Crypto remains a popular financial tool despite the ongoing bear cycle. Top crypto processing companies grow in volumes while new use cases for crypto appear regularly. Cryptocurrency cards are not new but still not widely used across industries. Let’s figure out which benefits crypto cards offer and their risks and limitations.
How Does It Work?
A crypto card works just like your regular banking service: you use it with ATMs to get cash or to pay with it for a purchase. Typically, the cryptocurrency funds are automatically converted into the local fiat currency, allowing the use of digital assets as payment means at stores that don’t support crypto.
Crypto credit vs. debit card
Similar to the traditional banking system, there are two main types of crypto cards: credit and debit. The first one allows spending a certain amount of funds based on the open credit line, while you’ll get a bill for the expenses at the end of the month. The debit card, on the other hand, is for your funds. Such a card should be topped up, but in reality, it is most often linked to your crypto exchange account.
Crypto reward cards
This type of crypto card allows you to earn rewards for your purchases, similar to cashback services in your regular bank. The only difference is that the reward is credited to crypto. As a rule, it is a native coin of a cryptocurrency platform that issued the card. The reward can range from 1% to 3% of all purchases.
Crypto Card: Pros and Cons
Although cryptocurrency cards may seem like a dream come true for a crypto enthusiast, this tool has both advantages and disadvantages. Before you get a crypto card, we suggest you get familiar with both sides of the coin.
Benefits
The ability to spend your crypto in everyday life
To be specific, anywhere with Visa/Mastercard support, as these two payment giants issue most crypto cards. This eliminates the need to convert your crypto into fiat and then move it to the bank account before being able to purchase something.
Seamless integration with fiat
No need to first exchange your crypto into fiat and then withdraw it to a bank account for further expenditures — the system will do it for you.
Cashback rewards
One of the incentives to use a crypto card is the rewards client get. The more you spend, the more crypto you will earn as a reward.
Limitations
Crypto cards are issued by good-old banks
Although Bitcoin as the first cryptocurrency was a response to the fraud and corruption of traditional financial institutions, modern crypto platforms work closely with banks and regulators.
Here is an interesting fact: for an exchange to support fiat deposits/ withdrawals, it should have a bank account to manage all those funds. The process of opening one is usually time-consuming and involves extensive KYC procedures. That is why decentralized platforms, such as Uniswap, only support crypto.
They are not available globally
Despite the digital asset ecosystem being decentralized, it is not the same with crypto cards. Currently, they are available only in several jurisdictions.
Crypto Card vs Bank Card
We have chosen two very popular cards in both traditional and crypto sectors for our comparison: Coinbase Debit Card and Bank of America Debit Card.
| Coinbase Debit Card | Bank of America Debit Card (SafeBalance) | |
| Set-up fee | 0% | 0% |
| Montly fee | 0% | 4,95% |
| Transaction fee | 0% | 0% |
| ATM withdrawal fee | 0% | 0% |
| Conversion fee | 2,95% | 0% |
Here is the biggest catch for the Bank of America debit card: to get it you need to have a checking account which comes with a monthly fee. We have chosen the simplest package with the lowest commission of 4,95%, but it can reach as high as 25%. Coinbase, on the other hand, does not charge a monthly fee.
As for the ATM withdrawal and transaction fees, it’s a tie, as both Bank of America and Coinsbase charge 0% for such operations. However, additional fees will be applied by intermediaries.
The biggest catch for the crypto card by Coinbase is a conversion fee, which applies each time you purchase something. Although it is also a third-party commission, it should be noted while using a cryptocurrency debit card.
Crypto Cards: Is It Worth It?
That very much depends on your personal goals and conditions. Crypto cards can be a good fit for enthusiasts with substantial digital assets. It can also be quite convenient while traveling. However, crypto cards have serious limitations, such as steep conversion fees and regional restrictions.