Are you considering getting a prepaid coded debit card? Read this first.
Cryptocurrency debit cards are available from many cryptocurrency exchanges. Some platforms have also launched crypto credit cards, but prepaid debit cards are more popular and easy to sign up for.
Many of these prepaid cards earn rewards, just as you would a credit card, and they don’t usually charge an annual fee. However, there are some big differences that you should know before you sign up.
Pros of Prepaid Crypto Debit Cards
Here are some advantages of crypto debit cards that you should know.
No credit check
When you apply for a regular credit card, you will need to provide your personal information and allow the card issuer to run a credit check to pull your credit information. If you don’t have a great credit score, you may not qualify for the best credit cards with the most valuable rewards or perks.
In contrast, your credit score is not a factor when you qualify for a prepaid debit card since you don’t reach any credit. Instead, you will need to top up your balance as required.
It’s easy to convert your cryptocurrency into spendable money
One of the big attractions of crypto debit cards is that you can use crypto assets to top up your balance. Since it can be a hassle to withdraw funds from the exchange to your bank account, this allows crypto investors to spend their assets more easily.
However, be aware that there may be tax implications when you spend your crypto. You need to keep track of every instance where you trade or use your crypto. Additionally, if you are a buy and hold investor, you may not want to use your cryptocurrency investments for daily spending.
You can earn rewards
The ability to earn rewards for spending you’ll make anyway is a major reason to sign up for credit cards. However, credit cards can come with annual fees and the temptation to spend money you don’t have, leading to debt.
These prepaid debit cards allow you to earn rewards without having a credit card. Rewards vary from platform to platform; For example, I got 2% back on most spending with a Crypto.com card. There is no annual fee, but I do have to share (link) about $400 CRO token for Crypto.com. I should point out that my CRO has gone down in value since I bought it, which is a factor to consider.
Other exchanges do not require you to wager coins to qualify for the card or get higher bonus rates. It’s worth shopping around to find the right card for you.
You may get additional benefits
Like rewards credit cards, prepaid crypto debit cards can give you additional benefits. For example, I qualify for a discount on my monthly Spotify subscription. The different staking levels on Crypto.com give you different cashback rewards and other benefits.
Don’t let perks tempt you to go to the wrong card. If you can get a better bonus rate with a different platform, this might be the best deal – especially if you don’t take full advantage of the extra benefits.
Cons of prepaid crypto debit cards
There are also some downsides that you will need to consider before getting a crypto debit card.
You don’t get the same protection you get with a credit card
When you sign up for a credit card, you usually get a host of additional scams and purchase protection measures. It’s easy to take for granted, but prepaid debit cards may not offer the same perks.
For example, if you paid for an item with your credit card and it was stolen or damaged soon after, you might be able to get your money back. Likewise, you will not be held liable for any fraudulent charges.
In contrast, you are unlikely to get purchase protection with a prepaid debit card. You will also need to read the terms and conditions carefully to understand what the applicable fraud protections are. The card was not issued by a bank or credit card provider, so you can’t assume you’ll get the protection you’re used to.
For example, my Crypto.com Visa debit card offers some fraud protection – it says I can file a chargeback to get the money back. This is not the same as irresponsibility. I will have to freeze my card to apply for a refund, and I may have to pay a fee to get a new card.
The card may not be accepted globally
Many of the cards offered by cryptocurrency exchanges are Visa debit cards and claim to work anywhere you can use Visa. However, in my experience, this was not always the case. Recently, my payments to Rappi stopped working and haven’t restarted yet.
Additionally, cardholders do not earn rewards on all their spend. For example, with Crypto.com, payments for everything from graphic designers to bookstores and souvenir shops may not earn you crypto rewards.
It will not build your credit history
Using a regular credit card can help build your credit history, which in turn contributes to a higher credit score. Your on-time payment history shows that you can treat credit responsibly, which is a big factor when calculating your score.
Since this is a prepaid debit card, you are not actually borrowing any money. this is Do It means you can’t accumulate debts that you can’t take or damage your balance by losing payment. But if you want to create a payment history, it is better to choose a secured credit card. To open a secured credit card, you need to make a refundable security deposit to offset your low credit score.
You need to keep it on top
Finally, if you open a prepaid debit card, you’ll need to make sure there’s enough money in the card to cover your purchases. If you use it to sign up for automatic monthly payments, you’ll need to keep an eye on your balance.
Crypto debit cards can offer a lot of advantages, but don’t get one just because it has the word “crypto” in the name. Read the fine print and compare the card to a traditional credit or debit card to make sure you get the best deal possible.
Buy and sell cryptocurrencies on an exchange chosen by experts
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