Crypto Debit Card or Crypto Credit Card – What’s The Difference? | Ledger (2024)

Aug 30, 2022 | Updated Jun 7, 2023

Ledger Academy explains the difference between crypto credit cards and crypto debit cards – simplifying the space, so you can get involved!

Crypto cards are one of the hottest topics in blockchain, promising a range of different services that link the worlds of crypto and fiat.

But with so many different crypto cards – all promising different things – it can be hard to understand exactly what each one is offering.

Luckily, there’s one simple question that will help you better understand the space. So let’s dive in, as we ask: what is the difference between a crypto debit card and crypto credit card?

Crypto Cards: Bridging the Great Divide

Let’s start with a quick recap – just why do we need crypto cards anyway?

Despite the meteoric rise of blockchain technology, and its obvious capacity to store and transfer value, crypto remains difficult to spend on a day-to-day basis.

Crypto is Tricky to Spend

Only a very small minority of businesses accept direct crypto payments. Doing so requires the business to set up crypto-specific payment infrastructure. As well as take into account the tax and legal implications of using crypto.

As a result, adoption by vendors has been sparse, making it hard for crypto users to actually buy goods and services with their assets without off-ramping into fiat – a process that can take days. In short, no matter how much value you’ve saved in crypto, actually spending it on real-world goods and services remains pretty tricky.

Blockchain is Not Scalable – Yet

Even if retailers DID accept crypto payments, the scaling of blockchain networks to allow mass use still needs some work. (We go into the why behind that in our article on the blockchain trilemma, go check out the three factors that fight against each other in crypto functionality.)

Getting Involved in Crypto Can Seem Like a Big Step

And there’s another issue too. For newcomers interested in dipping their toe in the waters of crypto, buying your first coins or tokens from fiat (otherwise known as on-ramping) can be time-consuming – not to mention complicated. That may be why how to buy your first crypto is one of our top performers on Ledger Academy.

So, in short, there are a number of factors that limit the utility of crypto, or simply keep people out altogether. This is where crypto cards come in.

Crypto cards aim to bridge the gap between fiat and blockchain – but they do so in different ways.Let’s get into the mechanisms of the two main varieties, credit cards, and debit cards, so you can understand which might suit you better.

What is a Crypto Credit Card?

Crypto credit cards work in the same way as traditional credit cards: they let you borrow a line of credit in fiat, and you make repayments each month as normal.

The difference relates to your rewards: like many credit cards, crypto credit cards give you rewards against your purchases. But instead of travel points or cash-back, those rewards are paid to you in crypto. This will be deposited in a wallet set up in connection with the card.

So, say for example you make a few large purchases with your crypto credit card – you’ll use the line of credit you received to pay for those, but you’ll receive a sum of crypto as a reward.

Can You Spend Your Crypto With a Crypto Credit Card?

The short answer is – no. Crypto credit cards are about helping you accumulate crypto, rather than helping you spend it. So if you’re looking primarily for a way of making purchases with your existing assets, this may not be the option for you.

Advantages of Crypto Credit Cards

There are a couple of advantages to using this type of card.

• Easy On-ramping

First, crypto credit cards provide an easy and seamless way to on-ramp: simply make your regular purchases on a seemingly normal card, and you’ll automatically receive your first coins and tokens to a linked wallet.

So for those interested in starting a crypto portfolio – without the blood, sweat and tears of figuring out the buying process – using a crypto credit card could be a great option.

• Passive Crypto

Crypto credit cards are also a pretty good deal if you like the sound of passive crypto income.

The majority of us already use , and being asome form of credit, so being able to passively build your crypto from your regular spending habits is a real bonus.

Limitations of Crypto Credit Cards

As with any type of credit, the drawback of using this options is that you’ll be subject to interest and late payment fees if your balance isn’t resolved at the end of the agreed period, So this is something you’ll need to consider when choosing your card.

What is a Crypto Debit Card?

Where crypto credit cards are focused on helping you accrue some passive crypto, crypto debit cards are all about helping you spend the crypto you already have.

A crypto debit card does something special: it converts your crypto into fiat instantly, at the point of sale. This clever mechanism means that, even when retailers don’t accept crypto payments directly, you can still spend the value stored by your coins and tokens.

Advantages of Crypto Debit Cards

There are a number of great advantages to using a crypto debit card, so let’s address each one in turn.

• Faster off-ramping

Normally, off-ramping from crypto into fiat means using a crypto exchange to swap your crypto for cash, then waiting around 48 hours for that money to hit your bank account. But crypto debit cards allow you to make this transition instantly – no more waiting, no more admin, just instant crypto spending power and more control for you.

• Unlimited spending options

Because so few vendors offer crypto payment infrastructure, the option to spend your coins and tokens used to be limited to whichever retailers were ahead of the technological curve – which meant sparse options for you.

But using a crypto debit card opens the door to more or less any retailer in the same way as a regular debit card. This means more or less unlimited choices in terms of how to spend your crypto value.

• Leaves your inflation hedge intact

Some cryptocurrencies are better equipped than fiat to hold a steady value over time – this is due to their fixed supply. Bitcoin is the most famous example of this, with a maximum circulating supply of 21 Million BTC programmed into the rules of its blockchain. As such, Bitcoin and other cryptocurrencies are used by many individuals as a hedge against the inflation we’ve come to associate with fiat.

Using a crypto debit card to spend crypto as and when you like means you can keep your value isolated from fiat’s notorious inflation for longer, instead of off-ramping days or weeks in advance of a purchase. In other words, it gives you more control when it comes to managing your value.

Limitations of Crypto Debit Cards

Crypto debit cards offer incredible flexibility for your crypto, but they also leave the ball in your court when it comes to on-ramping – not to mention how to manage your assets.

Key questions – such as what type of crypto wallet you’re using to secure your private keys and how you manage your secret recovery phrase – remain paramount. So even if you’re using a crypto debit card, make sure you stay on top of your security.

Crypto Cards: Where Blockchain Meets Fiat

So there you have it, a basic overview of the crypto card ecosystem that will hopefully help you better comprehend your options.

There are dozens of cards on the market and each one has its own specifics. But now you understand the basics, you’re in a great position to find the perfect option for you. The only thing that’s not optional? Your crypto security. And for that one, we have your back.

Knowledge is Power