In recent years, as cryptocurrencies have been constantly growing in both exposure and availability, many merchants and companies around the world have seen this opportunity and now accept them as a form of payment. There is still however a huge window of opportunity remaining to be seized, in the reach of the crypto market's every day usability and accessibility. The vast majority of commodity merchants and people's everyday purchases do not yet accept cryptocurrencies as payment. As a way to break through these barriers, many platforms have found a way to give crypto holders the ability to use their currency in a more easy and straightforward manner, by introducing their own crypto debit and credit cards.

How Do Crypto Debit Cards Work?

Crypto debit cards are financial instruments that work just like any other bank issued card. With them, users can pay at any business or establishment that accepts that card’s particular payment processing network, such as Visa or Mastercard, in the form of the FIAT currency accepted by that particular merchant.

There are two kinds of crypto debit cards, and they work in different ways. The first one requires the user to be a member of an existing crypto platform from which the card is issued, then either top up a required amount of crypto into an account or link it to an existing digital wallet in order to have an available spending balance on the debit card. With such cards, any time the owner makes a purchase, the platform goes through a conversion process, exchanging the selected crypto for FIAT at the current market value.

The other kind of crypto debit cards are made to be prepaid and can be recharged with crypto, the exchange value being pegged at the moment of recharge rather than the moment of transaction. The debit card can then be used at any payment terminal so long as it's supported by their processing network. While they both have the same purpose, the way in which the owner can manage their financial assets and use each of them respectively differs, depending on the company that issued the debit card.

There are important differences to be considered between the available debit cards on the market, such as payment processing networks, available countries and cryptocurrencies, market exchange rates, cashbacks, investing opportunities, reward programs, costs and commissions, and other particular issuer terms and conditions such as specific restrictions and regulations.

How Do Crypto Credit Cards Work?

Just like with the crypto debit cards, crypto credit cards work and are intended to be used the same as any other credit card issued by any financial institution. They are aimed to function at any physical or online merchant accepting their specific payment network.

There are two different kinds of crypto credit cards available out there. The first, just as in traditional finance, are tied to credit scores. They will thereby affect the holder's credit score for either good or bad, depending on how well they are managed. The owner of the credit card is in possession of a specific balance that needs to be paid on a regular basis in order to not incur late payment fees or interest. There may be extra payments such as annual or transaction fees, which will be explained further on in this article.

The reason these credit cards are considered crypto cards is mainly because they are tied to a specific platform or digital wallet where the user receives rewards in the form of crypto for purchasing good and services with their plastic. Some credit card balances can also be paid using crypto from the associated account, along with also being payable with FIAT currency.

There is another kind of crypto credit card out there which is actually a credit line extension using cryptocurrency as collateral. With this in consideration, users can expect to receive a credit line that does not surpass the amount of crypto currently held in the account linked to the card. There are some good benefits towards these kinds of credit cards, in that they're usually very low on fees and some even have no fees at all, cardholders can expect to receive rewards directly into their collateralized crypto balance, and as another plus, they offer a wide range of balance payment options including FIAT or stablecoins, and some even allow the use of earned rewards to pay off the credit line.

The main differences between different crypto credit cards generally include the fees incurred, minimum and maximum transaction volumes, availability and limitations, rewards programs and benefits, and the cryptocurrencies available.