypto market. Traditionally, investors sign up with crypto exchanges (Coinbase, Gemini, etc.) or a trader-broker connecting platform, to get started in the crypto industry. And some consider acquiring crypto credit cards. Some investors planning to enter the cryptocurrency industry are relying on the idea that it will increase in value in the future.
If that happens, they already have cards ready to use. And by that time, they will have been enjoying the rewards their card accumulated for a significant period. And that is possible to multiply depending on the value of crypto in the future.
Additionally, those who use bitcoin cryptocurrency credit cards can benefit from skipping some fees assessed by cryptocurrency exchanges. It actually might be quite a strategy for entering the market.
The Cons Of Crypto Credit Cards
Cryptocurrency credit card functions are similar to other financial credit cards. The only difference is there you only get the option to pay the amount with crypto money. That’s all.
Users Have To Be Cautious When It Comes To Crypto Tax Liability
Earning crypto rewards will not tax you, but it does when you cash in. When you sell crypto and profit from it, which means you get it at a low price using your rewards and sell it at a higher price, you will have to pay tax. And to be specific, we call that capital gain tax.
For some, it sounds off because users cannot get the most out of the rewards they gain. But on the brighter side, you seldom have to pay taxes on the points or cash back you receive from the purchases made using cryptocurrency credit cards. And that embodies what rewards mean because you get something in full without any deductions.
Rewards From Cryptocurrencies May Lose Value
Many crypto enthusiasts invest in the hope that their value will soar, but growth is far from certain because it’s also treated as a volatile asset at the end of the day.
It is challenging to plan what to do with the earned rewards because their value constantly changes. Bitcoin price, for instance, fluctuated. From 30k in the past few months, it fluctuated to 15k.
That means if you earned it at the former price, you would only get half of its value in the present. That is a drawback for cryptocurrency credit cards because it disappoints users.
The rewards they receive today make them happy, but that happiness might not last because the price might rise or fall tomorrow. Meaning that, depending on the price environment, the value of your rewards can also increase.
Whether cryptocurrency credit cards are already a thing depends on how one sees the pros and cons of crypto credit cards. Some might see the benefits are enough to compensate for the drawbacks or the other way around.
The bottom line is using crypto credit cards depends on spending habits and budget. If you think it is worth it, push for it. But if you think the disadvantages outweigh the advantages, you should think twice. If you want to share anything extra, you can use the comment section below.