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What are crypto credit cards and how do they work?

While cryptocurrencies are disrupting the global financial sphere, they have also made their way into the banking sector, extending more innovative options besides the traditional payment channels. Crypto credit cards have become the talk of the town, mainly thanks to the fact that they offer a unique touch of crypto spending and rewards in real-life transactions.

How do crypto credit cards work?

Crypto credit cards primarily function as regular credit cards involving a line of credit from the banks to cover transactions. The borrowed money then must be paid back at the end of the determined billing cycle to avoid paying interest or late fees. Moreover, both cards impact the user’s credit score and charge the clients some annual or transaction fee.

However, the difference between fiat and digital currency cards arises in the disbursed rewards. Crypto credit cards allow the users to earn cryptocurrency rewards as opposed to the cashback/points offered by traditional cards. The ratio and type of digital currency rewards depend on your selected financial service provider. Moreover, note that crypto credit cards essentially utilize local currency to make purchases, but they have been termed ‘crypto’ cards due to the nature of their distributed rewards.

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Things to look out for when choosing crypto credit cards

When dealing with crypto credit cards, you should remain aware of a few aspects, which are as follows:

Crypto volatility: Volatility is the essential feature of cryptocurrencies as their prices might experience violent fluctuations in a limited period. Resultantly, your crypto rewards may alter in value by current market conditions.
Taxes: Crypto assets are considered “taxable” in various jurisdictions; hence you should research or seek professional guidance to assess whether your crypto rewards have tax liabilities or not.
Availability of crypto assets: Each crypto credit card service integrates a unique portfolio of virtual assets issued as rewards. If you prefer any specific crypto to invest in, select a card supporting that currency.
Terms and conditions: Crypto payment cards may have different limitations and terms & conditions, depending on the locality. Keep this aspect in mind while choosing a crypto credit card.

Prospects of crypto credit cards

Despite the prevalent tough economic times, cryptocurrency’s popularity is nowhere near subsiding, and it may further surge in the coming years. Crypto credit cards, an innovative crypto-based spending product, are relatively new on the financial scene. But it also means significant capacity for their further development and growth. Moreover, with the technological advancements, there might be more intuitive, practical, and flexible ways to accommodate cryptocurrency into our spending habits.

Even currently, crypto credit cards offer a remarkable way to take advantage of digital currencies without much hassle. For example, the distributed crypto rewards have the potential to swell up in value with time, hence delivering enhanced returns to the users contrary to fixed cash back and travel points. However, all in all, remember to opt for a credible and reasonable credit card service, so as to ensure an optimal payments-related experience. The Toronto-based platform offers users three types of credit cards, providing opportunities to earn crypto cash back on every purchase.

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