Crypto credit cards explained
Spending crypto in shops, and earning crypto as rewards.
Crypto cards promise a way to use digital currency in everyday life, at any shop or website that takes Visa or Mastercard. But the name "crypto credit card" covers several quite different products, and mixing them up can be an expensive mistake.
The three things people mean
1. Crypto debit or prepaid cards
These are the most common. You hold crypto with the card provider, and when you pay, the provider sells the amount needed and settles the shop in normal money. The shop never receives crypto. There is no borrowing involved: you can only spend what you hold, which makes this the lowest-risk type.
2. Crypto rewards credit cards
These work like any other credit card, with a credit check, a spending limit, interest and a monthly bill, but the rewards are paid as crypto instead of points or cashback. Because they involve borrowing, they carry the same debt risks as any credit card. Availability varies by country and these cards are less common in the UK, so check what is actually on offer where you live.
3. Buying crypto with a credit card
This is a different thing altogether: using a normal credit card to buy coins on an exchange. Card companies often treat it like a cash advance, which can mean extra fees and interest starting immediately, and some banks block these purchases entirely. Borrowing to buy something as volatile as crypto is widely regarded as especially risky. Regulators have also been looking closely at this practice, so check current rules.
What to compare before you apply
- Fees: look for conversion charges or spreads when your crypto is sold at the till, foreign exchange fees, monthly or annual fees, and cash-machine charges.
- Rewards: what percentage do you earn, are there caps, and do you have to lock up or "stake" a large amount of the provider's own token to qualify?
- Interest rate (credit cards only): the APR matters more than any reward if you ever carry a balance.
- Who holds your crypto: with most card programmes, the provider holds it for you. Find out how it is protected and regulated.
- Supported coins and limits: and whether the card is available in your country.
- Track record: some crypto card and rewards schemes have been withdrawn or changed terms, sometimes with little notice.
Tax and record-keeping
In the UK, spending crypto is generally treated as selling it, which can create a Capital Gains Tax liability if the coin has risen in value since you bought it. Rewards may also have tax consequences. Every purchase can therefore be a taxable event, so keep records of dates, amounts and values. Rules differ elsewhere and change over time, so check with HMRC or a qualified tax adviser.
Sensible habits
- Never borrow money to buy crypto.
- Don't spend more crypto than you're comfortable selling at today's price. If the coin doubles next month, you will have missed out, and if it halves you will be glad you spent only a little.
- Read the provider's terms, and make sure it is authorised to operate in your country.
- Treat rewards as a small bonus, not a reason to take on a card.
Related: crypto wallets, storage devices and exchanges.