Is a Cryptocurrency Credit Card Right for You?
Cryptocurrency Credit Card
The primary association most people have between Cryptocurrency Credit Card and Fiat credit cards is that the latter can be used to purchase the former. As was explored in a past post on the ‘5 Best Bitcoin Exchange’ options, the leading services in the crypto space allow users to exchange funds from credit and debit cards for cryptocurrency. This, indeed, is how many if not most people secure cryptocurrency today.
In recent years though, the meaning behind the phrase “cryptocurrency credit card” has evolved. Once upon a time, one might have used these words to refer to a credit card accepted by an exchange like Coinbase or Coinmama, and thus useful for obtaining cryptocurrency.
Now, however, there are actual crypto credit cards — in the sense that there are functioning credit cards that provide users with rewards in the form of cryptocurrency.
Marketwatch recently wrote up a list of issuers that have either introduced cards like these or announced plans to do so.
These included SoFi, Brex, BlockFi, Gemini, and Unifimoney, and even that list doesn’t cover all of the options in this emerging category. But the bottom line is that there are real financial services companies working to link cryptocurrency with credit card activity.
It’s an interesting development, but the question is whether or not a cryptocurrency credit card is right for you. We aren’t here to conclusively answer that question for you, but below we’ll cover some of the important factors to consider when making the decision.
Why You should consider Cryptocurrency Credit Card
Do you need another card?
It’s easy to get excited about a new credit card — particularly when it’s a whole new type of credit card. But before you decide whether or not you want a crypto credit card specifically, it’s a good idea to give some thought to whether or not you need a new credit card in general.
As Petal Card points out in an article on this very topic, there are some potential drawbacks to having too many credit cards. It may affect your credit score, the fees can add up, and it can become harder to keep track of spending.
That said, there is no precise definition of how many credit cards constitute “too many.” Just be sure you aren’t already at the limit of what you can manage.
What are your crypto goals?
At a glance, a cryptocurrency credit card sounds like a dream come true: a card you can use for everyday expenses that will simply give you crypto rewards. Certainly, it’s a good way to build up your cryptocurrency stash, but it’s worth thinking about what your goals are on this front.
If you’re just getting started with cryptos for instance, or if you’re looking to pad investments, the trickle of rewards can be appealing and helpful.
If on the other hand, you’re seeking to gain cryptocurrency for the purpose of using it in transactions, it’s worth considering that what you’ll receive in credit card rewards at any given time will be minimal.
Have you considered taxes?
If in fact, you’re interested in cryptocurrency rewards as investments, it is also important to recognize that you may be taxed on any gains realized from those investments. As is explained in detail by Forbes, the tax rates can vary based on a number of factors (as well as where you live and use your credit card).
Generally speaking though, crypto gains of a certain amount over a certain time period will be taxed. This doesn’t negate your rewards, but it is worth factoring in as you consider whether or not this is the sort of card you want to use.
Would other rewards be preferable?
There’s undoubtedly a certain appeal to cryptocurrency credit card rewards, particularly if you’re already interested in the crypto world.
However, it’s worthwhile to at least explore other rewards situations if you’re in the market for a new card.
Keep in mind that if another credit card is better suited to your spending habits and offers more valuable cash rewards, you can always use that cash to invest in cryptocurrency on the side.
It might not be as seamless as simply benefiting from a cryptocurrency credit card, but you may ultimately get more value out of it.
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Hopefully, these points and questions will help you to sort through your decision regarding crypto credit cards.
These are still fairly new options, and their appeal to those intrigued by cryptocurrency is clear.
But it’s still a good idea to consider all of the angles and make sure that if you apply for a card like this, it’s the best choice for you and your financial situation.