Crypto rewards cards have joined the ranks of traditional rewards currencies like points, miles, and cash back. Unlike conventional rewards, crypto rewards convert automatically into cryptocurrencies like Bitcoin and Ethereum. While the value of traditional rewards is stable, the value of crypto rewards can fluctuate based on the ever-changing coin market. This adds an element of risk and potential reward, especially considering the recent volatility in cryptocurrency values.
While crypto rewards cards provide a low-risk entry into the crypto world, opting for a traditional card with higher cash back and then investing that cash into crypto might be a more lucrative strategy.
In the ever-evolving landscape of credit card rewards, a new player has entered the scene: cryptocurrency. The emergence of crypto rewards cards since the crypto boom of 2021 has added an intriguing twist to the world of credit card perks. But the question remains: Are cryptocurrency rewards credit cards a good idea?
The Rise of Crypto Rewards
Historically, credit card rewards have fallen into three categories: points, miles, or cash back. However, the crypto frenzy of 2021 paved the way for a new type of reward – cryptocurrency. Several credit cards introduced since then offer rewards that automatically convert into Bitcoin, Ethereum, and other cryptocurrencies.
Crypto Rewards in a detail:
The initial allure of crypto credit cards was the potential for high rewards through crypto investing. Cardholders believed they could earn cash back, convert it into an active digital currency, and watch their rewards grow exponentially as the value of their crypto soared.
However, the crypto landscape has seen its fair share of ups and downs, with the value of many cryptocurrencies plummeting from their all-time highs. This adds a layer of complexity to the decision of whether to opt for a crypto rewards card.
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The Case for Crypto Rewards Cards
The primary advantage of crypto credit cards lies in the potential for the value of your crypto rewards to increase. For those interested in investing in crypto but lacking the initial cash, a crypto credit card offers a practical way to start building digital assets through everyday spending.
An example is the now unavailable Upgrade Bitcoin Rewards Visa, which offered 1.5 percent cash back converted to Bitcoin as cardholders paid off their purchases. The appeal lies in the potential for these rewards to grow in value if the cryptocurrency market experiences an upswing.
However, the downside is that the value of your cryptocurrency could decrease, mirroring the fluctuations in the crypto market. If you earned rewards during a crypto high but didn’t spend them, their value might now be significantly lower.
It’s essential to note that platform-specific cryptocurrency credit cards might not offer any additional benefits. Opting for a high-rate cash back credit card and manually investing your earnings in cryptocurrency could provide more flexibility.
While the now-unavailable Upgrade Bitcoin Rewards Visa offered 1.5 percent back in Bitcoin with no annual fee, other options exist. The Gemini Credit Card allows you to earn 3 percent back on dining, 2 percent on groceries, and 1 percent on all other purchases, with rewards convertible to various cryptocurrencies. The Venmo Credit Card offers similar flexibility, allowing rewards to be converted into Bitcoin, Ethereum, Bitcoin Cash, or Litecoin.
The decision to opt for a crypto credit card ultimately depends on individual preferences and risk tolerance. Comparing top crypto cards to traditional cash back credit cards is crucial before making a decision. Instead of a crypto-specific card, consider signing up for a cash back card with no annual fee and invest your rewards in any cryptocurrency of your choice through a preferred platform.