Have you ever heard of crypto cards? This term seems familiar like the debit or credit cards that we use, though this has more to do with cryptocurrencies that are currently in rage. Cryptocurrencies have gained global attention owing to the quick returns that they beget. Apart from investments, more people worldwide are now keen to learn new ways to make use of cryptocurrencies as countries outside have started incorporating them into regular transactions and daily spending.
Understanding crypto credit cards
Crypto credit cards are a perfect example of innovation in banking and finance. Think of a credit card that allows you to spend and repay the amount later within the stipulated period. Crypto cards act like credit cards, cryptocurrencies being the underlying currency in the former. Like the miles and reward points that you collect every time you spend using your credit cards, crypto cards avail incentives while allowing you to spend using cryptocurrencies.
Cryptocurrency holders can also opt for crypto debit cards that are like bank debit cards. However, you can use these cards at places where they accept cryptocurrencies in payments. The rewards are also distributed in cryptocurrencies like Ethereum and Bitcoin.
Interest and penalties on crypto cards
Are the new crypto credit cards any different from their traditional counterparts? The answer is both in the affirmative and in denial. While like credit cards, non-repayment results in heavy interest and penalties, the repayment must be in cryptocurrencies alone.
Like other debit or credit cards, using crypto cards can affect your credit score in the long run. The annual fees involved in availing of these cards and their benefits are like other bank cards. However, the penalties on these cards continue to be hefty, thus, impeding their popularity.
Not all crypto cards are the same, which implies that it is essential to understand how every card processes and awards cryptocurrencies differently to its holders.
Are crypto cards worth the hype?
Like most other new financial concepts, there is too much interest surrounding crypto cards. Irrespective of the hype that these cards create, there are drawbacks that you must consider before holding a crypto card, even though it may be out of curiosity. First thing is that you may not be able to use the card at many places as most businesses do not accept them.
One thing is that the government in India is reticent regarding discussing cryptocurrencies with the Reserve Bank of India Deputy Governor even reiterating how cryptocurrencies are like ponzi schemes, and hence, must be banned. Merchants are equally hesitant about accepting payments in virtual currencies for myriad reasons including discrepancies regarding the legality of transaction processes, volatility in exchange rates, and the inability of the general public to comprehend the blockchain technology behind cryptocurrencies.
While a definitive statement regarding cryptocurrencies is still awaited, a growing interest in preferring crypto card payments over other payment methods may bolster its legitimacy in the long run. Till then, its legal entity will continue to stir controversies and raise questions around the world including India where the heavy taxes on earnings from cryptocurrencies have invited much criticism.
Also, with dozens of cryptocurrencies available in the market and their corresponding crypto cards vying for your attention, it makes sense to have one only after gaining adequate information regarding its legitimacy, utility, and charges involved.