About a month ago, Crypto.com announced that they would be launching their own credit card that would pay cashback rewards, up to 5% at the highest tier, in CRO coin. This credit card would be in addition to the existing Crypto.com debit card, which also pays cashback rewards in CRO coin. Today, they have launched the product, which is only available to account holders in the USA.
https://crypto.com/us/cards
What Effect Might the Crypto.com Credit Card Have on CRO?
I don't expect there will be much effect on the CRO coin. If all 100 million users of Crypto.com were to hold some of the present circulating supply, each user would only be able to get 300 CRO at maximum, which at today's price is roughly $30 worth of CRO. Clearly, a majority of Crypto.com users are not staking their CRO for debit cards. Most likely, they may be choosing the lowest tier debit card, the Midnight Blue card, which has no staking requirements and only pays 1.5% cashback rewards in CRO. In short, the staking benefits have not been a major incentive for users to upgrade their card from the Midnight Blue tier. Therefore, the benefits may not be a major draw for getting the credit card.
Current Crypto.com debit card users will be able to use their existing CRO stake to move to the credit card. The lowest tier for staking for either card is $500 worth of CRO, and it goes up by multiples of 10 for higher tiers. But unlike other credit cards that charge an annual fee, the CRO stake is one-time and refundable. The additional hurdle that users will face is that they will still need to undergo a credit check to qualify for a card. But, they make it easy for users to pre-check without it affecting their credit scores. This avoids burning a credit inquiry without the certainty of being approved.
Benefits of the Crypto.com Credit Card Vs Debit Card
Assuming a user has decent credit and qualifies for a Crypto.com debit card, what advantages does this have over the debit card? The rewards for both are roughly the same. The main advantage of getting the Crypto.com credit card largely comes down to cash flow. Users would be able to spend up to the their credit limit every month before having to make a payment. In contrast, the debit card can be topped up with cash in the exchange wallet or directly from a variety of cryptos. As debit card users may have experienced, it is good practice to keep the balance low just in case there is fraud that might wipe out their account. Whereas a credit card assumes the fraud risk, protecting the user.
The biggest benefit, in regard to cash flow, is to reduce the number of transactions needed to convert your crypto to cash for spending. If your cryptos are having a nice run up, you don't want to keep drawing down to top up your card every day. And maybe you're comfortable paying the high interest rate on a carried balance if you are getting a higher return on your crypto. In other words, a credit card, in this instance, offers a bit of flexibility on where your money has the greatest impact.
Of course, there are other benefits of having a credit card rather than a debit card. The new Crypto.com credit card will be a Visa Signature Card, which comes with a variety of benefits from Visa. These Visa benefits include purchase protections, travel benefits, and insurance.
https://usa.visa.com/pay-with-visa/cards/visa-credit-cards/visa-signature-credit-cards.html
Perhaps the most notable advantage of using a credit card rather than a debit card comes when traveling. Many hotels do not accept debit cards to cover incidentals. And car rental companies, at least in the USA, do not accept debit cards for their car rentals. There are other situations in which prepaid debit cards are also not accepted as a form of payment. A credit card solves most of this.
The Crypto.com credit card is issued by Comenity, also known as Bread Financial. Bread Financial typically issues consumer credit cards for retail stores. In terms of bank prestige, they aren't top tier. However, as far as credit cards are concerned, they perform adequately. From what little detail there is, the majority of the heavy lifting for perks may be on the part of Crypto.com rather than Comenity.
One convenience of the Crypto.com credit card is the ability to pay your balance from within the Crypto.com app. It doesn't sound like much, but it saves several steps on the process of liquidating cryptos, transferring to a bank, and then making the payment.
Future Features
It is possible that that the advantage of paying for the Crypto.com credit card directly within the app will be a short-lived advantage when Crypto.com launches their new Cash Accounts, as is stated in their product roadmap. By offering banking services, Crypto.com stands to become a more useful financial management service than it is presently. The current exchange cash account is rather limited in terms of adding money and withdrawing. For example, the exchange cash account cannot be used for direct debit payments, which many of us use for credit card and utility payments. And there are restrictions on transferring money in unless it is payroll or from another bank account the user owns.
The greatest advantage of full banking services within Crypto.com is that there would be no restrictions on buying crypto like many banks still have. Bank restrictions on crypto purchases have been a major pain point for most crypto users. Therefore, by adding banking services, Crypto.com would eliminate many hurdles that slow down retail investors from making crypto a significant part of their financial lives.
Overall, the launch of the Crypto.com credit card in itself will not be revolutionary. However, when combined with other services, at least for users in the USA, they form an important part of unifying personal finance where banking and crypto are all under one roof.