Crypto credit cards are catching on

1
Georgijevic/E+/Getty Images
Bankrate Logo

Why you can trust Bankrate

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for . The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired.

On July 21, the Upgrade Bitcoin Rewards Card became the first generally available U.S. credit card to focus on cryptocurrency rewards. It gives an unlimited 1.5 percent cash back (paid in bitcoin) on all purchases with no annual fee.

There is some notable fine print: Cardholders must hold their bitcoin rewards for at least 90 days. If and when they elect to sell their bitcoin, they’ll be charged a 1.5 percent transaction fee. These rewards cannot be transferred to another crypto wallet. And the card is not available in Hawaii, Indiana, Iowa, Louisiana, Nebraska, Nevada, New Hampshire, North Carolina, Washington, West Virginia, Wisconsin or the District of Columbia.

The competition

BlockFi and Gemini have opened waitlists for consumer credit cards that pay rewards in cryptocurrency. And Brex now allows its corporate credit cardholders to redeem their rewards points for bitcoin and Ethereum, alongside preexisting options such as cash back, travel and gift cards (crypto redemptions aren’t worth as much, however).

The BlockFi Bitcoin Rewards Credit Card will pay 1.5 percent cash back on every transaction in U.S. dollars, which it then converts into bitcoin.

Some other key aspects of the BlockFi credit card include:

  • 5 percent bitcoin rewards in a new cardholder’s first 90 days
  • An extra 2 percent APY on top of BlockFi’s current stablecoin APY for those who hold GUSD, PAX or USD Coin in a BlockFi interest account
  • A rebate of 0.25 percent of cardholders’ crypto trading volume (paid in bitcoin), up to $500 in bitcoin each month (excluding stablecoin to stablecoin trades)

The Gemini Credit Card will give cardholders up to 3 percent cash back (paid in bitcoin or a different cryptocurrency) on dining purchases, 2 percent back on groceries and 1 percent on other purchases. It will come with World Mastercard benefits such as a free ShopRunner membership and discounts from Lyft, DoorDash and others.

None of these cards charge annual fees. And customers will spend U.S. dollars, not cryptocurrency.

What about general purpose cash back cards?

While you could earn 2 percent cash back on all purchases with no annual fee cards such as the Wells Fargo Active Cash Card, the PayPal Cashback Mastercard and the Citi Double Cash Card (that one technically gives 1 percent cash back when you make a purchase and another 1 percent when you pay it off), you’d have to jump through additional hoops and pay additional fees to convert that cash back into crypto on your own.

If crypto rewards appeal to you, the SoFi Credit Card might be the best option of all. It gives 2 percent cash back on all purchases when you redeem into an eligible SoFi account. One such possibility is to buy crypto through a SoFi Invest account (other options include saving, paying down debt and investing in stocks and bonds). Using your rewards to buy crypto avoids SoFi’s usual crypto commission and transaction fees and secures a better cash back rate than other crypto rewards cards (except maybe Gemini, if you use that card extensively for dining purchases).

Bottom line

Investing in cryptocurrencies isn’t for the faint of heart. Don’t invest more than you can afford to lose. Bitcoin tripled in price from Dec. 2020 to April 2021, but then lost half of its value over the next three months. Where it goes from here is anybody’s guess.

I could see crypto credit card rewards as gambling with house money. Just be prepared for a wild ride. Most people are probably better suited for more traditional cash back or travel redemptions.

Have a question about credit cards? E-mail me at ted.rossman@bankrate.com and I’d be happy to help.