Considering a new rewards credit card? There’s a new category of rewards cards that has gained significant traction in the last year: crypto rewards credit cards. And although crypto rewards cards are a quickly emerging category, not all crypto rewards credit cards are the same. Here's what you should consider when choosing the best crypto rewards credit card for you.
Types of Crypto Credit Cards
Crypto Ownership vs. Crypto Price Exposure
The first thing you should consider when choosing a credit card that offers crypto rewards is whether it's important to you to own your crypto or not. Some credit cards claim to give you "Bitcoin rewards," but they only provide price exposure to it. When you earn those rewards, you can’t do as you wish, such as trade them for other cryptoassets, move your rewards to a different platform, or hold them in a private wallet. Plus, when you sell them, you often incur the costs.
The BlockFi Rewards Visa® Signature Card gives you crypto that is yours to keep. Once BlockFi rewards are redeemed, the cryptoasset in which you chose to earn rewards is transferred to your BlockFi account where it can be held, traded, sold, or moved to a wallet address of your choice.
Choice of Rewards
The next thing you’ll want to think about is which cryptoassets you’ll want to receive your credit card rewards in. Some cards only offer one crypto asset: bitcoin. The BlockFi Rewards Card and others let you choose and change the cryptoasset that you receive rewards in between redemption periods.
Bitcoin is the King of Crypto Credit Card Rewards
Although ~90% of BlockFi Rewards cardholders choose to receive bitcoin as their crypto reward, they also have the option to receive rewards in Ethereum, Litecoin, Dogecoin, or any of the 15+ cryptoassets available on BlockFi in the US. This flexibility allows you to build and diversify your portfolio as you see fit. Clients love the ability to gain exposure to other assets without having to purchase them outright. Also, if you’re someone who gets the deranged joy of trying to time the volatile crypto markets, the option to flex into stablecoins, such as GUSD, is a great way to generate liquidity to buy the dip.
Rewards Structure - Flat Rate vs. Tiered Rewards
The average cardholder will earn 25% more crypto with the BlockFi Rewards Card over a tiered rewards credit card* (see Table 3).
There are credit card rewards maximalists that will use a different credit card for every situation they’re in. They’ll use one card for travel, one for dining out, and another for their dog’s vet visits. The list goes on. If you’re someone who opts for simplicity over smoke and mirrors, but also wants to get the most crypto you possibly can out of one credit card, an unlimited 1.5% crypto back on every purchase beats any tiered 3/2/1% credit card rewards structure.
Here’s why: According to how our cardholders spend, ~80% of credit card spend will be outside of those “boosted” categories that give you slightly more (see Table 1). Getting 3% when you dine out may deliver a quick dopamine hit in the moment, but if your goal is to earn the most crypto with one credit card, the math is pretty clear—especially if you’re a high spender.
Let's compare our BlockFi Rewards cardholders spend over the last six months (Aug. 2021- Feb. 2022) vs. cardholders who spent in a tiered system:
Table 1: Blended earn rates
It may not look like a major difference, but when you dig a little deeper, the gap gets wider. Some tiered-rate cards will put caps on those boosted categories and then drop you down to a lower rate after you hit a certain spend threshold in the category.
Not the BlockFi Rewards Card! The more you spend, the more you earn. We increase your earning rate to 2%** when you spend over $30,000 in a year. BlockFi cardholders also earn more crypto for trading and purchasing crypto on BlockFi. Taking all of this into consideration, the math gets even better for an unlimited 1.5% crypto back. A deeper dive:
Table 2: True earn rates
There’s a clear winner. The average BlockFi Rewards cardholder spent ~$2,500 per month in 2021, or ~$30,000 annually. If you compare that same spend to a card using the tiered-earn-rate criteria above, you’ll earn about 25% more in crypto rewards at $2,500/month and 61% more at $10,000 spent per month.
Table 3: Blended earn rates (comparison)
Crypto Rewards Redemption and Taxes
The final thing to consider when choosing a crypto credit card is when your crypto rewards become yours. Some cards issue your rewards as you spend while others only issue your crypto rewards when you pay off a statement balance. With the latter, you’ll need to make sure you’re paying down your card each month to get rewards.
For the cards that issue your rewards as you spend, how often your rewards are deposited into your account also matters. Some cards offer “instant” rewards redemption, giving you crypto every time you swipe. Generally, the IRS treats credit card rewards as rebates and are not taxable****. The rewards on the credit card would not be treated as income at time of payment, but fluctuations in value may have tax implications; any future trading activity may generate capital gains/losses that could be taxable. We recommend you consult with a tax advisor with any questions regarding taxes to get a full understanding of the tax implications that involve credit card rewards. (This content is for informational purposes only and is not tax or legal advice. Please consult your tax advisor for further guidance.)
With the BlockFi Rewards Card, your crypto rewards are redeemed monthly—and that’s a good thing!
Earning rewards “instantly” at every swipe of the card might sound appealing at first. But that means you’ll be tracking the daily cost basis of every purchase you’ve made if you ever choose to trade or sell your rewards. We prefer the simple “dollar-cost average” approach to monthly reward redemptions. If tracking twelve average costs over 365+ average costs sounds better to you, then the BlockFi Rewards Credit Card is for you.
Our Criteria for the Best Crypto Credit Card
Ownership of crypto is important. Opt for full control of YOUR crypto rewards. Your everyday spend should be converted into crypto that you own, where it can be held, traded, sold, or moved to a wallet address of your choice.
Asset options. Choosing the cryptoasset in which you earn rewards from month-to-month gives you the flexibility you want.
Less tracking, more rewards. Pick the card that gives you the most crypto. Stop tracking merchant categories and just earn more crypto.
Simplicity in rewards redemption. Opt for the simple “dollar-cost averaging” approach to monthly reward redemptions.
The BlockFi Rewards Credit Card checks all the boxes.
Learn more about the BlockFi Rewards Visa® Signature Card here
If you want to take advantage of earning crypto back on every purchase, create a BlockFi account and apply now
BlockFi is a new breed of financial services company. Founded in 2017 by Zac Prince and Flori Marquez, BlockFi is building a bridge between cryptocurrencies and traditional financial and wealth management products to advance the overall digital asset ecosystem for individual and institutional investors. BlockFi's platform manages more than $12 billion in assets and has generated tens of millions in interest for clients. The company, headquartered in New Jersey with a presence around the globe, continues to expand in the United States and internationally.
*Based on analysis of BlockFi customer spend from Aug 2021-Feb 2022 and applied to a tiered rewards program.
**Rewards rate increases from 1.5% to 2% after $30,000 of spend has been achieved and resets on the card anniversary date every year.
****Reference: The Points Guy
. “Tax day is coming: Complete guide to paying taxes on credit card rewards”. March 2022.
Digital currency is not legal tender, is not backed by the government, and crypto accounts held with BlockFi are not subject to FDIC or SIPC protections. Digital currency values are not static and fluctuate due to market changes. Not all products and services are available in all geographic areas and are subject to applicable terms and conditions. Eligibility for particular products and services is subject to final determination by BlockFi. Rates for BlockFi products are subject to change.
BlockFi Rewards Credit Card: For more information, please see BlockFi’s Terms of Service.
BlockFi is not a Bank. Cards are issued by Evolve Bank & Trust, Member FDIC, pursuant to a license from Visa® USA Inc. Rewards are not offered by Evolve Bank & Trust and are instead offered and managed by BlockFi.