How to Get a Crypto Debit Card and Earn Free Cryptocurrency

David and Manuel Cáceres del Castillo started using crypto debit cards last year after El Salvador accepted Bitcoin as legal cash.

The brothers are using crypto rewards cards. In Visa's fiscal first quarter, users made $2.5 billion in crypto-linked payments.

"Crypto rewards card" refers to crypto credit or debit cards. David and Manuel chose the Crypto.com Visa Card, a prepaid crypto debit card that earns rewards.

Cáceres brothers David and Manuel

David and Manuel Cáceres del Castillo started using crypto debit cards last year to receive bitcoin incentives.

The Cáceres del Castillo brothers

YouTube influencers and a crypto-savvy acquaintance taught the Cáceres brothers about crypto investing. Knowing how unpredictable crypto is, they didn't want to invest immediately. David says, "All the YouTubers emphasize they're not financial counselors and to not sell your house for bitcoin."

As a low-risk first step, they chose a crypto debit card. This allowed them to invest without sacrificing other financial goals. The Crypto.com card offers 1-8% back in crypto rewards, equivalent to the top cash back cards.

"For me or Manuel, it's a benefit. David says, "It's gradual." "When uncertain, move step-by-step."

Crypto rewards cards let you get rewarded for everyday purchases with crypto, but you should know how crypto fits into your financial plan first. Choosing a crypto rewards card means foregoing a cash back credit card you can use for vacation, big expenditures, or crypto. Free crypto is still volatile, so examine its investment potential.

Manuel and David Cáceres del Castillo offer advice on getting a crypto debit card.

What are crypto debit cards?

Crypto debit cards reward users for regular transactions. Prepaid crypto debit cards like the Crypto.com card and others from Binance and CoinBase don't require a credit check. These cards help you spend your bitcoin and earn free crypto (though there are good reasons you should probably refrain from buying things with crypto).

Check if the card is legal in your area before signing up. In New York, virtual currency platforms need a BitLicense to operate. Across state boundaries, a product may be lawful, but not in your state. Your address will assist evaluate your eligibility for a crypto debit card.

To transfer money to and from the card, you must link a bank account. You'll transfer cash from your bank account to the card's crypto exchange, then load crypto. When choosing a cryptocurrency, consider transaction fees and volatility.

Manuel, from Baltimore, and David, from Helsinki, fill their cards with stablecoins pegged to the U.S. dollar. Stablecoins include USD Coin (USDC), Tether (USDT), and True AUD (TAUD)

David adds, "If you use your card daily, use stablecoins." Because other cryptos are so unpredictable, it's hard to determine how much of each you'll need in advance. (So don't pay your mortgage with Bitcoin.)

After choosing a stablecoin, you may set up periodic bank transfers. This works for folks with regular paychecks and bills that accept debit cards.

The Cáceres brothers use Crypto.com cards to pay their bills. Mortgages and auto payments don't usually accept debit cards without a fee, so it may not be worth it.

David gets his money as usual. I adjust our monthly housing and grocery budgets. David spends $600/month on groceries. I buy $600 in USDC stablecoins. I move it to a card."

What are crypto debit card risks?

Due to crypto's novelty, the increasing amount of money circulating, and the new infrastructure, frauds and theft are common. It's an ideal atmosphere for "Olympic-level crooks" to demonstrate their abilities and get away with all the new crypto money. Last year, fraudsters stole $14 billion in bitcoin.

ADVICE

Check your crypto card's hacking coverage. Use a card that accepts stablecoins for more predictable monthly transfers.

Even Crypto.com was hacked and lost $30 million. The vulnerability exposed 483 digital wallets, however no consumer funds were lost. Investors with a lot of crypto should always employ proper digital wallet hygiene (no exchanging security phrases or passwords), backup big quantities of crypto using cold storage, and inquire about the insurance policy for any crypto debit or credit card before starting one.

Traditional banks are FDIC-insured if they fail. FDIC insurance doesn't cover loss or theft; banks' individual policies do. Federal policy covers banks for fraud, but it's the customer's responsibility to report problems promptly.

You should also understand the protections and duties of a crypto debit card.

Why use a crypto debit card?

Ever-changing crypto debit card perks. Customers can earn crypto on daily spending. The Crypto.com card offers tiered rewards cards with 1-8% returns.

To get bigger rewards, you must acquire CRO and hold it on the Crypto.com wallet app for at least six months. "Staking" promotes money circulation and demand, boosting the blockchain ecosystem's value. More benefits come with longer and higher wagers.

David explains, "The lowest level is 1% cashback, then it goes up and up." At the higher tiers, members get free Spotify, Amazon Prime, and Netflix plus savings on Airbnb and other purchases.

Altcoins can be even more volatile and unstable than Bitcoin or Ethereum, so don't buy more than you can afford to lose if the coin loses value.

Do Crypto Debit Card Earnings Need to Be Taxed?

Yes, you must report crypto earnings in U.S. dollars on your tax return.

Lisa Bragança, former SEC branch chief and investment attorney, says centralized crypto exchanges like Kraken, Gemini, and Binance now submit trading activity to the IRS. Exchanges don't have consistent reporting obligations currently. Regulators want to strengthen tax reporting requirements for any crypto platform with decentralized financing (DeFi) activity, such as staking crypto on a rewards card for monetary benefits.

Bragança expects the exchanges will comply: "They want power and validity."

Are prepaid crypto cards worthwhile?

Each crypto debit card has its own rewards structure. Research before enrolling. Process fees (just as you would a debit card). Do the perks fit your lifestyle?

If you want to earn bitcoin by paying bills with a prepaid card like the Cáceres brothers, start slowly. First pay for long-term investments, housing, and an emergency fund.

A crypto rewards card can help you learn about decentralized finance while collecting rewards.