Cryptocurrencies have taken the world by storm, but adoption hasn’t reached a point where you can use digital tokens to directly pay for stuff in everyday life. To work around this, many crypto exchanges have introduced debit cards that let you pay for things by converting the tokens in your account into fiat.
This article will show you how a crypto debit card works and what to look out for when choosing one.
What Is a Crypto Debit Card?
It is a prepaid card that lets you spend the tokens held in an exchange or wallet. You can use it to pay for goods and services denominated in fiat currency, and the equivalent amount of crypto tokens will be automatically deducted from your wallet. The exchange rate depends on the market rate for the specific token at the time of your payment.
These cards enable you to use cryptocurrency for everyday purchases, albeit indirectly. You can also get loyalty points or other rewards anytime you use one.
How Does a Crypto Debit Card Work?
It works like a traditional bank card, albeit with cryptocurrency. You can use it to pay for an item denominated in fiat currency, and the equivalent in cryptocurrency will be deducted from your account on an exchange or wallet.
Cryptocurrency hasn’t reached a point where most merchants directly accept it as payment. Crypto cards provide a workaround for this situation.
Tips to Consider When Choosing a Crypto Debit Card
There are certain factors to look out for when you want to select a crypto card provider. They include:
Is the Service Available in Your Area?
Crypto adoption is higher around the globe than ever before, but not all jurisdictions are in agreement. Some countries have restricted or banned the use of cryptocurrencies, so exchanges cannot offer their cards there. Check if your exchange can provide cards for customers living in your country. Even at that, ensure you have a backup plan because regulations are ever-changing in jurisdictions that aren’t friendly towards digital tokens.
What Cryptocurrencies Are Supported
Different cards support different cryptocurrencies. For instance, some may support only Bitcoin, while others support multiple tokens, including Bitcoin, Ethereum, Litecoin, etc.
Ideally, look for one that supports the token you use most. If most of your crypto assets are stored in Bitcoin, find one that supports it, and the same applies to any other token. Otherwise, you may first need to convert your tokens, which can incur significant transaction fees.
What Fees and Exchange Rates Apply
Different providers have different transaction fees and exchange rates. Most of them don’t charge deposit fees but usually charge withdrawal fees. Some remove fees entirely if you spend past a certain amount. The idea is to find a provider that charges fees you can afford.
Foreign exchange fees can also be a major problem, so look for a provider that doesn’t take exorbitant fees. The good thing is that most providers that charge forex fees only do so to the extent needed to reimburse Visa or Mastercard, the underlying card issuers.
Pay Attention to Daily Spending and Withdrawal Limits
Most providers have some spending and withdrawal limits. Always seek out this information before signing up and read the fine print to see other terms that may apply. This mostly applies if you are a big spender because you don’t want to get stranded after surpassing your transaction limits.
Card Reward Programs
Providers usually have reward programs to entice customers to use their cards. For instance, some offer reimbursements on music and video streaming subscription services or a small percentage of cashback on every purchase. Consider these rewards when choosing a provider, especially if you are the budget-conscious type.
Conclusion
We have explained how a cryptocurrency debit card works and the key factors to consider when choosing one. There are many such cards out there that you can choose from, including CryptoWallet’s upcoming card which will support 800+ tokens at the start and offer high transaction limits.
