Cryptocurrencies revolutionized the financial world in so many ways. It is still hard to imagine that it is possible to own and transact with digital currency. They also offer high levels of security due to cryptography technologies.
The other allure lies in the fact that governments do not regulate cryptocurrencies. The basic principle was peer-to-peer transactions, removing the need for financial institutions. That means it is possible to circumvent taxes or capital controls. Some ways to do this include buying inside of a 401-k, a defined benefit, or retirement plan.
There has been massive growth in the sector. The global cryptocurrency ownership in 2021 was 300 million users. At the time, over 18,000 businesses were allowing customers to make payments with crypto coins.
And now we have crypto credit cards. But before you rush out to apply for one, read on to know what they are and whether they are a good idea.
Crypto Cards; What Are They?
Bitcoin or other cryptocurrency holders must go through a process to get cash. You first need to convert the crypto into standard or fiat currencies. Then comes the waiting game for the money to appear in your account. Long story short, the money would not be instantly available to you.
Crypto cards, whether debit or credit, changed all that. They operate pretty much like the standard cards. You can spend the money for whatever purpose at a moment’s notice.
At this point, the question on your mind would be, what about stores that do not accept cryptocurrencies? Well, there is an automatic conversion of crypto into fiat currency. At no point will the vendor have to deal with the crypto coins.
The crypto offering gets better. You can earn the same rewards card issuers extend to standard credit cardholders. Only in this case, the reward is in crypto coins. As we said, crypto credit cards operate much like traditional cards. The issuer lends you crypto tokens, which you must pay back at the end of the month.
Please make sure you make the payment, or there are consequences you will face. The issuers may include a late fee penalty and additional interest on the amount.
Crypto debit cards are the same. Like with standard ones, you must have crypto coins in your wallet/account. You can only spend what you load.
Crypto Credit Cards and Credit Scores
The only way to get the perfect credit score is to have financial prudence. And that includes keeping up with debt repayment. Delinquencies or skipping payments on the crypto credit card balance will impact your credit score.
Further, issuers will run a hard credit inquiry when applying for the card. That could have a negative impact on your credit score, though on a temporary basis.
Keep up with monitoring your credit report. Any mistakes or inaccuracies will make your credit score drop. Take advantage of affordable credit repair services if you find it challenging to track the accounts yourself.
Credit repair professionals can identify errors. They then take on the job of resolving the issue. Dealing with credit bureaus can be difficult and time-consuming. Yet, a mistake or inaccurate report will stay on your credit score for up to seven years.
Considerations When Applying for Crypto Credit Cards
Let’s look at some pros and cons to have in mind when applying for crypto credit cards.
- Taxation on rewards: Standard credit card rewards attract no taxes. They may depreciate due to inflation or devaluation. Crypto rewards are taxable because the crypto reward coins are an asset. You will be liable for taxation if you decide to offload them.
- Reward returns: Since the crypto rewards become assets, they could lose or earn value, depending on market volatility. This is a fantastic entry point for those who would like to venture into crypto investing.
- Flexibility: Crypto cards offer tons of flexibility. Most of the major credit card issuers are already on board. You should have no issue using the cards anywhere in the world. On the reverse, though, there may be a limit on the number of currencies, depending on the issuer.
- Range of choices: You have many options when choosing the best crypto card. Cashback credit cards, for example, can save you money on monthly purchases.
- Availability: Crypto card availability can vary depending on your state. Also, do take care not to violate international laws. Find out what the rules are when operating a crypto account outside your country.
Please take time to find out what the issuing company has on offer. The best thing you can do is compare the features and reward systems. Pay attention to the pricing structure and any other fees you will be liable for.
Crypto Credit Cards: Are They Worth It?
We have shared salient points you need to know about crypto cards. We are now at that point of providing a stand on whether they are worth it. The truth is it would be hard to say yes or no for one reason. It comes down to you as an individual.
No one can argue that the crypto industry is still growing. Yet, since its conception in 2009, it continues to flourish. Major financial institutions are embracing crypto as a viable payment solution. The crypto credit card is another example that there is potential.
There is not much difference between crypto and standard credit cards. Whatever you spend is essentially a loan. That means you must keep up with the monthly payments.
As we advised, keep a close watch on your credit report. Top-rated credit repair companies can do the monitoring for you. They will identify and correct any errors from the crypto credit card issuers.
The final advice we can give is to do your research first. Learn all there is to know about cryptocurrencies and crypto credit cards. One of the strongest selling points is the crypto reward systems. Yet, such attract taxation if you decide to sell.
Further, market volatility will determine the returns you get. Cashing in at the wrong time could mean losing a lot of money. Yet, in the same breath, the reverse is true.
Sit down and list the pros and cons. Spend time comparing the different offerings and then make your decision.
