Bitcoin credit cards: how they work (+ ratings and reviews)

People call them bitcoin credit cards, but it is more accurate to call them bitcoin debit cards. Load one of these cards with your bitcoin (or other cryptocurrency), then spend it like a traditional credit or debit card.

These cards usually have VISA or Mastercard integrations, so you can use them anywhere you use traditional credit cards, but you’re spending bitcoin, not cash.

These cards play a necessary role in the evolution towards a new financial system, but are they a good deal for consumers? Let’s take a look at three of the most popular cards and show you what to avoid.

BitPay is an Atlanta, Georgia-based payment company that allows businesses to receive payments in bitcoin. Founded in 2011, the company created one of the first bitcoin prepaid VISA cards in 2016 and has since switched to Mastercard.

The BitPay Prepaid Mastercard allows you to load the card with a few different cryptocurrencies (BTC, ETH, XRP, BCH and a number of others), then spend it anywhere in the world that accepts Mastercard.

You’ll pay $ 10 for BitPay to print each new card, $ 2.50 to make ATM withdrawals, and a monthly fee of $ 5 / month if you haven’t made any purchases in 90 days. But making purchases in bitcoin is essentially free, as long as you plan to use it regularly in the United States (international currency conversion costs 3% more).

San Francisco-based Coinbase is emerging as one of the giants of the new financial system, and its Coinbase VISA card is available to customers in the US and most of the EU. Coinbase’s user interface is excellent, so it has become the default “bitcoin bank” for many users new to blockchain investments. Conveniently, their debit card is withdrawn directly from your Coinbase wallet, like a bank account.

The Coinbase Card is also powered by VISA and supports BTC, ETH, LTC, BCH and XRP, as well as some smaller cryptocurrencies like BAT and XLM. You can then spend your cryptocurrency wherever VISA is accepted, drawing from your Coinbase Wallet.

The cost of issuing a new card is approximately $ 5.00, with no monthly fee and no inactivity fee. Small ATM withdrawals are free. You will pay 3% more if you use it internationally.

Based in London, Wirex was the first to offer a VISA payment card to allow you to spend digital currency. Today the company specializes in currency conversion, both international and digital, so you can load a VISA card and use it easily in multiple countries, across multiple cryptocurrencies.

If you read the homepage of the Wirex Card, it looks like you can use it pretty much anywhere for free. If you look at Wirex’s commission page, it tells a different story. There is a monthly fee of EUR 1.20, ATM fees are approximately EUR 2.00 per transaction, and international currency conversions have an unspecified “FX fee”.

On the other hand, there are no costs for issuing the card, there are no downtime costs and there is 0.5% of “CryptoBack” which is like cashback, but they pay you 0.5% plus in bitcoin for all in-store purchases. (A $ 100 purchase, in other words, would make you $ 0.50 in bitcoin, more if you keep their Wirex token.)

Read the fine print

There are a number of other “bitcoin cards” on the market that aren’t really debit cards, so read the fine print. For example:

The Nexo card is often included in the list, as it has integration with Mastercard. But Nexo is a loan provider, not a “bitcoin bank”. This is not a bitcoin debit card, but a way to leverage your existing assets to put even more money at risk. Their home page reads: “The only crypto card that allows you to spend the value of your crypto without having to sell it.” (Remember that there is no free lunch.)

Revol is making a sensation as a next-generation financial services company to help you manage your money better. Although the app is truly revolutionary and also allows you to buy and sell bitcoin and Ethereum, your card is not a “bitcoin debit card”, but rather a traditional card tied to your Revolut account.

The MCO VISA Card looks elegant, with different “tiers” like those offered by American Express and packed with features such as reimbursement of monthly Amazon Prime, Netflix and Spotify subscriptions. But it is not a bitcoin debit card, just one way to get you to buy more MCO tokens, with the cards offered as a perk.

Why crypto cards are still confusing for the user

To thrive, the “crypto cards” industry needs to become more user-friendly. Today it is still a source of confusion for users.

It’s not just the complicated fee structure and the lack of consistency between cards. It is that the “bridge” between digital and traditional payment systems (for example VISA and crypto) is not completely built. Here are some of the problems that need to be fixed:

• Country specific rules. Some cards are only available in certain countries and all cards have conversion fees if you want to use them internationally. These international rates are confusing and can vary by country.
  Solution: Bitcoin debit card apps and websites should automatically detect your country and only give you clear language about where it can be used and what the fees will be for using it internationally.
• Cryptocurrency delays. After depositing digital assets on a card, it can take a few hours (or even a few days) to show up, given the slow settlement times of some blockchains. This can be troubling for consumers who want to see their account balance immediately.
  Solution: Bitcoin debit card apps should include clear communication about the transfer process and a constantly updated “tracking number” (such as FedEx tracking) that shows what’s going on.
• Volatility of cryptocurrencies. This is the big one. If consumers don’t understand that bitcoin can fluctuate wildly in price from day to day, they won’t understand why their equilibrium keeps changing. Some “bitcoin debit card” providers will actually convert you to a native token, which means you now have the volatility is a different sign.
  Solution: Bitcoin debit cards should have a simple three-step “tutorial” that walks you through how digital assets work, making it clear that they don’t hold their value like fiat currency.

Who Uses Bitcoin Debit Cards?

There are some likely consumers. First, people who bought a lot of bitcoin in the early days and want to cash in some of that profit, perhaps without paying taxes (note: in the US, buying things with your bitcoin earnings is still a taxable event).

The second group is made up of people who somehow wish to move funds for illegal or imprecise purchases. Google reports that people are looking for terms like “no verification bitcoin debit card” or “anonymous bitcoin debit card,” which are likely to people trying to bypass identity checks required by reputable vendors.

The third group, however, is legitimate and growing. This is the group that is evolving towards the new global financial system, unconstrained by national borders and local currencies. They can buy bitcoins, convert them to stablecoins, then “withdraw” from their balance as they need it for local shopping.

If you want to spend bitcoins on everyday purchases, here’s a simple table that shows two options for a consumer who spends $ 100 / month on a card. This is what you could pay with a bitcoin debit card compared to a traditional debit card.

The bitcoin debit card has fewer fees, but higher volatility. This means you could get a great deal (bitcoin price goes up and you have more buying power), or you could get a bad deal (bitcoin price goes down, draining your account).

The best deal of all is to convert your bitcoin into a stablecoin (which holds its value against the traditional currency), then keep that coin on your debit card until it’s time to spend. If you are looking to spend bitcoins, this gives you the best of both worlds: lower fees and high stability. At the time of writing this article, I am unable to find any company that will allow you to do this. (Some debit cards allow you to deposit stablecoins but then convert them into a more volatile currency.)

Today, therefore, the cheapest alternative for those who want to “spend” their blockchain investments is to keep them in a stablecoin (such as Tether, USDC or SAI), which will protect them from volatility. When you want to spend, load those stablecoins onto a debit card (and don’t forget to pay income tax).

This isn’t very convenient, but at least we have legitimate ways to pay using encryption in the existing card system. And over time, as user interfaces and communication with consumers improve, the system will only get better.

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