Crypto debit cards have increased tremendously due to the ever-growing number of crypto users. Crypto debit cards have proven to be remarkably important to crypto investors. But how can you earn rewards with crypto debit cards?
Besides convenience and flexibility, most crypto debit cards offer interesting rewards. However, the type of reward and how they work highly depends on the type of crypto debit card. So, knowing how crypto debit cards work is essential when planning to apply for one.
How do crypto debit cards work?
Crypto debit cards might sound tricky and complex to use. Yet, these cards operate pretty much like traditional debit cards.
These cards’ main purpose is to make crypto spending easier and more convenient. Also, like regular debit cards, you can make purchases online or in-store with them. This only requires you to swipe your card or insert card details.
The funding mechanism for these cards is also pretty similar to that of regular prepaid cards. Similar to how regular cards receive funds from linked bank accounts, crypto cards receive funds from linked crypto wallets.
Crypto debit cards can vary when it comes to funding. They might vary depending on crypto conversion time or the process of conversion.
On the one hand, we have crypto debit cards that require manual funding. First, you have to sell your crypto on a platform provided on the app or portal. After successful selling, your fiat gets deposited directly to your account. From this account, you can fund your debit card and pay for your spending.
On the other hand, there are debit cards with automated funding processes. These cards can load crypto from your crypto wallet and convert them to fiat during purchases.
This crypto to fiat conversion takes place at the prevailing market price of the crypto. A credit that falls in this category is the Coinbase card.
Additionally, there are three categories of crypto debit cards depending on the transaction process. These are Crypto to fiat, crypto to stablecoins, and Crypto to stablecoins to fiat. Crypto to fiat forms the biggest category for crypto debit cards, and a good example is the Club Swan card.
What are the benefits of cryptocurrency debit cards?
For a long time, crypto wasn’t a convenient way of making purchases around the globe. However, thanks to cryptocurrency debit cards, you can now easily make payments with crypto.
Here are some of the benefits of crypto debit cards.
1. Increased convenience
The world is going digital, and so is financial technology. The world is eradicating cash as people continue to embrace digital payment methods. In fact, the commonly used crypto payment method globally is debit cards.
As a result, crypto exchanges have already started issuing their crypto debit cards. These cards allow you to use crypto for daily spending, which was impossible a few years ago.
Most crypto debit cards offer rewards to their users. However, depending on the card issuer, the rewards might vary.
Cashback rewards are the most common among crypto debit cards. You receive the stated cashback reward directly to your account after purchases.
Depending on the card, some cashback rewards might take a while to display on your account. Meanwhile, cashback rewards for some cards instantly appear on your account after purchases. A good example is the Gemini Visa card.
Moreover, the Gemini Visa card offers different cashback amounts depending on how you spend it. This includes 3% for dinner, 2% for groceries, and 1% for all the other purchases.
On the other hand, Club Swan offers up to 22% instant rewards for purchases you make with their cards.
Besides cashback, some cards offer referral program rewards. Club Swan Membership card is a good example.
Club swan offers 20% of the joining fee if you refer a new member. More importantly, your membership gets upgraded once you refer three new members.
Also, some crypto card issuers offer rewards through staking. These include Binance and Crypto.com. The amount you stake determines the crypto debit card you get.
3. Improved Versatility
Different from fiat currency, crypto manipulation isn’t easy. Thus, it’s correct to say crypto can easily bypass a country’s economic instability.
It’s next to impossible for crypto to lose value as it moves from one country to another, like fiat currency. As you cross borders, the value of crypto doesn’t change, while that of fiat can completely change. This highly depends on currency conversions.
As a result of this crypto versatility, economically unstable countries have turned to crypto and hard currencies. These hard currencies include EUR, GBP, and the US.
A good example of this is Venezuela. Apart from hard currencies, many Venezuelans have reverted to the use of crypto. Fortunately, crypto can easily bypass a country’s inflation.
What is crypto debit card flexibility? This is the ability to use different currencies through your crypto debit card to make purchases.
Crypto debit cards are mostly jam-packed with numerous fascinating features. One of these features is the ability to support multiple currencies.
These currencies include crypto, altcoins, stablecoins, and even fiat currencies.
Do you have a diversified crypto portfolio? You can choose a crypto debit card that supports your preferred cryptocurrencies.
Also, processing companies, Visa and MasterCard, mostly power these crypto cards. And thanks to them, you can use most of these cards to make ATM withdrawals and purchases in most places.
5. Additional perks
Crypto issuers have gone out of their way to make crypto debit cards exciting and fun by offering additional perks.
For instance, Coinbase and BlockFi offer waived fees if you exceed a certain monthly crypto expenditure threshold.
On the other hand, Crypto.com offers free subscriptions to Amazon Prime, Netflix, and Spotify and discounts for Airbnb and Expedia. Additionally, it provides accessibility to airport lounges and even partnership for private jets. However, these perks are only accessible for the top-tier cards.
Risks of using cryptocurrency debit cards
Without a doubt, crypto scams are among the significant risks of using crypto debit cards. In fact, according to trusted sources, crypto scammers made away with about $14 million worth of crypto in 2021.
This shows how necessary it is for crypto companies and investors to strive for crypto security. To this security, you must ensure to put across the provided security measures. These measures include a security phrase, passcode, 2-factor authentication, etc.
What are the drawbacks of crypto debit cards?
According to the International Revenue Service (IRS), cryptocurrency is a capital asset. This is similar to bonds and stocks.
Therefore for any crypto gains, you must pay capital gain taxes. The amount of crypto gain tax you pay depends on two factors. These factors are the time of holding the crypto and the amount of accumulated interest.
2. High fees
Different crypto debit cards charge different kinds of fees to cardholders. Some of the fees cutting across the board are transaction fees, mostly withdrawal. Most crypto debit cards charge no deposit fees.
On the other hand, some debit cards charge numerous fees yet are high. These fees include foreign exchange, maintenance fees, liquidation fees, etc.
Despite the similarities of crypto debit cards, they can vary in many aspects. They include fees, rewards, and availability. This variance allows you to choose a crypto debit card that suits your lifestyle. To earn rewards with a crypto debit card, you’ll have to consider other factors and weigh them carefully.