Coinbase 4% Crypto Debit Card – too good to be true?

Recently I wrote about Fold Debit Card which earns bitcoin instead of cashback but the catch is that the better version of the Fold card has an annual fee. Prior to that, I wrote about crypto debit card that earn up to 8% cashback in the form of crypto but the catch there was various staking requirements, some of which got as large as $400k. But, Coinbase’s debit card comes with no annual fee nor any staking requirement and it gives you up to 4% cashback in the form of crypto.

Use this link to get $10 in Bitcoin (BTC) when you buy or sell $100 or more in crypto

You can even buy/sell stable coin, like USDC, which are supposed to be 1:1 with USD.

https://card.coinbase.com/

use above link to join the waitlist

To be very specific, currently the form of cashback are as follows:

1. 1% if you choose to get cashback in Bitcoin (BTC)
2. 4% if you choose to get cashback in Steller (XLM)

XLM is currently ranked #20 in among cryptocurrencies by marketcap (coinmarketcap). It has great utility (ex: super fast transaction and super low fee) so I don’t see it going anywhere. To my understanding Coinbase has no way of printing XLM of their own so whatever cashback they are giving is from whatever amount they have previously acquired. This means that eventually they might offer cashback in the form of another coin. Obviously as the card gains popularity, it seems reasonable to add more coins as an option for cashback.

Currently you can spend whatever coin you have on Coinbase (not Coinbase Pro) through this debit card. However, spending anything but USDC will incur the usual 2.99% fee. So it obviously doesn’t make sense to use this card to spend anything but USDC. Thankfully, you can instantly purchase (and load) USDC on Coinbase using your linked bank account while incurring no transaction fee. You can also setup the card to auto drain USD directly from your linked bank account. Essentially, this mean you can use the card without using Coinbase a whole lot, which will be welcomed by many.

It is also worth mentioning that you can see the virtual card number on the app as well as lock the card from the app.

Closing Thoughts

It is worth pointing out that cryptocurrencies, as of writing this article, are rapidly falling in price. There is a good chance that the 4% in XLM you earn today might just be worth 2% two weeks later. So, for some using this card might not make sense until XLM, like the entire crypto market, finds some stability in price. Alternatively, if you wish to go long on XLM then this is a great card right now as well.

Obviously, selling the cashback you get in the form of crypto will be a taxable event which might make the 4% not as appealing of a number. Furthermore, remember that crypto exchanges are not a bank and are notoriously known for horrible supports. Additionally, this is a prepaid debit card and they do not come with the usual benefits of a credit card (trip delay, return protection, etc). Last but not least, remember that Altitude Reserve can give you up to 4.5% cashback on virtually every location you can swipe a card.

Having said that do remember that this is debit card 🙂

Disclaimer: not a financial advice.