Credit cards with rewards programs are becoming common. You may quickly redeem your points for anything from money back to completely free trips. It's also possible to accrue incentives in the shape of bitcoin at present. Many large Cryptocurrency trading platforms now provide customers with a new sort of rewards card called a Crypto credit card. A Crypto credit card might be useful if you want to start investing in Cryptocurrencies or increase the amount you already have invested. Read on to find out how Cryptocurrency credit cards function and also what perks they might provide.

Also Read: 10 Finest Metaverse Crypto Coins To Check In 2023

The value of Cryptocurrency as an 'asset' in financial portfolios is skyrocketing. More than $2 trillion has been invested in Cryptocurrencies so far, as per CoinMarketCap, and also that number is expected to grow.

Also Read: How To Calculate Risk-Reward (RR) Ratio In Crypto Trading?

Credit cards that use Cryptocurrency as their currency are often issued under many brands. That's because a bank issues them, but another entity, quite an investment firm or Cryptocurrency exchange, handles their promotion. Example: BlockFi issues and Evolve Bank & Trust markets their renowned BlockFi Rewards Visa Signature Credit Card. Your BlockFi account will be credited with the Cryptocurrencies you earn as incentives. 

How Crypto Credit Cards Work?

Similar to other rewards credit cards, Cryptocurrency credit cards allow you to earn incentives as you make purchases. The difference here is that payment is made in digital money. Take into consideration that the specific methods used by each card to process and award bitcoin to cardholders may vary. To offer just one instance, below are some of the benefits cardholders of the BlockFi Rewards Visa Signature Credit Card receive: For all purchases, you will get 1.5% back in Cryptocurrency and 2% return in Cryptocurrency for yearly spending exceeding $30,000. BlockFi Cryptocurrency Rewards Points are the true incentive for using the card, since there are hundreds of different Cryptocurrencies you may store on it. As long as the cardholder account has been in top form, BlockFi would allow the credits to be converted into the Crypto of your choosing.

Depending on the card you use and the Cryptocurrency you choose, you may accumulate different types of digital currency. There is a standard set of Cryptocurrencies that may be purchased with any Crypto credit card. Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE), Litecoin (LTC), as well as Gemini Dollar (GUSD) are just a few of the many Cryptocurrencies that may be used as incentive programs . The amount of Cryptocurrency you get is depending on two variables: the rewards rate and the market price of the coin at the time of the transaction. Many Cryptocurrency reward cards function like traditional rewards cards in that you receive a set rate on all purchases and extra rewards in certain areas.

What to Consider with a Crypto Credit Card?

Following are the 4 important factors that you need to consider with a Cryptocurrency Credit Card:

          1. Taxes

Unlike money back as well as trip benefits, which are expected to lose value due to inflation and devaluation, Crypto card rewards have the potential to increase in value over time, making them an attractive option. Unlike Cryptocurrency earnings, which are treated as an asset and subject to taxation upon sale, these bonuses are not taxable. A tax expert should be consulted if you expect to make or dispose of a significant quantity of Cryptocurrencies.

          2. Flexibility

Depending on the Cryptocurrency card you choose, your incentives might be in a variety of different Cryptocurrencies. Ensure the card as well as the marketplace it's used with help the currencies you wish to invest in before you use it to make any purchases.

          3. Benefits

For frequent fliers, a credit card with travel rewards may be preferable than a Cryptocurrency card due to the former's limited set of perks. But a cash-back credit card might be more useful if you're looking to save costs on a monthly basis.

          4. Limitations

Some Cryptocurrency cards are unavailable nationwide due to variations in local legislation. Examine the eligibility requirements for every card to ensure you reside in a qualifying state prior to actually enrolling. To avoid running afoul of foreign regulations, it's recommended that any bitcoin awards be managed from inside the United States.

Difference Between Crypto Credit Card and Crypto Debit Card

Most Crypto debit cards use the same major card networks as traditional debit cards like Visa, Mastercard, and many other cards. In order to use your Crypto at establishments that don't normally take this form of payment, certain Crypto wallets as well as platforms offer you this feature. Your Cryptocurrency holdings or investment account will be liquidated and changed to the merchant's currency when you make a purchase using a Crypto debit card. Just as with a traditional debit card, you'll need to have enough Cryptocurrency in your wallet to cover the cost of the transaction. Cryptocurrency credit cards, on the other hand, won't drain your existing Cryptocurrency holdings. Rather, they function like ordinary credit cards and provide a credit limit in your own money. In this sense, using a credit card is similar to taking loans, with repayment required once a month after using the borrowed funds. Cryptocurrency credit cards aren't used to complete transactions using Cryptocurrency, but rather collect Cryptocurrency incentives.

The Bottomline

Although Crypto rewards are an exciting development in the world of credit cards, you should still evaluate their practicality in light of your other financial options. Finally, despite the worth of your incentives increasing over time, you should still exercise fiscal restraint at all times. Being in loans, especially to a credit card company, is never a smart idea, and neither is spending more than you can afford on a credit card.

Disclaimer: The author’s thoughts and comments are solely for educational reasons and informative purposes only. They do not represent financial, investment, or other advice.