If you already own some type of cryptocurrency, you might be thinking about how and where to spend your virtual funds in the real world. From buying fresh juice to gaining crypto rewards, crypto credit and debit cards provide a seamless transaction experience, earning and spending crypto, and might be the best choice for those of us seeking a simpler way to spend our funds.
What is a Crypto Card?
Before, when early crypto users wanted to spend their funds, they were first required to convert their crypto into fiat money through a crypto exchange. Then they had to wait until the amount was credited to their bank account before they could spend it.
This complex procedure takes so much time and effort, so most crypto owners at the time still had to keep some traditional money for their regular shopping requirements.
Luckily, crypto has since evolved to a great extent, and it’s become simple to use in common transactions. Crypto cards have made payment much simpler for crypto owners. Now they can directly spend their crypto without facing the motions of fiat exchange.
These cards are allocated by crypto exchanges, and users can effortlessly get one from their institution of choice. These cards are very simple to use for a large range of payment requirements.
There are two types of crypto cards, which are Crypto Debit Card and Crypto Credit Card.
Crypto Debit Cards
Crypto debit cards are similar to prepaid debit cards. You should connect your wallet to your crypto card so you can make use of it to make payments and withdrawals. Take into account that some crypto debit cards impose maintenance fees and charge a specific amount with every ATM withdrawal. Ensure to check these terms before you sign up for one.
To obtain a crypto debit card, you must first sign up for an account on your payment platform of choice. Then, follow the KYC instructions to confirm your identity. Lastly, you are required to fund your account or wallet with crypto to start using it.
Crypto Credit Cards
If you choose a crypto credit card, the card provider will grant you a credit line based on your creditworthiness (or credit score). You can use the crypto credit card to make purchases in advance and pay back what you owe, of course with interest charged specified by the card’s terms and conditions.
There is another type of crypto cards called a prepaid crypto cards which must be loaded with coins and tokens before use. Once loaded, they work like the two more popular ones above, but you can only spend what you have preloaded.
Difference Between Crypto Crypto Debit Card & Crypto Credit Card
| Feature | Crypto Debit Card | Crypto Credit Card |
| Funding source | Directly linked to your crypto wallet’s balance | A line of credit secured by your crypto holdings |
| Spending limit | Limited to the number of tokens and coins you have in the wallet | Based on the credit line provided (can exceed the current crypto balance) |
| Repayment | No | Repayment is required. Additional interest may occur if not repaid in full each month. |
| Rewards and incentives | Rewards may include cashback on purchases but are more limited compared to credit cards | Tempting cashback rate on purchases. Offer various incentive programs such as travel benefits. |
| Use cases | Ideal for those who want to make immediate transactions without accruing debt | Best for users who want to spend without liquidating their crypto assets and are interested in incentives |
| Fees | Usually has lower fees, but may incur transaction fees depending on the network | This may include annual fees, interest charges, and late repayment fees |
How Does a Crypto Card Work?
A crypto card works just like other traditional payment cards offered by a regular financial institution. The only difference here is that instead of using money directly from bank accounts when you make a transaction, these cards typically convert crypto from your wallet automatically into the fiat currency you need to make the payment. Money is then used for payment as in normal cards.
So, you can use crypto cards as payment for online and offline shopping, even at retail stores that do not accept cryptocurrencies, as long as they support cards. You can also use these crypto cards to withdraw cash at ATMs that support this form of currency. Some crypto cards, especially credit cards, offer various incentives such as perks, high cashback rates, or rewards in tokens for using this payment method.
