Key takeaways
- Crypto rewards cards offer a newer addition to the rewards currencies that include points, miles and cash back: rewards that automatically convert to Bitcoin, Ethereum and other cryptocurrencies.
- Unlike the rewards of a traditional credit card, the value of your crypto rewards has the potential to rise in value as coin values increase… or decrease, if the trend of plummeting coin values since the heyday of crypto continues.
- Though these cards are a low-risk way to build crypto coins, you could be better off with a traditional card that earns you more lucrative cash back — and then invest that cash into crypto, if you like.
Credit card rewards historically fall under three types of rewards currencies — points, miles or cash back. But cryptocurrency is now a rewards currency, too, thanks to the launch of several rewards credit cards since 2021’s crypto heyday.
The rewards process for these cards is fairly simple and works similarly to a traditional cash back program. With most crypto cards, you earn a percentage of your purchases back in U.S. dollars, which you can then use to buy or add to your crypto stash, usually automatically.
The initial appeal of crypto credit cards was the “high risk, high rewards” aspect of crypto investing. For example, cardholders in the midst of the crypto frenzy believed they could earn cash back with a crypto credit card, move their rewards into an active digital currency, and then grow their rewards haul exponentially as the value of their crypto exploded.
But crypto winters since have resulted in the plummeting value of many cryptocurrencies, with prices for even the most popular coins down considerably from all-time highs. The price of a single bitcoin, for example, surged to $64,400 in November 2021 and stands at less than $40,000 as of January 2024. Same for the Bitcoin competitor Ethereum, which reached a high of $4,811.70 in November 2021 and now holds less than half that value today.
The case for crypto rewards cards
Of course, that’s not what people who opt for crypto credit cards hope for. The benefit of crypto credit cards is that, unlike other types of rewards currencies, the value of crypto has the potential to increase. Not only that, but people who are interested in investing in crypto but don’t have the cash to do so can begin building their digital assets by using their card for regular spending and bills.
While the card is no longer available to new applicants, the Upgrade Bitcoin Rewards Visa® Credit Card was an early crypto rewards card that earned cardholders 1.5 percent cash back, which converted to Bitcoin as they paid off their purchases. It meant you could use the card for $1,000 in spending and bills, pay off your balance off and get $15 in Bitcoin deposited into your card’s rewards account. This card didn’t charge anannual fee either, and interest charges didn’t apply because you never carried a balance from one month to the next.
Imagine you got this card and used it for $2,000 a month in regular spending and bills over the course of a year. If you paid off the entire $24,000 in balances with each billing statement and never carried debt from one month to the next, you might have earned $30 in Bitcoin each month — or $360 in Bitcoin over the 12 months.
With a regularrewards card, that $360 in cash back wouldn’t have had the potential to grow in value. But let’s say the value of Bitcoin increased 20 percent over the year you had the Upgrade card. In that case, your $360 rewards haul could be worth $432. And if the value of Bitcoin increased 50 percent, your rewards value could be $540. That’s the appeal of crypto rewards cards.
The other side of the crypto coin
Of course, with all that’s happened in the crypto world over the last few years, among the downsides of crypto credit cards is the value of your cryptocurrency could also decrease dramatically, causing your rewards value to drop right along with it.
If youwereable to earn rewards in Bitcoin at the time but didn’t spend them, for example, your rewards could be worth less than half of their original value.
Of course, the idea of investing credit card rewards to help them grow isn’t new — cards that automatically invest your cash back in the stock market have existed for years. Fidelity, for example, launched a credit card in 2016 that offers unlimited 2 percent cash back when deposited into an eligible Fidelity account, like a brokerage account or an IRA.
You could get potential upside with less risk by doing something like buying an S&P 500 index fund with your cash back rewards or through cards offered by the likes of Fidelity and SoFi. But I still think crypto rewards cards appeal to a certain audience.— Ted Rossman, Bankrate Senior Credit Card Industry Analyst
There’s also a reason to be leery of platform-specific cryptocurrency credit cards, since they don’t really do anything for you that you can’t do yourself. For example, you could instead opt for a cash back credit card with the highest possible rate, then redeem your rewards for cash back and use the funds to buy cryptocurrency yourself. In that case, you could use any platform you wanted to buy your crypto, or you could even store it using a cold wallet that keeps your information and private crypto keys off the web.
And either way, you just can’t beat the versatility of a traditional cash back card. For some, the ability to spend cash back on anything — whether that’s crypto, a grocery store trip or a splurge purchase — is better than being locked into crypto, even if that means manually investing your earnings and paying the typical USD-to-cryptocurrency conversion fees.
How much can you earn with a crypto rewards card?
We mentioned how the now-unavailable Upgrade Bitcoin Rewards Visa offered 1.5 percent back in Bitcoin as you paid your purchases off with no annual fee. However, there are other crypto credit cards to consider.
For example, the Gemini Credit Card® lets you earn 3 percent back on dining, 2 percent back on groceries and 1 percent back on all other purchases. There’s no annual fee for the Gemini Credit Card, and you can opt to earn rewards in Bitcoin, Ethereum or any other cryptocurrencies currently available on the Gemini platform.
Then there’s the Venmo Credit Card, which offers 3 percent back in your top eligible spending category, 2 percent back in the next top spending category and 1 percent back on other purchases. The eight flexible spending categories that qualify for bonus rewards include bills and utilities, dining and nightlife, entertainment, gas, grocery purchases, health and beauty, transportation and travel.
The Venmo Credit Card doesn’t have an annual fee, and rewards can be converted into Bitcoin, Ethereum, Bitcoin Cash or Litecoin.
The bottom line
Only you can decide if a crypto credit card is a good idea, but you should compare the top crypto cards to regular cash back credit cards before you make a decision. Instead of getting a crypto-specific card, you could always sign up for a cash back card that earns a flat 2 percent back with no annual fee, then invest your rewards into any cryptocurrency you want with a platform of your choosing.
Also, know that the jury is out on whether crypto is on the rise or doomed to fail in the long run. Whether you should invest in crypto is a larger conversation, but if you are optimistic about crypto’s future — or even just crypto curious — these rewards cards offer a fairly low-risk way to get some skin in the game.
*Information about the Upgrade Bitcoin Rewards Visa® Credit Card, Gemini Credit Card® and Venmo Credit Card has been collected independently by Bankrate. Card details have not been reviewed or approved by the card issuer.
