Key Insights on What Are Crypto Cards and How They Actually Work

Estimated reading time: 5 minutes

Crypto owners might want to spend some of their holding on buying services or goods. But they could not because of the limited options available such as wire transfer or Bitcoin ATMs. The cryptocurrency industry has added convenience for its users in the form of crypto cards. With these cards, cold holders can make purchases using cryptocurrency. Through this article, let’s learn the key insights on what crypto cards are and how they actually work.

What are Crypto Cards?

In today’s market, you can find many types of cards like BlockFi, Nexo, Coinbase, and others. First of all, we should understand what is a crypto card and how they work? Crypto cards are similar to regular bank cards. But, with these cards, you make purchases using cryptocurrency instead of fiat currency. VISA and MasterCard support these cards, either crypto credit cards or crypto debit cards.

You can pay for services through these cards at any retailer supporting VISA or MasterCard payments.

How Do Crypto Cards Work?

All cryptocurrency cards have the same regulations and restrictions as licensed under VISA and MasterCard.

For using the crypto card, you have to connect your card with a wallet. It could be either your personal or platform’s wallet. After connecting the wallet to the card, your funds get connected with the card, and you can start using it for shopping.

With crypto cards, you are not actually paying with cryptocurrencies, but your digital asset is first converted into your local fiat currency by your card provider, and then the amount is sent to the retailer.

Consider an example to understand how crypto cards work.

Suppose you did some shopping of $100 and want to pay for it with your crypto card. When the cashier swipes your card, the card provider company will reach your card’s crypto wallet. Suppose you have $500 ETH in your wallet. The company will sell ETH of $100 and load the card with fiat currency. The retailer will get paid $100, and there will be $400 ETH remaining in your wallet. All this happens within a few seconds.

What Is the Difference Between Crypto Credit and Debit Cards?

Both cards work almost the same way with only a few minor differences.

Crypto debit cards are generally prepaid cards for which you need to load money onto cards before using them.

While crypto credit cards borrow money from card providers, which is then paid back.

What Are the Benefits of Crypto Cards?

What are the benefits of crypto cards?

The following are the benefits of using crypto cards.

Use Crypto With More Ease

Before crypto cards, crypto owners could not pay conveniently for goods or services. The 30 minutes transaction time was not generally acceptable for any retailer.

With crypto cards, you can pay for services and transactions complete in only a few seconds.

Low Fees

With some regular bank cards, you have to pay an annual membership fee for using their credit or debit card. With crypto cards, the annual fee is very low. Also, if your spending is up to a specific limit within a year, the annual fee will be generally waived off.

Also, in contrast with regular payment cards, crypto cards do not charge a foreign exchange fee. But there are VISA and MasterCard standard fees.

Rewards

With crypto cards, you can earn rewards or cashback on your purchases. These rewards vary with the card providing service. The rewards could be Netflix & Spotify subscription, airport lounge access, VIP concierge, etc. It offers cash backs that can be 1% to up to 8% on your transactions.

Is There Any Risk Associated With Crypto Cards?

Having a crypto card is almost similar to holding cryptos. It means the value of fiat currency will constantly change according to the market value of the crypto loaded on your account. You will not have the exact amount of money you are expecting, depending upon exchange rates.

You should also keep in mind that crypto spending is taxable whether you are spending a few dollars or thousands of dollars.

What Are the Most Popular Crypto Cards Available in the Market?

The following are the most popular crypto cards available in the market.

Crypto.com

Crypto.com is a crypto debit card available in almost every country. It is funded through the crypto wallet. This card supports more than 90 different cryptocurrencies with no ATM withdrawal fee. The cashback on transactions can be up to 8%.

BlockFi

BlockFi is a crypto credit card available in the U.S. only. The annual fee is $0. You can also win cash back, up to 3.5%. The card is funded through a bank account.

SEE ALSO: What is BlockFi and How Does it Work?

Conclusion

Many of the crypto cards available in the market are doing great. Each card has different and specific features. Compare different cards and choose the one which best suits your requirements. Also, always select a well-reputed crypto card provider company.