Crypto Rewards Credit Cards: An Easy Way to Get into Cryptocurrency — If You Don't Mind the Risk
Americans love cash back, travel, gift cards, and other rewards they can earn from swiping their credit cards. But for those who are also cryptocurrency fans, there's a new breed of card that may hold extra appeal: crypto credit cards. These cards work similarly to traditional rewards credit cards, but instead of scoring common rewards like airplane miles, you'll earn cryptocurrencies such as bitcoin and ether.
"People who believe in the future of crypto appreciate cards that let them earn and use digital currencies," says Brent Weiss, a certified financial planner and head of financial wellness at online financial planning firm Facet. "Earning the rewards is akin to investing, since your rewards can grow in value if crypto prices increase. 'It's similar to receiving stock shares for spending on a traditional card,' Weiss adds.
But these rewards also come with risks. Here's what you need to know before opening a crypto credit card:
The State of Crypto Credit Cards
The market for crypto credit cards has been volatile, similar to the state of crypto prices themselves. When bitcoin was on a tear in 2021, several companies introduced these cards. But when bitcoin's price dropped from roughly $64,000 per coin to below $20,000 per coin in less than a year and the collapse of major crypto firm FTX rattled the industry, those companies took note.
For example, digital asset lender BlockFi teamed up with Visa to launch a card that offered 1.5% back in bitcoin with every purchase in 2021, only for BlockFi to go bankrupt in 2022. The Upgrade Bitcoin Rewards Visa Credit Card is another example of a crypto card that's no longer available.
The Current State of Crypto Credit Cards
Today, there are only two main options for people looking to earn crypto rewards with their credit card spending: the Gemini credit card and the Venmo Credit Card. The Gemini card allows you to earn up to 4% back (the exact amount depends on the spending type) in bitcoin, ether, or more than 50 other cryptocurrencies.
The Venmo card lets you sign up for a feature that will automatically use your earned cash back to purchase bitcoin, bitcoin cash, ether, litecoin, or PayPal's stablecoin. Crypto credit cards have similar transaction processes, provider networks and usabilities to traditional credit cards, Weiss explains. You can use them like a regular credit card at any merchant that accepts the network (most run on Visa or Mastercard), and your purchases go through instantly.
Pros and Cons of Crypto Credit Cards
Crypto credit cards come with pros such as growth potential — since the value of your crypto can grow faster than traditional cash back or points when crypto prices jump — as well as supporting crypto innovation and adoption.
But they also come with downsides, too, including higher volatility. If you earn 1% back in bitcoin and bitcoin's price drops 50% overnight, your rewards lose half their value instantly, says Ben Loughery, a certified financial planner and founder of Lock Wealth Management.
Crypto also comes with regulatory uncertainty. "Some banks are still hesitating to fully embrace crypto because of government regulations," Loughery says. Regulatory changes could impact your card or how rewards are taxed in the future.
There's also limited flexibility and an opportunity cost for crypto as a reward versus more traditional rewards like travel, gift cards and cash back. "Rewards are often locked into crypto," Weiss says. "You may lose out on other benefits."
Earning with a Crypto Credit Card
So how do you earn with a crypto credit card? Earn 4% back on gas at the pump & EV charging (up to $200 in spend per month, then 1%). Earn 3% back on dining. Earn 2% on groceries. Earn 1% on everything else.
The Gemini Credit Card is best for risk-tolerant investors who want to earn bitcoin and other cryptocurrency from everyday expenses like gas, dining, and groceries. This card doesn't charge annual fees or foreign transaction fees, and cardholders can add authorized users at no additional cost.