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Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.
1. You could lose all the money you invest
2. You should not expect to be protected if something goes wrong
3. You may not be able to sell your investment when you want to
4. Cryptoasset investments can be complex
5. Don't put all your eggs in one basket
If you are interested in learning more about how to protect yourself, visit the FCA's website here.
For further information about cryptoassets, visit the FCA's website here.
Using a credit card responsibly can be a great way to earn rewards on your day-to-day spending. With a crypto credit card those rewards come in the form of a small amount of cryptocurrency. In addition to the crypto rewards, some cards offer enticing perks like sign-up bonuses, discounts with partner brands, airport lounge access or reduced/waived transaction fees when you use them overseas.
While crypto credit cards aren’t available in the UK yet, crypto debit/prepaid cards are. The difference between them is that with a debit/prepaid card you’ll need to already have the funds available to spend, rather than borrowing from your card issuer. You’ll still be able to earn cryptocurrency on your regular spending.
A crypto credit card is much like a standard rewards credit card but it allows you to earn cryptocurrency on your regular spending. You can earn points that can then be converted into cryptocurrency, or earn cryptocurrency directly for everyday purchases. Some cards offer attractive earn rates, upwards of 2% for example.
Like other bank cards, a crypto credit card lets you tap or insert your card at a shop to make purchases. If you’re using it to buy online, you can enter your card numbers to make a purchase.
Shops don’t take payment in cryptocurrency, so the card network (normally Visa or Mastercard) processes the transaction and then requests the money in fiat currency (like pounds sterling) from your card issuer.
The cards are generally issued by platforms offering crypto investing services, so you’ll usually need to have an account with them in order to request the credit card.
You’ll earn rewards at an agreed “earn-rate”. Typically it’s a percentage of the amount you spend. So with an earn rate of 1%, if you spent £100 you’d earn the equivalent of £1 in cryptocurrency, tokens or points – whatever scheme the card issuer uses.
With crypto credit cards you could be charged interest if you don’t clear your balance in full each month, and that could easily outweigh what you earn in rewards. However, crypto debit/prepaid cards generally won’t charge you interest, because you’re drawing on money you already have in the account.
As no crypto credit cards have launched yet in the UK, if you’re interested in earning crypto rewards through your spending, you could consider a crypto debit card. We’ve compared popular cards in our table.
Our full guide to crypto debit cards gives you more details and what to consider, including pros and cons. In this guide, we’ve focused on crypto credit cards.
Crypto credit cards are convenient and easy to use, and they can help make your trip to the supermarket or restaurant more rewarding. But as with all credit cards, you’re incurring a debt and could end up paying interest.
When selecting any rewards card, including a crypto rewards credit card, it’s important to consider how it fits with your pattern of spending, to ensure you get the maximum rewards.
John gets a rewards credit card and spends £5,000 in purchases over his first 6 months, paying off his balance in full each month to avoid paying interest. At the end of this time, he has earned £75 worth of cryptocurrency rewards (a rate of 1.5%). He did have to pay a 1% fee to convert his cryptocurrency to GBP, but that has still left him with a £25 profit. If Bitcoin’s price then rises by 5% over the following 6 months, John’s accrued crypto credit card rewards would then be £78.75 worth of Bitcoin at the end of his first year, and he’s £28.75 up. Of course the value of Bitcoin could instead have dived in that time, leaving him with almost nothing, and worse off for fees.
While crypto credit card rewards can be attractive, if you’re not able to pay off your balance in full each month, you’re likely to negate the value of the rewards, just as you would with a mainstream credit card. Remember, there are crypto debit cards too that allow you to earn cryptocurrency rewards on top of what you currently hold. Overall, crypto credit cards are worth considering as a way to get cryptocurrency without parting with money you weren’t going to spend anyway.
*Cryptocurrencies aren't regulated in the UK and there's no protection from the Financial Ombudsman or the Financial Services Compensation Scheme. Your capital is at risk. Capital gains tax on profits may apply.
Cryptocurrencies are speculative and investing in them involves significant risks - they're highly volatile, vulnerable to hacking and sensitive to secondary activity. The value of investments can fall as well as rise and you may get back less than you invested. Past performance is no guarantee of future results. This content shouldn't be interpreted as a recommendation to invest. Before you invest, you should get advice and decide whether the potential return outweighs the risks. Finder, or the author, may have holdings in the cryptocurrencies discussed.
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