Articles
October 31, 2022

How Do Crypto Credit Cards Work?

How Do Crypto Credit Cards Work?

Credit cards and reward cards have become a staple of most people's lives. They offer great rewards, such as transaction protection, and they improve your credit score should you keep up to date with payments. With the rapid rise and adoption of cryptocurrency, it’s only natural that defi continues to adopt products offered by traditional financial services – that’s where crypto credit cards come in.

In this article, you’ll learn what a crypto credit card is, how it works, and guidance to understand if you should get one. For those first breaking into the crypto scheme, or seasoned investors, a crypto credit card can be a great option.

What Is A Crypto Credit Card?

Much like a traditional credit card, crypto credit cards give holders a credit line, meaning they can spend up to a certain amount before paying it off at the end of the billing cycle. Whatsmore, the purchases a cardholder makes and paying off their debt earn them a range of cryptocurrency-based rewards.

Usually offered by popular brokers and exchanges, crypto credit cards tend to be co-branded. This means they’re backed by a financial institution such as a bank. Then, they're promoted by a broker or exchange. So, your accumulated crypto rewards are deposited into your crypto account or digital wallet rather than a traditional bank account.

How Does A Cryptocurrency Credit Card Work?

As with the credit cards you’re used to, a cryptocurrency credit card is used to make purchases. Rather than earning cash back, a cryptocurrency purchase is initiated, with the funds deposited into your crypto wallet or account. When selecting the best crypto credit card for you, the first thing to consider is the type of cryptocurrency it is associated with. If you’re an avid bitcoiner you’ll want a credit card that purchases BTC. Alternatively, if you’re building a portfolio of Ethereum, you need to research Eth cryptocurrency credit cards.

Usually, each crypto credit card allows you to choose from a list of cryptocurrencies, making it easier to find a card you’d like to use. Often, the list you can choose from includes:

  • Ethereum
  • Bitcoin
  • Dogecoin
  • Litecoin

And many more.

Are There Crypto Credit Card Rewards?

What’s great about crypto credit cards are the rewards you can earn. Typically, with a credit card, you earn cashback or air miles and other travel benefits. However, with a crypto credit card, you can build your crypto portfolio passively.

You might be thinking that there are limited places to make purchases using crypto, so is a crypto credit card worth it? Well, what many people aren’t aware of is that a crypto credit card is based on fiat transactions. So, with every dollar you spend, you can earn cryptocurrency, expand your portfolio, and build a collection of digital assets.

If you’re new to crypto and don’t understand the complexities of the market, but want to start building a portfolio, a crypto credit card allows you to use the dollars you’re already spending as a method for purchasing particular currencies. This ensures you're not risking any additional money as you venture into a new space.

If you’re an investor that uses a dollar-cost average, a crypto credit card can contribute greatly to your portfolio. You can continuously invest in a specific currency, no matter the price.

Cryptocurrency Credit Cards vs. Crypto Debit Cards

So, we’ve discussed crypto credit cards and how you can use fiat currency to earn cryptocurrency credit card rewards. Another option is cryptocurrency debit cards. Again, these operate much like their fiat counterparts. Usually powered by a big-name brand such as Visa or Mastercard, a crypto debit card completes a transaction by connecting to your digital wallet and converting your chosen crypto into the currency of the merchant you’re buying from.

Rather than collecting rewards as a credit card does, this debit card empowers you to make purchases using your portfolio of cryptocurrency. To adopt this way of transacting, you need to ensure you always have enough crypto in your digital wallet.

Some people use crypto credit cards and debit cards in conjunction with one another because they provide differing benefits. If you have plans to begin using cryptocurrency for everyday transactions, and still want a way to accumulate more cryptocurrency, you’ll need to spread transactions across both debit and credit cards.

Do I Need A Crypto Credit Card?

As mentioned throughout, one of the main advantages of a crypto credit card is its ability to enable anyone to build a cryptocurrency portfolio. If you’re someone already using a credit card but don’t take advantage of the benefits they come with, a crypto credit card is a great option.

To passively build a crypto portfolio, using the dollars you’re already spending is the ideal way to break into the crypto markets, and it’s a passive method for active investors to expand their portfolio further.

So, yes, anyone seeking ways of earning more crypto does need a crypto credit card.

Keeping Your Crypto Safe

Be sure to connect your crypto credit card to the most secure digital wallet on the market. Escrypto gives retail investors institutional-grade security, protecting the crypto you accumulate against malicious attacks and hacks, and keeping your mind at ease at all times.

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