Are Cryptocurrency Rewards Credit Cards A Good Idea?

Bank card rewards traditionally fall underneath three varieties of rewards currencies — factors, miles or money again. However cryptocurrency is now a rewards foreign money, too, because of the launch of a number of rewards bank cards since 2021’s crypto heyday.

The rewards course of for these playing cards is pretty easy and works equally to a conventional money again program. With most crypto playing cards, you earn a share of your purchases again in U.S. {dollars}, which you’ll be able to then use to purchase or add to your crypto stash, normally robotically.

The preliminary enchantment of crypto bank cards was the “excessive threat, excessive rewards” facet of crypto investing. For instance, cardholders within the midst of the crypto frenzy believed they might earn money again with a crypto bank card, transfer their rewards into an lively digital foreign money, after which develop their rewards haul exponentially as the worth of their crypto exploded.

However crypto winters since have resulted within the plummeting worth of many cryptocurrencies, with costs for even the most well-liked cash down significantly from all-time highs. The worth of a single bitcoin, for instance, surged to $64,400 in November 2021 and stands at lower than $40,000 as of January 2024. Identical for the Bitcoin competitor Ethereum, which reached a excessive of $4,811.70 in November 2021 and now holds lower than half that worth immediately.

The case for crypto rewards playing cards

After all, that’s not what individuals who go for crypto bank cards hope for. The good thing about crypto bank cards is that, in contrast to different varieties of rewards currencies, the worth of crypto has the potential to extend. Not solely that, however people who find themselves considering investing in crypto however don’t have the money to take action can start constructing their digital property by utilizing their card for normal spending and payments.

Whereas the cardboard is not accessible to new candidates, the Improve Bitcoin Rewards Visa® Credit score Card was an early crypto rewards card that earned cardholders 1.5 p.c money again, which transformed to Bitcoin as they paid off their purchases. It meant you would use the cardboard for $1,000 in spending and payments, repay your steadiness off and get $15 in Bitcoin deposited into your card’s rewards account. This card didn’t cost an annual charge both, and curiosity costs didn’t apply since you by no means carried a steadiness from one month to the subsequent.

Think about you bought this card and used it for $2,000 a month in common spending and payments over the course of a yr. If you happen to paid off your complete $24,000 in balances with every billing assertion and by no means carried debt from one month to the subsequent, you might need earned $30 in Bitcoin every month — or $360 in Bitcoin over the 12 months.

With a daily rewards card, that $360 in money again wouldn’t have had the potential to develop in worth. However let’s say the worth of Bitcoin elevated 20 p.c over the yr you had the Improve card. In that case, your $360 rewards haul might be price $432. And if the worth of Bitcoin elevated 50 p.c, your rewards worth might be $540. That’s the enchantment of crypto rewards playing cards.

The opposite facet of the crypto coin

After all, with all that’s occurred within the crypto world over the previous couple of years, among the many downsides of crypto bank cards is the worth of your cryptocurrency might additionally lower dramatically, inflicting your rewards worth to drop proper together with it.

If you happen to had been capable of earn rewards in Bitcoin on the time however didn’t spend them, for instance, your rewards might be price lower than half of their unique worth.

After all, the thought of investing bank card rewards to assist them develop isn’t new — playing cards that robotically make investments your money again within the inventory market have existed for years. Constancy, for instance, launched a bank card in 2016 that gives limitless 2 p.c money again when deposited into an eligible Constancy account, like a brokerage account or an IRA.

There’s additionally a motive to be leery of platform-specific cryptocurrency bank cards, since they don’t actually do something for you which you could’t do your self. For instance, you would as a substitute go for a money again bank card with the best attainable charge, then redeem your rewards for money again and use the funds to purchase cryptocurrency your self. In that case, you would use any platform you wished to purchase your crypto, or you would even retailer it utilizing a chilly pockets that retains your info and personal crypto keys off the net.

And both method, you simply can’t beat the flexibility of a conventional money again card. For some, the flexibility to spend money again on something — whether or not that’s crypto, a grocery retailer journey or a splurge buy — is best than being locked into crypto, even when which means manually investing your earnings and paying the everyday USD-to-cryptocurrency conversion charges.

How a lot are you able to earn with a crypto rewards card?

We talked about how the now-unavailable Improve Bitcoin Rewards Visa supplied 1.5 p.c again in Bitcoin as you paid your purchases off with no annual charge. Nonetheless, there are different crypto bank cards to contemplate.

For instance, the Gemini Credit score Card® helps you to earn 3 p.c again on eating, 2 p.c again on groceries and 1 p.c again on all different purchases. There’s no annual charge for the Gemini Credit score Card, and you’ll decide to earn rewards in Bitcoin, Ethereum or every other cryptocurrencies at the moment accessible on the Gemini platform.

Then there’s the Venmo Credit score Card, which provides 3 p.c again in your prime eligible spending class, 2 p.c again within the subsequent prime spending class and 1 p.c again on different purchases. The eight versatile spending classes that qualify for bonus rewards embrace payments and utilities, eating and nightlife, leisure, gasoline, grocery purchases, well being and wonder, transportation and journey.

The Venmo Credit score Card doesn’t have an annual charge, and rewards will be transformed into Bitcoin, Ethereum, Bitcoin Money or Litecoin.

The underside line

Solely you’ll be able to determine if a crypto bank card is a good suggestion, however you need to examine the highest crypto playing cards to common money again bank cards earlier than you decide. As a substitute of getting a crypto-specific card, you would at all times join a money again card that earns a flat 2 p.c again with no annual charge, then make investments your rewards into any cryptocurrency you need with a platform of your selecting.

Additionally, know that the jury is out on whether or not crypto is on the rise or doomed to fail in the long term. Whether or not you need to spend money on crypto is a bigger dialog, however if you’re optimistic about crypto’s future — and even simply crypto curious — these rewards playing cards supply a reasonably low-risk technique to get some pores and skin within the sport.

*Details about the Improve Bitcoin Rewards Visa® Credit score Card, Gemini Credit score Card® and Venmo Credit score Card has been collected independently by Bankrate. Card particulars haven’t been reviewed or accepted by the cardboard issuer.