Crypto credit and debit cards offer unique advantages and can cater to different use cases and financial strategies. There are multiple factors to consider when deciding which would best suit your needs such as fees, rewards and perks, or a range of cryptocurrencies. This blog will delve into the basic concept of a crypto card and how it works to help you fully understand a crypto card and better find your preferred payment method.
What is a Crypto Card?
A crypto card is a payment card that allows you to use your cryptocurrency holdings for daily transactions. In essence, it serves as a traditional payment card, except for the fact that the crypto card is connected to your crypto wallet instead of a bank account.
There are two types of crypto cards, which are Crypto Debit Card and Crypto Credit Card.
Crypto Debit Cards
Similar to a traditional debit card linked to a bank account, a crypto debit card is connected directly to your crypto wallet. This enables users to use their crypto debit cards everywhere normal debit cards are supported.
Each time you make a transaction, your digital assets will be converted into fiat currency at real-time rate. This amount of money is then used to pay for your purchases.
Crypto Credit Cards
If you choose a crypto credit card, the card provider will grant you a credit line based on your creditworthiness (or credit score). You can use the crypto credit card to make purchases in advance and pay back what you owe, of course with interest charged specified by the card’s terms and conditions.
There is another type of crypto cards called prepaid crypto cards which must be loaded with coins and tokens before use. Once loaded, they work like the two more popular ones above, but you can only spend what you have preloaded.
In this blog, we focus only on Crypto Debit Cards and Crypto Credit Cards, as these two are more popular and preferred among users worldwide. Now let’s look at the key differences between them.
| Feature | Crypto Debit Card | Crypto Credit Card |
| Funding source | Directly linked to your crypto wallet’s balance | A line of credit secured by your crypto holdings |
| Spending limit | Limited to the number of tokens and coins you have in the wallet | Based on the credit line provided (can exceed the current crypto balance) |
| Repayment | No | Repayment is required. Additional interest may occur if not repaid in full each month. |
| Rewards and incentives | Rewards may include cashback on purchases but are more limited compared to credit cards | Tempting cashback rate on purchases. Offer various incentive programmes such as travel benefits. |
| Use cases | Ideal for those who want to make immediate transactions without accruing debt | Best for users who want to spend without liquidating their crypto assets and are interested in incentives |
| Fees | Usually has lower fees, but may incur transaction fees depending on the network | May include annual fees, interest charges, and late repayment fees |
How Does a Crypto Card Work in Australia?
Basically, a crypto card Australia works just like other traditional payment cards offered by a regular financial institution. The only difference here is that instead of using money directly from bank accounts, when you make a transaction, these cards typically convert crypto from your wallet automatically into the fiat currency you need to make the payment. Money is then used for payment as in normal cards.
So, you can use crypto cards as payment for online and offline shopping, even at retail stores that do not accept cryptocurrencies, as long as they support cards. You can also use these crypto cards to withdraw cash at ATMs which support this form of currency. Some crypto cards, especially credit cards, offer various incentives such as perks, high cashback rates, or rewards in tokens for using this payment method
