While most people have heard of credit cards that allow you to use your cryptocurrency to buy goods and services, not many are aware of the details behind them. So what exactly are crypto-credit cards? How do they work? What should you consider before getting one? This guide will help you get the answers to these questions and more.
What is a Crypto Credit Card?
According to SoFi, “A crypto credit card is a credit card that lets you spend cryptocurrency and earn rewards.” These cards work the same way as a standard credit card, except it doesn’t require a bank account. Instead, it uses blockchain technology and cryptocurrencies -such as Bitcoin- and allows customers to spend their coins anywhere that accepts credit or debit cards. So here’s everything you need to know.
Crypto-Credit Cards Explained
Users can store cryptocurrency with their card provider and not a third-party wallet with a crypto rewards card. What’s more, you’ll be able to exchange your crypto rewards for Cash through a linked debit account or by using direct bank transfers
The Benefits of Using a Crypto-Credit Card
Get 6% Cash Back on Purchases
If you’re planning on paying with your credit card to buy something anyway, it makes sense to use an incentive credit card that offers cash back rewards.
$0 Fraud Liability
When you use traditional credit cards, chargebacks can occur. However, you’re protected by $0 fraud liability, so you don’t have to worry about chargebacks.
Your Credit Score is Not Affected
This is good news for people who have poor credit scores or no credit score. Unlike conventional credit cards, you can use crypto-credit cards without worrying about how they will affect your overall financial health. If you miss payments or carry a balance from month to month, your credit score suffers from regular credit cards. However, no interest rates and fees are associated with missed payments and carrying balances with crypto-credit cards.
You Get a Backup for Your Cryptocurrency
If something happens to your digital assets, or if you want to make a purchase and are short on funds, your card can help bridge that gap. In addition, crypto-credit cards give you more flexibility in using your cryptocurrency.
The Drawbacks of Using a Crypto Credit Card
Crypto-credit cards are still very new, and there are some drawbacks that users should consider before using them. For example, U.S. residents can use a cryptocurrency Visa or Mastercard to buy goods online; however, many large retailers don’t accept them in-store. Further, these digital payment services aren’t available outside of America just yet—you won’t be able to take advantage of your digital Visa while on vacation in Italy.
For cryptocurrency to take off, it will need more services and products. However, with many companies creating blockchain-based products, it’s only a matter of time before we see more options for spending our digital money in real life.