Stepping into the world of cryptocurrencies is exciting, especially when you can earn rewards simply by spending money. This guide details the lucrative universe of crypto cashback. We cover everything you need to know. Choose the perfect crypto card and start enjoying instant cashback rewards in popular coins like bitcoin and ethereum.
Discover all types of crypto cashback with popular BeInCrypto recommended platforms
Wirex
OKX
Kraken
What is crypto cashback?
Crypto cashback is the result of a collaboration between banks, who provide credit and debit cards, and various businesses. Right now, some banks or financial services give back some of the fees merchants charge when you pay with a certain card. Others have set up reward systems, where the amount you get back can change based on your purchase. In all, the premise is simple. Use a card and receive rewards in the form of a certain cryptocurrency.
For many, utilizing a crypto cashback service can be a good way to diversify an investment portfolio that mainly consists of fiat. Diversification, of course, is one of the main reasons people look to decentralized currencies: according to research conducted in 2023 by the Financial Conduct Authority, about 30% of those who bought crypto in the UK in 2022 do so as part of a wider investment portfolio.
How to get crypto cashback
So, how should you go about getting crypto cashback on everyday spending? Here’s one way it can work.
Sign up for a crypto cashback card
To get started with crypto cashback, you’ll first need to sign up with a service that provides a crypto card and has in place a cashback system.
We will use Wirex, one of our recommended partners, to demonstrate. With this card, you can earn up to 8% cashback in Wirex tokens (WXT).
However, you might choose any other cashback service that’s available to you. Always do your own research and check all the financial conditions that apply to you before signing up for any financial service.
In the case of Wirex, you’ll first need to verify your identity and provide some personal data. These are regulations required by the financial authorities and are meant to protect customers and prevent money laundering.
After verifying your Wirex account, you must fund your account (crypto or fiat). After your account is funded, you’re on your way to earning crypto cashback!
Get your crypto cashback card
To be able to receive cashback with Wirex, you’ll need to get a Wirex debit card. You can order a physical card, but you can also issue a virtual card, which you can use immediately for online payments.
Note that you must add funds to your account before issuing a virtual card. In this case, you’ll need to add at least 20 EUR (this amount might differ for each account, depending on your chosen fiat coin).
Since this is a crypto debit card and service, you can choose to either deposit fiat or cryptocurrencies (NXUSD, BTC, WXT).
Note that Wirex has different cashback tiers based on your subscription type and the amount of WXT tokens staked on the platform. To unlock the last tier, which gives you 8% cashback, you must stake 7,500,000 WXT tokens for 180 days and purchase the Elite monthly subscription.
Wirex’s cashback system is called Cryptoback™ rewards, which refers to the service’s crypto cashback rewards.
As of 2023, here are the subscription plans offered by Wirex and their Cryptoback rewards percentage.
Remember that you’ll need to stake a certain amount of WXT tokens to increase cashback, which could be up to 8%. Wirex’s pricing options provide everyone with the chance to enjoy the advantages of Wirex. Hence, you can simply select from three varied plans based on your financial perspective.
Here are the Wirex cashback-boosted plans.
Shop through crypto cashback websites
To start earning Cryptoback™ rewards, simply use your Wirex card for eligible purchases.
After funding your account and issuing a virtual Wirex card, you can now use it to shop online, and you will receive your cashback according to your subscription plan and WXT token holdings.
This means that each time you use the Wirex card to pay for a product or service, Wirex will perform a real-time conversion at the point of sale (POS). There are no FX fees, fiat-to-fiat conversation, or instance exchange at interbank and OTC rates. You can also use the Wirex card for free international ATM withdrawals.
The cashback rewards are calculated for each transaction and are received in WXT tokens.
As of 2023, here are the maximum cashback reward levels for each plan:
- Standard users can earn up to 10,000 WXT
- Premium users can earn up to 50,000 WXT
- Elite users can earn up to 150,000 WXT
Also, note that you will not receive any cashback rewards for transactions that are on Wirex’s list of ineligible Merchant Category Codes (MCC).
How does crypto cashback work?
Crypto cashback works like traditional credit card rewards but pays you back in cryptocurrency instead of cash or travel points.
For example, Wirex offers up to 8% cashback in crypto on eligible purchases. The exact cashback depends on your subscription level and the amount of crypto staked on the platform.
Here’s a real-world example:
Imagine this: John purchased a plane ticket using his credit card and got a 5% refund from his bank, Financial Institution X. Later, he bought a concert ticket and received a 2% refund for that purchase.
That cashback percentage is always calculated from the total cost of the transaction and can be found in your account after the transaction has been completed. In the case of cryptocurrency credit or debit cards, such as bitcoin debit cards, the cashback can also be offered in the cryptocurrency of that specific service or other cryptos, depending on the service. Also, the tier of the cashback percentage may depend on each account’s level of cashback. Some services may require holding a certain amount of crypto in your account or purchasing a monthly subscription.
In the case of Wirex, you receive Wirex tokens (WXT), which you can later hold, spend, stake, or convert into the crypto of your choice.
