Even traditional financial institutions, something the crypto community has traditionally stood against, are starting to embrace cryptocurrencies, offering new services and products specially tailored for cryptocurrency users.
One of these is crypto cards, which put forward a convenient way to spend your crypto.
What Are Crypto Cards?
Not so long ago, whenever you wanted to spend your crypto, you first had to convert your funds into a fiat currency at a crypto exchange and then wait for the money to hit your bank account. This was a timely and tedious process and meant that, in practice, you couldn’t really use your crypto as an actual currency for your everyday purchases.
This is where crypto cards come in. Crypto cards offer the possibility of spending your crypto directly, without the need to convert your funds into a fiat currency.
How Do Crypto Cards Work?
Even though crypto exchanges and start-ups mainly issue crypto cards, they work just like any traditional payment card, and they can be used for your everyday purchases just like with any other bank-issued card.
When you make a purchase with your crypto card, transactions are carried out through any of the traditional payment processing networks, including Visa and MasterCard. This means that crypto cards are accepted anywhere traditional payment cards are.
Crypto cards automatically convert your crypto from a linked wallet into the fiat currency needed to pay. This makes crypto cards particularly useful since you can use them for online and in-store purchases from retailers that don’t necessarily accept crypto. They can also be used to withdraw cash from supported ATMs, which can come in handy.
Crypto Debit Cards vs. Crypto Credit Cards
Crypto cards are very much like regular debit and credit cards, aside from some key differences. In any case, they serve the same purpose.
Crypto Debit Cards
Crypto debit cards work much like a pre-paid card, which means you need to have funds linked to the crypto card to use. Also, most of them come with monthly maintenance and ATM withdrawal fees.
To apply for a crypto debit card, you usually need to create an account or crypto wallet, verify your identity following the know-your-customer protocol, and fund it with crypto. Also, some cards must be purchased, while others require you to stake some of your funds in their issuer’s own crypto token to get better benefits.
All in all, crypto debit cards are very convenient since they allow you to spend your crypto without the need to withdraw it from your wallet or exchange them into a fiat currency first.
However, this means that while you can use your crypto for everyday purchases, since you need to have funds readily available, crypto debit cards aren’t as useful for big purchases, such as buying a car or a house. This is where crypto credit cards come in.
Crypto Credit Cards
Crypto credit cards are an incentive-driven payment option that rewards holders with cryptocurrency, as opposed to fiat cashback. You can use your crypto credit cards just like a traditional credit card.
Every time you make a purchase with your crypto credit card, you are eligible for cashback. The main difference is that the rewards come in the form of cryptocurrency instead of fiat currency or airline miles.
Should You Get a Crypto Card?
Crypto cards might seem a bit complicated, but in reality, they work just like regular bank-issued payment cards. If you hold or use cryptocurrencies, applying for a crypto card could definitely come in handy for easy access to your crypto funds.
However, you should keep in mind the differences between crypto debit cards and crypto credit cards. And if you finally do decide to pick up a crypto credit card, you should be mindful to pick one that is actually going to reward your buying habits!
