If you believe in the potential for cryptocurrency values to rise, you might want to explore a crypto rewards credit card. However, it’s vital to familiarize yourself with the inherent volatility of the crypto market before making any commitments. Additionally, consider the specific types of spending that are eligible for rewards when contemplating a crypto rewards card. Many Americans enjoy the perks of cash back, travel rewards, gift cards, and other incentives associated with credit card usage. A recent survey by Morning Consult in 2024 revealed that 80% of Americans have at least one rewards credit card, with 88% valuing the benefits these programs provide.
For those enthusiastic about both rewards and cryptocurrency, crypto credit cards are emerging as an enticing option. These cards operate similarly to traditional rewards credit cards, but instead of earning standard rewards like airline miles, users accumulate cryptocurrencies such as Bitcoin and Ether. “Individuals who have faith in the future of crypto are drawn to cards that allow them to earn and utilize digital currencies,” explains Brent Weiss, a certified financial planner and head of financial wellness at an online financial planning firm. The rewards earned can be seen as a form of investment, especially if the value of the cryptocurrencies appreciates over time. “It’s akin to earning shares in a company by spending on a traditional card,” Weiss elaborates.
However, the rewards associated with these cards are not without their risks. Understanding the current landscape of crypto credit cards is essential. The market for these cards has experienced considerable fluctuations, much like the prices of cryptocurrencies themselves. During the crypto boom of 2021, numerous companies launched crypto credit cards. Yet, following a significant drop in Bitcoin’s value—from approximately $64,000 per coin to under $20,000 within a year—and the fallout from the collapse of major player FTX, many businesses reevaluated their positions. For instance, BlockFi partnered with Visa to introduce a card that offered 1.5% back in Bitcoin on every purchase in 2021, but the company filed for bankruptcy in 2022. Similarly, the Upgrade Bitcoin Rewards Visa Credit Card is no longer available.
Despite the volatility, some industry experts remain optimistic about the future of cryptocurrency, particularly in light of supportive attitudes from figures like former President Donald Trump. Currently, two primary options exist for consumers wishing to earn crypto rewards through their credit card purchases: the Gemini credit card and the Venmo Credit Card. The Gemini card allows users to earn up to 4% cash back in Bitcoin, Ether, or over 50 other cryptocurrencies, depending on the type of spending. Meanwhile, the Venmo card includes a feature that automatically converts earned cash back into various cryptocurrencies, including Bitcoin and Ethereum.
Understanding the Functionality of Crypto Credit Cards
Crypto credit cards function similarly to traditional credit cards in terms of transaction processes and usability. Users can utilize these cards at any merchant accepting the relevant payment networks, which are predominantly Visa or Mastercard, with transactions processed in real-time. However, unlike standard credit cards that provide points redeemable for travel or gift cards, crypto cards enable users to accumulate cryptocurrency, which can be held, traded, or converted into cash.
Advantages and Disadvantages of Crypto Credit Cards
Crypto credit cards present certain advantages, including the potential for value appreciation, as cryptocurrencies can increase in worth faster than traditional cash back or points when crypto prices rise. They also play a role in fostering innovation and the adoption of cryptocurrency. However, they come with significant downsides, including heightened volatility. According to Ben Loughery, a certified financial planner, if you earn 1% back in Bitcoin and its value plummets by 50% overnight, the worth of your rewards would diminish significantly. Additionally, the regulatory landscape surrounding cryptocurrencies is still uncertain, with some banks hesitating to fully embrace crypto due to potential government regulations. Changes in regulation could affect your credit card’s functionality or the taxation of rewards in the future. Furthermore, rewards in cryptocurrency may limit flexibility compared to traditional rewards like cash back or travel points, as crypto rewards might be locked into specific digital currencies. Weiss cautions that some conventional rewards cards could potentially offer superior returns based on your spending habits. Moreover, there are tax implications to consider, as selling or converting cryptocurrency may incur capital gains taxes, a concern not typically associated with traditional rewards.
Key Considerations Before Applying for a Crypto Credit Card
When selecting any credit card, Weiss advises evaluating your spending habits since different cards reward various purchases at differing rates. It’s essential to choose a card that aligns with your spending patterns, whether for gas, groceries, dining out, or other expenses. Understanding how rewards can be redeemed, along with the associated fees and interest rates, is equally important. For crypto credit cards, additional factors must be taken into account. Keeping abreast of the ever-changing regulatory landscape is crucial, as is taking security precautions. “Ensure that your crypto rewards are stored in a secure wallet or platform,” Weiss warns, highlighting the real risks of theft and hacking.
Exploring the Gemini Credit Card®
The Gemini Credit Card offers compelling features for users. With a rating of 3.8 out of 5, it provides up to 4% back on gas and EV charging (up to $200 in monthly spending, thereafter 1%), 3% back on dining, 2% on groceries, and 1% on all other purchases. The card comes with a variable APR ranging from 17.24% to 29.24%. Notably, it has no annual fee and no foreign transaction fees. However, rewards are limited to one cryptocurrency of choice from a selection that includes Bitcoin and Ether. Users should also bear in mind the inherent volatility of crypto rewards compared to cash back or travel incentives, and they cannot use their crypto rewards to settle existing balances.
Overall, the Gemini Credit Card provides an opportunity to earn cryptocurrency rewards with the potential for growth, alongside instant rewards and no annual fees. Users can choose from Bitcoin, Ethereum, or over 50 additional cryptocurrencies available on the Gemini platform and can easily switch the cryptocurrency they wish to earn back whenever desired.
