Pros and cons of using the Crypto Rewards card
Crypto debit cards are available on several of the best cryptocurrency exchanges. Some platforms have also launched crypto loan cards, but prepaid debit cards are more common and easier to register.
Many of these prepaid cards provide rewards, just like a credit card, and typically don’t charge an annual fee. However, there are some big differences that you should be aware of before signing up.
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Benefits of Cryptocurrency Prepaid Debit Cards
Here are some of the benefits of cryptocurrency debit cards that you should be aware of.
There is no credit check
When you apply for a regular credit card, you must provide your personal information and allow the card issuer to check your creditworthiness to retrieve your credit information. If you don’t have a good credit score, you may not be eligible for the best credit cards with the most valuable rewards or benefits.
In contrast, your credit score is not a qualifying factor for a prepaid debit card as you don’t have access to any credit. Instead, you have to top up the balance as required.
Easily convert your crypto into spendable money
One great attraction of cryptocurrency debit cards is that you can use your cryptocurrency assets to replenish your balance. Given that withdrawing money from an exchange to a bank account can be a hassle, this allows crypto investors to spend their assets more easily.
However, be aware that spending cryptocurrencies may have tax consequences. You need to keep track of every instance where you trade or use your crypto. Also, if you are a buy and hold investor, you may not want to use your cryptocurrency investments for day-to-day spending.
You can earn rewards
The ability to get rewards for expenses you would have done anyway is the main reason people sign up for credit cards. However, credit cards can incur annual fees and the temptation to spend money you don’t have, leading to debt.
These prepaid debit cards allow you to earn rewards without needing a credit card. Prizes vary by platform; for example, I earn 2% back on most of my expenses using my Crypto.com card. There is no annual fee but I need to wager (tie) around $ 400 Crypto.com token, CRO. I should note that my CRO has depreciated since purchase which is a factor to consider.
Other exchanges do not require wagering any coins to qualify for the card or to get higher prize stakes. It’s worth looking around to find the card that suits you best.
You can get additional benefits
Like reward credit cards, crypto prepaid debit cards can provide additional benefits. For example, I qualify for a Spotify monthly subscription discount. Different wagering levels at Crypto.com provide different cashback rewards and other benefits.
But don’t let the perks fool you into choosing the wrong card. If you can get a better prize rate on a different platform, this could be a better deal – especially if you don’t take full advantage of the perks.
Disadvantages of Cryptocurrency Prepaid Debit Cards
There are also some negative aspects that should be considered before getting a cryptocurrency debit card.
You don’t get the same protection as a credit card
When you sign up for a credit card, you usually get a ton of extra safeguards against frauds and purchases. It’s easy to take them for granted, but prepaid debit cards may not offer the same benefits.
For example, if you pay for an item with a credit card and it is stolen or damaged shortly thereafter, you can get your money back. Likewise, you usually do not assume any responsibility for any fraudulent charges.
In contrast, it’s unlikely you’ll get protection for your purchases with a prepaid debit card. You also need to read the terms carefully to understand what fraud protection is in place. The card was not issued by a bank or credit card provider, so you can’t just assume you’ll get the protection you’re used to.
For example, my Visa Crypto.com debit card offers some fraud protection – it says I can apply for a chargeback to get my money back. It’s not the same as having zero responsibility. I would have to freeze the card to apply for a chargeback and may have to pay a fee to issue a new card.
The card may not be universally accepted
Many of the cards offered by the crypto exchanges are Visa debit cards and claim to work wherever Visa can be used. However, in my experience, this was not always the case. Recently, my payments to Rappi stopped working and have not resumed yet.
In addition, cardholders do not receive rewards for all their expenses. For example, with Crypto.com, payments on everything from graphic designers to libraries and gift shops may not yield crypto rewards.
You are not building your credit history
Using a normal credit card can help build your credit history which in turn contributes to a higher credit score. The history of making your payments on time shows that you can handle your credit responsibly and is an important factor in calculating your score.
Since it is a prepaid debit card, you are not actually borrowing any money. This if means you cannot incur a debt that you cannot pay, or damage your credit by not paying. But if you want to build a payment history, you’d better choose a secured credit card. To open a secured credit card, you must pay a returnable security deposit to compensate for your low creditworthiness.
You have to recharge it
Finally, if you open a prepaid debit card, you need to make sure there is enough money on the card to cover your purchases. If you use it to sign up for automatic monthly payments, you need to keep an eye on your balance.
Crypto debit cards can offer many benefits, but don’t buy them just because they have the word “crypto” in their name. Read the fine print and compare your card to a traditional credit or debit card to make sure you’re getting the best deal possible.