Crypto Credit Cards for Canadians

Crypto Credit Cards for Canadians

updated on May 10, 2022 by John

Crypto Credit CardsCrypto credit cards, which could be either prepaid cards, non-prepaid cards or rewards credit cards, allow holders to spend digital currencies or to earn crypto rewards spending.

What are Crypto Credit Cards?

What many people refer to as crypto credit cards in Canada are not really credit cards at all. You are not able to use your card and then pay back your balance on your statement due date. The correct name for these cards should be crypto payment cards. You need to first load your crypto onto your card so then you are spending what you already own. This is basically the same as a prepaid card.

The other type of cards that are sometimes called crypto credit cards are actually crypto rewards credit cards. These are real credit cards, where you pay back your balance on the statement due date, but you will pay in Canadian Dollars. You will earn cryptocurrency as a reward for using your card.

A third type of card is a non-prepaid crypto card. These cards function more like credit, but with a twist. They allow you to leverage your crypto investments to borrow money. You are essentially using the value of your cryptocurrency as collateral for the money you’re borrowing. This means that you don’t need to convert your crypto into Canadian Dollars to make purchases.

There is currently no traditional credit card available in Canada where you can pay in cryptocurrency. With the rapid growth and adoption of crypto, especially Bitcoin and Ethereum, there may soon be more options available for Canadians.

How do Crypto Cards Work?

Cryptocurrency is not considered legal tender in Canada. Therefore it cannot be used like fiat currency to make purchases. Prepaid crypto cards are a more convenient way to exchange digital currency for goods and services.

Card holders must first load funds from their crypto wallet onto their card. When they use their crypto card, the cryptocurrency is converted into Canadian dollars based on its market rate, and delivered to the merchant in cash. Unless they are non-prepaid cards where you just borrow against your holdings.

A crypto rewards credit card works much like any other credit card. The difference is that the rewards are paid in cryptocurrency instead of cash. The crypto would be deposited directly into the card holder’s crypto wallet.

What crypto cards are available in Canada?

The crypto credit card market in Canada is in the very early stages. The cards that are starting to gain traction are being offered by some of the largest crypto exchanges.

The cards that you can choose from include:

  • Crypto.com Visa Card – this prepaid card is available in several tiers, which provide cardholders with a variety of reward benefits and carry different requirements at the application stage.
  • Shakepay Visa Card – this prepaid card earns up to 2% in bitcoin cash back on purchases, deposited to a Shakepay account.
  • Nexo MasterCard – this card allows you to leverage the value of your cryptocurrency to borrow funds. There are no fees and no requirement for an investment stake. It also offers a 2% cashback incentive in either Bitcoin or Nexo tokens (NEXO) on all purchases.
  • Mogo Platinum Prepaid Visa – this is a prepaid card where you will earn 50 Green Satoshis on every purchase that are automatically credited to your MOGO crypto account.
  • Coinbase Visa Debit Card – this crypto card is currently only available to residents of the USA. However, it seems likely that they will soon launch a crypto card for Canadians.

A number of different cryptocurrencies can be deposited onto prepaid crypto card. For example, Canadian cardholders can top up Crypto.com’s Visa card with more than 20 types of crypto, including Bitcoin, Litecoin, Cardano, Theta and even meme coins like Dogecoin.

Pros and cons of Crypto Credit Cards

As like all credit cards there are pros and cons that you should be aware of before using.

Pros:

  • No risk of overspending: when you use your crypto prepaid card, you are using the balance that you have loaded onto the card, you are not using any credit. Therefore, you cannot spend more than you have available.
  • No foreign exchange fees: crypto credit cards often convert your crypto to the local currency. This way, you can avoid both exchange rate conversion fees and the need to carry multiple currencies.
  • Earn cyrpto rewards: the cash back cyrpto credit cards allow you to earn cryptocurrency on every dollar that you spend. This is a great way to build up your crypto holdings without buying more crypto.
  • An easy way to take part in the crypto market: For those looking to dip their toes into this new asset class, this is the easiest way to do it. Just use your credit card as you would normally and start earning.

Cons:

  • Exchange rates: When you pre-load your crypto card with digital currency you never really know how much you have to spend. This, in turn, means you also never really know how your purchases will cost. This is because every time you make a purchase, your card issuer will covert your crypto funds into Canadian Dollars. As we have seen, it is not uncommon for the exchange rate to fluctuate by 10% in one day. This makes it challenging to monitor you spending and your account balance.
  • Tax considerations: The Canada Revenue Agency states that any transactions involving digital currency are taxable. This means that when you exchange crypto for dollars, or another crypto coin, there may be tax implications. This could become quite a headache when it comes to tax time. It is important that you consult with a tax lawyer or accountant to understand how using a crypto payment card may affect your income tax bill.

How to get a Crypto Card?

When you apply for a crypto prepaid card it is not the same as applying for a traditional credit card. For example, before applying for a Crypto.com Visa card you have to sign up for an account on their currency exchange app. You also need to complete the verification process, purchase and ‘stake’ (or deposit/lock) CRO tokens (the exchange’s own coin) in your crypto wallet for six months. This may or may not be something that you are willing to do.

It is much more straightforward if you choose a crypto rewards card. You will need to verify your crypto wallet to receive your rewards, but otherwise, it is not much different than other credit cards.

What are the Costs of a Crypto Card?

All crypto cards have some fees which can really add up, if you are not paying attention. The main fees that you will find are:

Monthly or annual service fees: these generally average a few dollars per month.

Exchange fees: usually a percentage amount of the transaction.

Cash withdrawal fees: can vary between domestic and international ATMs.

International transaction fees: these are usually about 3%.

Inactivity fees: charges for not using your card for an extended period of time.

Third-party merchant fees: charged at some point-of-sale terminals from certain merchants. These are often 1.5-3%.

Card issuance fees: charges for ordering, delivering and activating your card. These can be $50 or more.

Frequently Asked Questions about Crypto Cards

What is Better Prepaid Or Non-Prepaid Crypto Cards?
Prepaid cards require you to convert your cryptocurrency into dollars, before making a purchase. Non-prepaid cards allow you to borrow against the value of your crypto, and function more like a credit card. If you believe the value of your digital assets will increase, you should go with the non-prepaid option.
Do crypto cards affect your credit score?
Crypto cards have no effect on your credit score because they are usually prepaid cards. This is because your are paying in advance. If you choose a crypto rewards card, it would affect your score as it is a traditional credit card.
Are Crypto Credit Cards Safe To Use?
Crypto credit cards are safe to use. They work similarly to regular credit cards, but with the added security of cryptocurrency. Crypto credit cards also offer fraud and chargeback protection, as well as options like PIN numbers and two-factor authentication. Prepaid cards do not offer government protection on deposits so they do come with an added amount of risk.
Where Can Crypto Credit Cards Be Used?
These credit cards can be uses at any merchant that accepts major credit cards, as long as the issuer has a relationship with the credit card firm (Crypto.com Visa cards). Cash withdrawals may also be made using most ATMs.

Crypto Credit Cards Summary

These cards are just starting to gain traction. There is not a huge demand right now, but we can see that changing in the near future. As more and more people become interested in owning and investing in cryptocurrencies, there are more and more companies offering cards to fill this demand.

We think that these cards are a great idea for Canadians. No matter if you want to spend your crypto or you want to earn cyrpto rewards, it is a great time to learn more about them. If this sounds like something that you are interested in, we expect that there will be a lot more crypto credit cards coming soon to Canada.