Crypto Credit Cards – All You Should Know

Crypto Credit Cards

Ever since cryptocurrency came into the market in 2009, it has faced its fair share of doubt. There was the whole aspect of digital currency which only a few people understood. The anonymity of the persons behind crypto also doesn’t give too much credibility to Bitcoin.

Further, the situation gets worse due to the volatile cryptocurrency. In early 2021, the price of Bitcoin surpassed the $60,000 mark. That signified an eightfold increase in less than a year. But, investors did not have too long to be happy. Within a few weeks, the Bitcoin value fell by half.

Yet, despite the misgivings, it would be hard to argue about the success of cryptocurrency. The adoption rate continues to grow. Indeed, many retailers are now accepting crypto coins as a payment mode. Customers also now have the option of using crypto credit cards for transactions.

Our article will explore salient points you need to know about crypto credit cards.

Understanding Crypto Credit Cards

In many ways, crypto credit cards are a lot like the standard ones. A lender issues a credit card that gives you access to lines of credit with a spending limit. You get instant access to cash that you can use at a POS or eCommerce platform. The credit card gives loans you must pay back at the end of the billing cycle.

To understand crypto credit cards, let’s explain how cryptocurrency works. If you need to turn your Bitcoin into cash, it is quite a process. You must sell the crypto, much like when converting currencies at a ForEx bureau. That means going through a third-party broker or peer-to-peer transactions. Sometimes it can take 4-6 days to receive the cash.

Crypto credit cards avail instant cash, as the standard credit cards do. The card issuers automatically convert the crypto into currency. So, even those retailers who don’t accept cryptos should not have an issue accepting these credit cards. Indeed, at no point in the transaction will they come in contact with Bitcoin or other cryptos.

How Crypto Credit Cards Can Impact Your Credit Score

Like in the case of standard credit cards, the crypto cards also extend credit facilities to you. That means you must keep up with the balance repayments at the end of each billing cycle. You cannot afford to skip or delay payments. Card issuers that report to the credit reference bureaus will pass on the information, and it will reflect in your credit report.

Make sure you are very keen about looking at your credit reports. Any erroneous information can cause your credit score to drop. Now, what happens if you find a mistake? Well, the credit bureaus have a credit resolution portal. You can try to get them to correct the error.

But dispute resolution can be time-consuming and very frustrating. You are better off getting the services of cheap credit repair professionals to work on it for you. Further, the credit repair experts can provide ongoing monitoring of the reports. That way, they can take care of any mistakes on your behalf before it stays too long on your credit report.

Remember, the benefits of a perfect credit score are many. A credit score of 850 is worthy of bragging rights. You will find it easy to get good terms if you ever decide to get a loan. Getting an apartment, or even a job,  will depend on a good credit score.

Pros and Cons of Crypto Credit Cards

We can all agree that cryptocurrencies have become a relevant currency in the modern world. Crypto credit cards provide a convenient way to circumvent the challenges of getting quick access to cash from your Bitcoin. But there are other benefits you need to be aware of as well.

  • Rewards on Crypto Credit Cards

Credit card issuers offer many incentives to users. These come as bonuses, cash backs, and other rewards.

The same applies to crypto credit cards. Some lenders will give you a discount on every purchase you make using the card. The only difference is that you have to redeem your rewards in cryptocurrencies.

  • Crypto Card Rewards Taxation

One thing to note is that crypto coin rewards are taxable. Since they are an asset, you can sell them. But, expect to pay the attendant capital gains tax.

The same does not apply to the standard credit card reward schemes. The cashback or bonuses give you the money you can spend right away. But there are some exceptions worth noting. Cash backs, miles, and points are non-taxable. In essence, you are getting back part of your money.

If the bonus comes as a gift, meaning you did nothing to earn it, it could fall under the taxable bracket. An example would be getting coins for referring a friend to sign up for a credit card.

  • Crypto Volatility

We also talked about the volatility of cryptocurrency. In good market conditions, crypto credit card rewards can gain a lot of value. But, the reverse also applies. The rule of crypto investing is buying intending to make money during a market upturn.

Your crypto card rewards can lose value in poor market conditions. Go back to our introduction to this article for a minute. If you got the crypto reward when each was worth $60,000, the value would be pretty significant. So, you leave it in your account, and a week or two later, it is worth $30,000 only.

  • Acceptability

With the growing acceptance of cryptocurrency, credit card companies are taking notice. You will find that many are now offering them to customers. Like standard credit cards, they have fantastic incentives to get people on board.

Final Thoughts

Crypto credit cards give you quick access to cash. You don’t have to go through the hassle of changing Bitcoin into fiat currency. But like standard credit cards, what you get are credit facilities. Keep up with the payments, or you will affect your credit score.

Also, check your credit report for any inaccuracies or errors. Affordable credit repair professionals can resolve such for you. If not, the blemish on your credit report can hamper your efforts at achieving a perfect credit score.

By John Paul

Leave a Reply

Your email address will not be published.

error: Content is protected !!