Cryptocurrency is a speculative investment due to the high volatility of the crypto market. Still, many people want to invest in digital currencies. When it comes to speculative investments, you should only invest what you are willing to lose.
You should also consider the cost of buying cryptos. Most crypto exchanges charge a fee when you buy crypto from them. Depending on your payment method, this fee can be as high as 7 percent but there is a simple hack to avoid the exchange fee.
Try Using A Crypto Rewards Card
Credit card companies and banks have started adopting a new trend of offering customers the opportunity to earn rewards that can be redeemed for crypto instead of points or cash. Like a cashback card, you typically earn purchase rewards at a standard rate.
However, instead of redeeming reward points for cash, you can redeem them for your choice of crypto. The issuer purchases and deposits your redeemed crypto in your crypto account. Some credit card issuers will purchase crypto when you swipe your card for a purchase.
Suppose your credit card earns you 2 percent back on your purchases. If you purchase goods worth $100 using your card, the issuer will immediately buy and deposit $2 worth of cryptocurrency in your associated crypto account.
Other times, this purchase and deposit are not done until you hit a certain minimum spend threshold for rewards or until your credit card transaction has been cleared. Either way, this hack to purchase crypto means you do not pay any exchange fee.
Not only do you use free rewards money to invest in your choice of crypto, but you don’t even pay any brokerage or exchange fee for your investment. Ultimately, you get more value from every dollar invested.
Consider Opportunity Cost
If you make your purchases using a crypto reward card, you are not using a different reward card. You will have to consider this opportunity cost because you may need to maximize your reward potential.
Most crypto rewards cards typically do not offer competitive rewards. Let’s take the previous $100 purchase example, where you earn $2 dollars of crypto. Using a typical grocery rewards card, you may get around 4 percent for the same purchase.
So, you get $4 worth of grocery rewards, which is twice as much as your crypto rewards. However, if we consider how much exchange fee you save on, it may balance the scales in the crypto rewards card’s favor.
Since different crypto exchanges charge different fees, you must ensure that the exchange fee is more than the difference between the rewards in cards. So, in the case of our example, you need the exchange fee to be at least 2 percent to justify using the crypto rewards card. If it’s more, you are in the green.
Final Thoughts
Crypto rewards cards are a simple hack that can allow you to get the most value out of every dollar you invest in crypto. It is an easy hack to get fee-free crypto. You can even set and forget it until you decide to do something with your (essentially free) crypto investment.
The great thing about this method is that you are only investing free money from rewards, which means it makes no difference to your budget or lifestyle in any significant way. It is money you can afford to lose, which makes it ideal for a volatile investment like cryptocurrency.
