The days when cryptocurrencies were only limited to being considered a hobby for people with some technical knowledge are gone. In the past few years, the entire industry and blockchain technology have evolved immensely and now almost everyone in the world has heard about them.
Starting from Bitcoin, then Ethereum and its smart contracts, to DeFi, and NFTs, the real-world use cases have expanded beyond simply trading cryptocurrencies. One such innovation that can be considered groundbreaking is crypto cards.
So, if you are looking to get a crypto card for yourself, in this article, we will give you a detailed overview on the differences between a crypto debit card and a crypto credit card.
Table of Contents
What Are Crypto Debit Cards?
Just like traditional debit cards that are linked to your bank accounts and can be used to make purchases either online or in the real world. Cryptocurrency debit cards are linked to your cryptocurrency wallets and can be used to make purchases and transactions, both offline and online.
They allow you to do a lot more than simply trading or holding your cryptocurrencies waiting for the bull run. It gives cryptocurrencies a real-world use case that could break down one of the biggest barriers it had in terms of mass adoption.
These can be used to make payments directly using cryptocurrencies without having to convert them into fiat currencies. They can also be used to make fiat withdrawals from ATMs. Since a majority of these cards are issued in partnership with Visa or MasterCard, they are accepted everywhere.
Advantages of Crypto Debit Cards
- They can be used to spend cryptocurrencies anywhere that accepts Visa or Mastercard without having to worry about converting into fiat.
- A lot of companies that issue them offer cashback for using them. So, you can earn rewards and cashback with every purchase you make.
- They can be used anywhere in the world without having to worry about currency exchange rates when travelling abroad or making international payments.
- They come with very robust security measures such as two-factor authentication, 256-bit encryption, biometric scanning, mobile codes, etc., and hence keep your funds safe.
Disadvantages of Crypto Debit Cards
- Using these cards can draw a hefty amount of fees in the form of transaction fees, withdrawal fees, conversion fees or card maintenance fees. These fees can at times be much more than the cashback earned.
- Cryptocurrencies are considered assets and as a result might be subject to capital gains tax or income tax depending upon the part of the world that you are in.
- The cryptocurrency market is highly volatile and the prices can fluctuate immensely. If you are using any of these cards, for example, a Bitcoin debit card, then depending on the price of BTC, you might end up either overpaying or underpaying.
What Is a Crypto Credit Card?
A traditional credit card allows its users to spend money in advance and get a line of credit. This money must be paid back each month to avoid getting penalised or incurring interest charges. A lot of these credit cards give rewards and cashback to the users for making purchases through them.
Similarly, a cryptocurrency credit card is simply a traditional one that offers users a line of credit to be paid back each month. But the difference here is that the rewards and cashback earned by using them are in the form of cryptocurrencies.
For example, if the card offers a cashback reward of 3%, then for every $100 spent, you will be rewarded $3 worth of cryptocurrency of your choice. Most issuers give you the option of choosing which cryptocurrency you want to get the rewards in.
Advantages of Crypto Credit Cards
- They are a good way for users to get familiar with cryptocurrencies while using fiat money. They can earn cryptocurrency passively without buying them through exchanges.
- They are best suited for users that are invested in cryptocurrencies and do not want to miss any opportunity of earning more.
- If the price of cryptocurrency earned goes up, the users can earn a massive profit.
- While traditional cashback, rewards, points, etc. earned through traditional credit cards can remain unused or go to waste, you can always sell the cryptocurrency rewards anytime.
Disadvantages of Crypto Credit Cards
- As is the case with traditional ones, if you fail to pay back the amount spent, then you will be penalised. If it occurs multiple times, then your credit score might also get affected.
- The cashback and rewards in cryptocurrencies are not that substantial and would require you to spend a lot of money to earn a respectable amount of cryptocurrency as cashback.
- Cryptocurrency markets are highly volatile, so if the prices fall significantly, your rewards risk the chance of becoming worthless.
- They usually have a spending limit and also annual fees are levied on them.
Differences between a Crypto Debit Card and a Crypto Credit Card
| Crypto Debit Card | Crypto Credit Card |
| 1. They are linked to your cryptocurrency wallet and the purchases are charged to it. | 1. They are linked to your bank account and offer a line of credit to be paid back each month in order to avoid penalties. |
| 2. They can be used to spend cryptocurrencies directly without having to convert them into fiat. | 2. The currency being spent is fiat and you only earn cryptocurrencies in the form of rewards and cashback. |
| 3. A lot of them require either a minimum crypto holding or a staking amount in order to be issued or to earn rewards. | 3. Have no such requirements and getting it issued depends on your bank. But this might affect your credit score in case of multiple repayment failures. |
Conclusion
Cryptocurrency cards are the best of both worlds, traditional finance and the blockchain industry. The cryptocurrency credit cards are a good way to onboard new users into the space and also earn crypto passively. The cryptocurrency debit cards are meant for users that are deeply invested in the space and are familiar with all the risks associated with market volatility.
Depending upon your ease, familiarity, expertise and what you wish to do with cryptocurrencies, you can choose to get either one or both of these.
