Crypto debit cards are debit cards that enable people use the funds in their crypto wallets to settle transactions with merchants.
That way, users can transact with their crypto assets at locations where crypto debit cards are accepted.
Whenever the crypto debit card is used, money is deducted from the user’s wallet balance and converted into the merchant’s currency.
Now that you understand what a crypto debit card is, we will be going through how it works, its pros and cons, and factors to consider when using it.
How crypto debit cards work
When you make a purchase and you pay with your crypto debit card, the processing company takes the fiat equivalent of the crypto in your wallet and converts it into regular fiat currency before sending it directly to the account of the merchant.
Also read, Top Crypto Credit Cards in 2021
Pros and cons of crypto debit cards
The pros:
- Transacting with crypto debit cards reduces or results in waived foreign conversion fees
- Some crypto card issuers waive ATM withdrawal fees
- Crypto debit cards enable users to spend cryptocurrencies just like fiat currency
- Some crypto credit cards offer users huge cash-back rewards in crypto
- It enables diversified spending because it facilitates both crypto and fiat payments
The cons:
- Not all merchants accept crypto debit cards as means of payment
- You cannot make transactions without a balance in your crypto wallet
- Using cryptocurrencies causes taxation scenarios
- Geographical restrictions
Factors to consider when using crypto debit cards
If you are interested in getting a crypto debit card, below are factors you should consider for the best experience:
Supported cryptocurrencies
Some cards take only Bitcoins as deposits while some take Ethereum and other mainstream cryptocurrencies.
It is therefore advised that you choose a crypto debit card that supports your preferred coin.
It is a good thing that most of the crypto debit cards out there support multiple cryptocurrencies.
Also read, Review: Crypto Vs Credit Cards
Availability
Even though crypto is being adopted in many countries, there are still restrictions as to its use as a means of payment. It is best you ensure the one you are getting works at any POS.
Fees and exchange rates
Transaction fees vary per crypto debit card provider. While most of them do not charge deposit fees, they all charge withdrawal fees.
It is therefore important to check in with a crypto debit card provider that they do not charge for foreign conversions.
Tax
Cryptos are taxable. This means whenever you purchase goods or services and your card is swiped, you are taxed. However, taxes are based on how low you have held your crypto for and the amount of profit.
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