Cryptocurrency credit cards - top facts you need to know

Cryptocurrency is fast foraying into the mainstream world. How do you know that a new asset is making its way into mainstream finance? Well, the early signs are that the new asset will start adopting features and systems that are common to the traditional finance world. Many fintech experts have noted that the crypto market has entered a correction phase recently after its ATH last year- and this is the sign that the new market is maturing. Then, you can already buy crypto with credit card- another element common with mainstream finance. And, lately, a new element has been added to the crypto scene (inspired by mainstream finance)- Cryptocurrency credit cards.

Cryptocurrency credit cards


So, have you heard of cryptocurrency credit cards? Well, it’s a new phenomenon and many people are yet to know about it. However, the concept has been receiving rising interest among crypto users and for all the great reasons. Would you too like to have a
cryptocurrency credit card? The post below offers a brief on the nuts and bolts of cryptocurrency credit cards.

Cryptocurrency credit card- overview

Cryptocurrency credit cards work almost the same way as you see with your good old regular credit card. Just like the old one, the crypto one too allows you to make cash-free purchases in advance. There is a specific time period within which you would have to pay back the amount spent as otherwise you would incur penalty fees as well as higher rate of interest. The only fundamental difference is that the crypto one makes the payment in the form of crypto whenever you use it to pay for goods and services.

How does it work?

The paragraph above has already detailed how these cards work. Here we will know a little something more about them.

These new forms of credit cards are not connected to your bank account. Rather, these are connected to your crypto wallet. When you use them, these cards take crypto from your crypto wallet, then convert the amount into the vendor’s local currency for easy payment. The best ones in the market generally perform the conversion in real-time.

Now, where do you get these cryptocurrency credit cards? Well, the two leading global payment service providers offer cryptocurrency credit cards. You can use these credit cards all across the world, at every merchant outlet that accepts these payment providers. Then, certain crypto exchanges too have started offering the crypto credit cards

Credit card rewards

Much like regular credit cards, the crypto ones too offer rewards to customers.

You will generally receive cryptocurrency as reward from most of cryptocurrency credit cards. For example, you might get 1.5% to 3% reward of total transaction every time you use the card for a purchase. Some of the cards offer an even higher percentage of rewards if you touch a certain milestone of using the card in one financial year.

Then, the reward percentages are also dependent on the services or  goods you purchase with the card. For example, you might receive a higher rate of return if you use the card for making a payment at a diner than for shopping for groceries. However, some of the cards offer travel points and cashback for rewards as well.

But one thing is certain, you will get rewards every single time you make a purchase with your crypto card- irrespective of the volume of your expense.

Fees

Some cryptocurrency credit cards might ask for annual fees. However, a bunch of leading crypto card providers do not charge yearly fees from users.

Benefits of cryptocurrency credit cards

Hassle-free crypto payment

The fundamental benefit of cryptocurrency credit cards is that these cards have made the process of crypto payment more seamless than ever. No longer would you have to waste time in going through the elaborate process of exchange on a crypto exchange platform. As these crypto cards can complete the whole process in real-time, the process of crypto payment is a lot easier and quicker now.

Rewards

This is certainly one of the most important benefits of taking to cryptocurrency credit cards. You will receive a reward every single time you will swipe this card for a purchase.  You can utilize the crypto you receive in reward for crypto investment, staking, or trading. This way, you won’t have to pull money out of your personal investment or trading capital.

No pricey fees for fiat conversion

Traditional banking institutions generally charge high fees for credit card payment services. But, with cryptocurrency credit cards you won’t have to go through lofty fees for converting crypto right into fiat.

More convenient avenue for crypto payments

There are several crypto users who had always wanted to make payment with crypto but had not been able to handle the associated hassles mentioned above. Also, they could not make crypto payments at a large number of stores initially. But, now, thanks to the intervention of the leading payment service providers- that are accepted widely worldwide- crypto users now have more avenues to make crypto-based payments.

Downsides of using cryptocurrency credit cards

Loss in market value

As mentioned previously, cryptocurrency credit cards offer crypto rewards for every purchase made with these cards. Now, while such returns are always welcome, you also cannot forget that the crypto market is wildly volatile. What if the cryptos you would receive lose out on their market value after you receive them? In that case, the rewards would be nearly worthless. However, you could stay a little patient here and deposit the returns for HODLing so that you can reap benefits when the market would rally.

Taxation liabilities

Rewards like travel points or cashback do not fall under the taxation bracket. But, that won’t be the case with cryptocurrency. Cryptos are already under taxation as these are considered to be “property”. Put simply, you would have to pay taxes on the cryptos you would earn as rewards.

Wrapping up

Cryptocurrency credit cards are bliss for crypto users who want to make payment in crypto. But, if you are not a frequent crypto user for payment, there is no compulsion to opt for the card.

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