The best crypto credit cards deposit your crypto rewards directly into your account, giving you instant access. Just like with traditional credit cards, you’ll need to pay off your balance each month to avoid interest or late fees, and these cards also impact your credit score.
What are the benefits of crypto cashback?
The benefits of crypto cashback are numerous and can make a significant difference for crypto card users. One of the main advantages is that you can earn unique crypto rewards. Unlike traditional credit cards, which may offer points, crypto cards provide cashback as digital currencies. These rewards can then be reinvested. This could be a way to grow your crypto investment simply by using the card for everyday transactions.
Moreover, crypto cashback enables you to diversify your crypto assets. As you receive cashback in various types of tokens, you can broaden your crypto portfolio without incurring transaction fees.
Another benefit of crypto cashback is that it offers a hassle-free way to accumulate crypto. For those new to crypto investments, this feature helps you acquire digital assets. And that is possible without diving deep into the complexities of trading on crypto exchanges. You can simply spend as you normally would with a credit or debit card and accumulate crypto rewards over time.
Additionally, if you’re based in Europe or travel frequently across the continent, a European crypto debit card can provide localized benefits alongside your global crypto cashback rewards.
Types of crypto cashback
Flat-rate cashback
Flat-rate cashback refers to a straightforward rewards system offered by certain credit cards. You earn a fixed percentage back on every purchase you make, regardless of the type of expenditure.
Imagine getting a constant 2% cashback every time you spend money — whether it’s a cup of coffee, a set of new tires, or a fun day at the amusement park.
Flat-rate cashback cards are a great fit for people who prefer simplicity, particularly if you don’t want the hassle of keeping track of rotating bonus categories. They’re especially useful for those whose spending patterns are varied.
Percentage-based cashback for categories
Percentage-based cashback refers to credit card rewards programs where the amount of cashback you earn varies. Each spending category offers a different cashback percentage. Unlike flat-rate cashback cards, percentage-based cashback cards reward you with different rates depending on your purchase.
With a percentage-based cashback card, you might earn varying rates. It could be something like 4% on dining, 3% on travel, 2% on groceries, and 1% on everything else. The card issuer defines these categories. They may even rotate them on a quarterly basis, requiring you to activate the new categories to earn higher rates. You’ll need to align your spending with these categories to maximize your rewards.
These cards are ideal for individuals with specific spending habits aligning with the reward categories. They’re also good for those who don’t mind putting in a little effort to maximize their rewards by tracking categories and perhaps even juggling multiple cards.
Tiered cashback
Tiered cashback refers to a credit card rewards program where the amount of cash back you earn is structured in different tiers or levels based on spending categories. It’s somewhat similar to percentage-based cashback. But instead of rotating categories or requiring activation, tiered cashback cards have fixed categories that always earn you higher rates.
With a tiered cashback card, you could earn, for example, 4% back on dining, 3% on travel, 2% at grocery stores, and 1% on all other purchases. These rates are set and won’t change, making knowing what you’ll earn with each purchase easier. You don’t need to sign up or activate these categories; they’re automatic.
When discussing tiered cashback, we also refer to credit or debit cards requiring a subscription. These services offer tiered cashback rewards based on your subscription level. Think of them as a unique blend of a membership and rewards system. You get a higher cashback rate with the monthly or yearly subscription fee. Other more lucrative benefits are based on the tier of your subscription.
With these cards, you select a subscription plan, typically from a basic to a premium tier. The higher the tier, the more you pay in subscription fees, but the higher your potential cashback rewards. For example, a basic tier might offer 0.5% cashback on all purchases, whereas a premium tier could offer 8% cashback, as is the case with the Wirex card.
Sign-up bonuses
To attract new customers, sign-up bonuses are incentives offered by financial service providers, such as credit card companies, banks, or even crypto exchanges.
These bonuses often come as cashback, points, or other rewards and are typically granted after a customer meets certain conditions. Some of the most common conditions are spending a specific amount within a given timeframe or making a minimum deposit.
A sign-up bonus might be advertised as “Earn $200 after you spend $1,000 in the first three months.” Once you meet the spending requirement within the specified period, the credit card issuer will credit your account with $200. This is usually in addition to your regular cashback on your purchases. For example, OKX is one of the top cryptocurrency exchanges that offers a guaranteed airdrop of up to $10,000 for signup. To receive your signup bonus, you must deposit at least $50 into your account.
Referral bonuses
Referral bonuses are incentives provided by financial services, cashback programs, and crypto exchanges. They offer them to encourage existing users to invite new users to their platforms. When you refer someone, they must sign up and meet certain conditions. When that happens, you and the person you referred typically receive some bonus or reward.
In the crypto space, referral bonuses are quite popular. If you’re an existing user of a crypto exchange and you refer someone else to use that exchange, you might get a percentage of the trading fees that your referred friend pays. Alternatively, you could both get a small amount of cryptocurrency once the new user makes their first trade or purchase.
Kraken is one popular cryptocurrency exchange that offers such a referral bonus. For each friend you refer, you both receive $10 in BTC after your friend has traded at least $100 on the platform.
