Where Credit Cards Meet Cryptocurrency

Cryptocurrency is one of the fastest-growing segments of the world economy. Somewhere between a currency and an investment, it comes in many different forms, with Bitcoin being the largest and best-known. While cryptocurrency started off as a niche financial product, it has become increasingly mainstream and is now intersecting with credit cards in a variety of interesting ways.

As cryptocurrencies like Bitcoin become more mainstream, they are beginning to interact with credit cards.
Some exchanges allow you to buy cryptocurrency with a credit card, including at some Bitcoin ATMs.
A recently launched credit card offers rewards in the form of Bitcoin, and other such cards seem likely to follow.
Bitcoin ATMs
A Bitcoin ATM is a kiosk connected to the internet where you can purchase Bitcoin and other forms of cryptocurrency. Depending on the machine and the network, you may be able to use cash, a debit card, or a credit card for the transaction. Bitcoin ATMs are rapidly growing in popularity, with more than 12,000 kiosks in the U.S. as of February 2021.1

While commonly referred to as Bitcoin ATMs, these kiosks are more limited in what they can do than traditional ATMs. Unlike a bank-owned ATM, Bitcoin ATMs only allow you to buy cryptocurrency and do not dispense cash. Most Bitcoin ATMs also restrict the amount of cryptocurrency that you can buy at one time. Bitcoin ATMs often charge fees for using them and may not give you the best price for cryptocurrency.

Buying Cryptocurrency With a Credit Card
There are a variety of ways to buy Bitcoin and other cryptocurrencies, including with a credit card. But not all cryptocurrencies can be purchased with a credit card, and not all exchanges support purchasing cryptocurrency with one. Even on cryptocurrency exchanges that support buying with a credit card, the fees can make it quite expensive.

Another thing to keep in mind: Because cryptocurrency is, at its core, a currency, many banks and credit card issuers consider it a cash equivalent. So, your card may treat a cryptocurrency purchase the same as it would a cash advance from an ATM. That means you may incur additional fees and you’re likely to be charged interest starting on the date of the withdrawal.

Credit Cards With Bitcoin Rewards
One of the latest developments at the intersection of cryptocurrency and credit cards is a credit card that offers rewards in cryptocurrency. Cryptocurrency-based lender BlockFi announced in December 2020 that it was introducing a new credit card that pays rewards in Bitcoin. The Bitcoin Rewards Visa Credit Card is already open to BlockFi members, with an anticipated public launch date in the first quarter of 2021. BlockFi’s credit card is slated to earn 1.5% back (in Bitcoin) on all purchases, with a $250 bonus after spending $3,000 in the first three months of having the card.

On the downside, the Bitcoin Rewards credit card is scheduled to have a $200 annual fee, which is significantly higher than the annual fee on most cash back credit cards. Because the rewards are paid in Bitcoin, you do have the ability to get in on any price appreciation of Bitcoin, but you’ll also be subject to more volatility (and potential loss) than with a traditional cash back rewards card. Still, it’s likely that additional Bitcoin credit cards will be announced in the near future.

The Bottom Line
Cryptocurrency and credit cards are increasingly overlapping. There are already tens of thousands of Bitcoin ATMs where you can buy Bitcoin and other cryptocurrencies, with more being added each month. You can also buy cryptocurrency with a credit card on many exchanges, though you’ll want to watch out for high fees and other charges. Finally, the first credit card to offer rewards in Bitcoin is coming in 2021, and it’s likely to be followed by other cryptocurrency rewards cards.