Crypto Rewards On Credit Cards; The New Trend
Cryptocurrency is slowly and steadily taking over the World. Now, it’s not just about buying and selling cryptocurrency. Rather, some of the famous digital currencies, like bitcoin, are also spreading their wings in other markets. The latest of it is becoming a part of the spending strategy of the crypto enthusiasts.
The credit cards that offer crypto rewards to their consumers and users are increasing, giving bitcoin the ability to affect every possible market. With more and more platforms becoming crypto-friendly, the awareness regarding the legitimacy of digital currency is also spreading wide.
A lot of platforms are now offering crypto rewards to users. The first ones to have come up with this idea are BlockFi and SoFi. Being the pioneers in giving out crypto rewards, they are now contemplating offering loyalty programs as well. These programs will entail offering the consumers additional crypto rewards that would include bitcoin for now but will soon gather other currencies as well.
With this speed of digital currency normalization, conventional credit cards will soon start offering these rewards with a partnership with cryptocurrencies. This way, you can use Bitcoin as a legal means of payment and will come in handy to manage all your crypto earnings.
Hence, the race has now shifted. People now look forward to the redeemable rewards in the shape of cryptocurrencies rather than the usual points.
The Working Model of These Rewards
This is not the first time credit cards have started associating with investments. In the past, such schemes have gained a lot of popularity. For instance, the famous Fidelity reward on signature cards offered the return of 2% on a purchase when the user would deposit his salary in an investment account by the company. The new rewards of crypto work in an exactly similar manner. Hence, understanding them has become easier for regular credit card users.
The mode of working for credit cards reward is simple. When you use a reward card to make a purchase, you will earn a flat rate. If not, you would be eligible for a bonus reward that would make purchases on special categories, including specific grocery items/stores or dining.
The Interest Debt Risks
The risks associated with credit card rewards are similar to conventional credit cards. If you cannot pay the balance on the due date, the interest rate would be variable. For instance, it may start from 10% and may go up to 35%.
Over time, the rewards earned in crypto may become extremely profitable. However, for the time being, if you don’t pay the balance on time, they may be wiped out of your account to manage the rate of interest you are liable for.
Another risk that is associated with these reward cards is the same that is a part of the traditional credit cards as well. You should get them only if you have good credit habits. Spending too much without being able to clear the balance may put you at great financial risk.
The Process of Redemption
This is probably the major difference that sets the conventional reward cards and the crypto reward cards apart. They both are redeemed in different manners. While using the crypto reward cards, you don’t get cashback. Rather, you end up earning the percentage in the form of crypto.
For example, if you spend around one thousand dollars in a month and earn 2% of the crypto rewards back, you will be liable to redeem the rewards for the same worth of bitcoin. The crypto earned will be deposited in the associated account of your reward card. This is because the cards come with a co-brand through a crypto exchange program.
The crypto reward you get on your credit cards is quite valuable. They enhance your holdings when you invest in digital currency, especially bitcoin. This free money will be easier to put on stakes as it would come with a lesser amount of risk.
Compared to that, you would be scared to put your own money into the bitcoin investment activity. To test the waters, you can opt for these reward cards as they will give you an insight into the working of the crypto world without actually putting your hard-earned money at any risk!