Crypto debit cards are similar to traditional debit cards in that you can swipe or dip your card for purchases in person and online. But instead of deducting fiat currency like USD or SGD from a bank account, your card deducts the charge from a crypto wallet that automatically converts your purchase into SGD or other fiat currency.
How do crypto debit cards work?
Crypto debit cards are linked to a crypto wallet — the place your cryptocurrencies like Bitcoin and Ethereum are stored. To use your debit card, you need to connect your crypto wallet if you have one, or open one through an exchange or crypto-focused platform.
Most crypto debit cards are backed by Mastercard and Visa, making it easy to use them anywhere that accepts debit payments. Funds are deducted from your crypto wallet balance automatically, just like fiat would be, each time you use your crypto debit card for purchases.
Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific
provider, service or offering. It is not a recommendation to trade.
Compare bitcoin debit and credit cards at a glance
Looking to load your crypto card? Check out our guide to crypto exchanges.
Crypto debit cards vs traditional debit cards
Unlike traditional debit cards, crypto cards go through an extra process of converting your crypto assets into fiat currency. Some crypto cards will convert your crypto as soon as you fund — or, as some cards call it, “top off” — your crypto wallet. While others convert it when you make a purchase.
When your crypto card converts your cryptocurrency into fiat currency is important, as you may be locked into a potentially weaker or stronger exchange rate.
3 ways your crypto funds convert
1. Converts as soon as you fund your crypto wallet
Cards like the Crypto.com Visa Card convert your cryptocurrency into fiat currency when you fund it. Purchases are deducted from a fiat currency balance (for example SGD), requiring no further conversion for transactions.
Automatic conversions are easier to manage, but cryptocurrencies are volatile: If the conversion takes place during a dip in value, you’re stuck with that low rate until you spend down your account.
2. Converts at the point of transaction
Certain cards convert your cryptocurrencies to fiat at the time of purchase.
This model can lead to the freshest rates, allowing your crypto assets to grow with the market until you’re ready to spend it. But it can also lead to more complicated taxes, each transaction triggering a taxable event reportable on your tax returns.
3. Manually converts at the time of your choosing
Cards like the Nexo Crypto Debit Card require you to manually convert your cryptocurrency into fiat before you can make a purchase. If you haven’t yet converted your crypto and you attempt to make a purchase from your wallet, your transaction is declined.
This method provides control and flexibility to convert at the strongest exchange rates, though you must stay on top of your wallet to avoid your card being declined when you least expect it.
Remember these 5 features when you compare
When searching and comparing different crypto debit cards, look out for these features:
- Account type. While most crypto debit cards are attached to crypto wallets, they aren’t your only crypto debit card options. Keep an eye out on current accounts that may offer a debit card that rewards you in Bitcoin instead of fiat currency.
- Currency conversion. If you want your crypto to instantly convert into SGD or USD upon funding your account, you may want to go with a card like the Crypto.com Visa card. Otherwise, you can look for alternatives that allow your crypto to be converted at the time of purchase or manually at your preferred rate.
- Supporting cryptocurrencies. Not all crypto debit cards support every cryptocurrency. Some may only allow deposits of popular cryptocurrencies like Bitcoin, while others only allow you to deposit stablecoins like USDC or USDT.
- Withdrawal fees. While there are normally no fees associated with depositing cryptocurrency, withdrawing funds is often a different case. If you don’t plan on keeping your cryptocurrency in a crypto wallet all of the time, find out if there are any withdrawal fees.
- Rewards. Cashback is the most common incentive offered by crypto debit cards. Cashback incentives vary between different service providers with some even offering the opportunity to send rewards straight into a crypto savings account. Some platforms also offer loyalty tiers that reward you in their native coin.
How safe are crypto debit cards?
Crypto debit cards are as safe to use as traditional debit cards. You’re required to submit “know your customer” (KYC) documentation to meet governing regulations when you apply for a crypto debit card.
The majority also implement strict security measures to prevent unauthorized access. For example, you’ll be asked to establish strong passwords and set up two-factor authentication.
Benefits and drawbacks of crypto debit cards
Some of the key benefits for using a crypto debit card include:
- Utilise cryptocurrency assets. Crypto debit cards are ideal for those looking to spend cryptocurrencies on real-world goods and services. Using a crypto debit card greatly improves the usability of otherwise restricted digital assets.
- Reduced foreign fees. Because cryptocurrency prices aren’t based on any single fiat, the same price is available worldwide. You can use crypto debit cards to convert to a range of different fiat currencies, which can reduce foreign exchange fees compared to traditional debit cards.
- Potential rewards. Most crypto debit card providers offer rewards like cashback incentives, often paid in cryptocurrencies. Several all-in-one crypto banks pay stronger loyalty rewards the more you use their services.
- Spending limits. Some crypto debit cards set daily or weekly caps on how much you can spend, regardless of the balance in your account.
- Price volatility. Cryptocurrencies are volatile, so prices can change quickly. That can also affect the value of your card rewards. For example, an SGD$5,000 reward in BTC could be worth only SGD$3,000 at the time you cash out if the value of BTC drops. You may need to stay on top of cryptocurrency prices to maximise your card’s value.
- Potential tax liability. Regulations in this space are ever-changing so keep in mind that each crypto-to-fiat conversion could trigger a taxable event reportable in the future.
Before you sign up
Similar to traditional banking, KYC documentation and verification is required when you open a debit card account. This process is designed to deter money laundering and terrorist-related activities.
Most crypto debit cards require you to first download their app before completing the KYC verification process, which typically requires your full name, address, a photo of your government-issued ID or driver’s license and a photo of yourself.
Once you’re verified, you can fund your crypto wallet and you may be required to stake your crypto for a specific time. For example, the Crypto.com Visa Debit card requires you to stake CRO — their native coin — in the app for 180 days.
As cryptocurrency becomes more mainstream, crypto banking platforms are offering debit cards that allow investors a way to manage and spend their cryptocurrencies on everyday goods and services — sometimes with cashback and rewards.
Compare top crypto debit cards to find the best perks for your spending habits and financial goals.
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly
volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of
future performance. Consider your own circumstances, and obtain your own advice, before relying on this information.
You should also verify the nature of any product or service (including its legal status and relevant regulatory
requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may
have holdings in the cryptocurrencies discussed.