Advantages of crypto cashback
Save money on your purchases
Every time you make a purchase using a card or service that offers crypto cashback, you immediately receive a percentage of the transaction value back in cryptocurrency. This is essentially like getting a discount on everything you buy. Only the “discount” is paid back to you in a digital asset.
When you receive cashback in crypto, you’re not just getting money back; you’re acquiring an asset that could grow in value. So, you could end up saving even more money in the long run if the value of the cryptocurrency goes up.
Some crypto cashback programs are also tied to specific retailers or services, offering higher cashback rates when you shop with them. This creates a savings cycle: you save money on your first purchase, earn crypto cashback, and then save even more on future purchases by using or leveraging that earned cryptocurrency.
Earn crypto rewards
Earning crypto rewards is a major advantage for crypto cashback programs. Unlike traditional cashback schemes offering points or fiat currency like dollars or euros, crypto cashback programs reward you with cryptocurrency.
The investment opportunity is one of the most compelling reasons to opt for crypto rewards. The value of cryptocurrencies like bitcoin and ethereum has the potential to grow over time, which means your cashback rewards could also increase in value. While this comes with its own risks due to market volatility, the upside is considerably higher than getting cashback in a stable but non-growing currency like the dollar.
Also, receiving cashback in crypto allows you to diversify your investment portfolio without having to invest your own money actively. Over time, these small amounts of cryptocurrency can add up and serve as a low-risk introduction to the world of digital assets.
Crypto cashback programs often come with additional features, such as staking, where you can stake your earned crypto to earn interest on it, further enhancing its investment potential.
Build your crypto portfolio
Building your crypto portfolio is another attractive advantage of crypto cashback programs. Essentially, every time you make a purchase and earn cashback in cryptocurrency, you’re adding to your existing collection of digital assets without having to invest extra money. This is like dipping your toes into the world of crypto investment but without the typical risks or costs associated with buying cryptocurrency directly. Over time, these small amounts can accumulate, contributing to a more diversified and robust crypto portfolio.
Additionally, the cryptocurrencies you earn may appreciate in value, potentially increasing the worth of your portfolio in the long run. And since many crypto cashback programs allow you to earn a variety of cryptocurrencies, you can easily diversify your holdings. This can be an excellent strategy for risk mitigation and maximizing potential gains, essentially allowing you to grow your crypto assets by doing your regular spending.
Disadvantages of crypto cashback
Cashback may be small
One downside to using crypto cashback programs is that the cashback amounts may be relatively small. Especially when you compare it to the total cost of your purchases — while you are earning some crypto as a reward, the amount might be small.
You shouldn’t solely rely on crypto cashback programs as a way to build a substantial portfolio. Nor is it the best way to save money in the long term. A cashback is more like a nice bonus or a little extra that adds up over time. It shouldn’t be seen as a game-changing financial tool.
Some cards have high fees
Another drawback of crypto cashback programs, particularly those tied to specific cards, is that these cards can come with high fees. These fees could be annual charges, transaction fees, or even maintenance fees. In some cases, you need to pay just to hold the card. These fees can offset the benefits gained from the cashback rewards, making the card less lucrative than it initially appears.
For example, if you earn 2% cashback on your purchases. But you have to pay a high annual fee, and you’ll need to spend a significant amount just to break even. The idea of earning crypto on your purchases sounds appealing. However, assessing whether the fees make the card worthwhile for your spending habits and financial situation is crucial.
Cashback may not be instant
Even though you earn crypto cashback rewards on your purchases, the rewards might not appear in your account immediately. Some programs have a waiting period before you can actually claim or use the cashback you’ve earned. This delay may be due to a pending verification process or may be held to ensure the transaction is finalized and not returned or disputed.
In traditional cashback programs, this might not be a big deal. However, the value of crypto can fluctuate significantly in a short period. In this case, a delay could mean that your rewards are worth less when you can use them. If immediate utility from your rewards is important to you, this delayed cashback could be a notable downside.
Is crypto cashback taxable?
Cashback rewards, including those received in crypto assets, are generally not considered taxable income for ordinary retail customers. This applies whether the cashback is provided by the seller of goods and services or by a third party. So, good news for card users!
However, keeping records of these cashback rewards is important, as you may need them for future transactions, such as when you sell the assets. Remember that most crypto credit and debit cards convert your crypto to fiat currency when you make a purchase, effectively selling your crypto. As for the actual cashback, it might be treated similarly to fiat cashback, which is tax-free. However, it’s important to note that tax regulations can vary by jurisdiction and are subject to change.
Ready to get started with a crypto cashback service?
With options ranging from crypto credit cards to debit cards that link directly to your bank account, diving into the world of crypto rewards has never been easier. Users can say goodbye to the limitations of traditional credit cards and embrace a rewards program that earns them fruitful crypto rewards with every eligible purchase.
Simply pick a cryptocurrency exchange offering a card with cashback rewards that suit your top spend category, whether dining out or online shopping. Be mindful of annual fees, and always conduct thorough research to ensure you get the most bang for your buck. Remember that crypto cards come with similar risks to credit cards and should be used mindfully.
Frequently asked questions
How do I get crypto cashback?
What is crypto cashback?
Can you get cashback for buying crypto?
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