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. Though 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.
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 over 30,000 kiosks in the U.S. as of Feb. 2022.
Though they’re commonly referred to as Bitcoin ATMs, these kiosks are more limited in what they can do than traditional ATMs are. Unlike a bank-owned ATM, Bitcoin ATMs only allow you to buy a 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 bitcoins. Visa’s Bitcoin Rewards Credit Card was already open to BlockFi members, and they announced the public launch on July 6, 2021.
On the downside of this, because the rewards are paid in bitcoins, 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 20,000 Bitcoin ATMs where you can buy Bitcoin and other cryptocurrencies, with more 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.