I originally published this on October 15, 2021. I am updating in November 2022 because it appears BlockFi is filing for bankruptcy and the credit card can no longer be used. I was excited to generate a small amount of bitcoin and have moved almost everything off before they froze withdrawals.
Below is the original post.
You've read a few blog posts (hopefully all of mine!) and are thinking that maybe this crypto stuff isn't so crazy after all. But you're still skeptical. Or maybe, you just don't have any free cash right now. I have a suggestion for you. BlockFi, a fully licensed and regulated institution will pay you bitcoin rewards of 1.5% on your credit card purchases.
Free Financial Advice: Always use a credit card if you can afford to pay it off every month. The second half of that sentence is crucial. I don't know what any of my credit card APRs are, because I don't care. Honestly, they could be 25%. It doesn't matter how much the lending institution charges me because I treat my credit cards like cash and I don't spend more than I can afford. This is not a humblebrag, this is the only rational way to use a credit card. I suspect the average U.S. cardholder's APR is somewhere around 20%. I just took a peek over at Bankrate.com and saw their preferred credit card has a 0% APR for a time, and then it converts to 15, 20, or 25% after 15 months.
I think the reasons you want to use credit card instead of a debit card are twofold: 1: lower risk for you, 2: the float grace period. If you use a debit card, the money leaves your checking account and goes to the merchant instantaneously. If you are hacked, scammed, robbed, victim of ID theft, etc, you are going to go through quite an adventure getting the funds returned to you (if ever). On the other hand, using a credit card puts that risk on the part of the lending institution. The credit card issuer is going to refund you the charge while they sort out the fraud. You also have a few more days to cover that grace period where you could have the money earning interest (8.88% at Celsius) before you pay back the credit card company.
BlockFi is the first organization that I am aware of that pays credit card rewards in Bitcoin. I don't pretend that this is going to make me wealthy, but it is a low-friction way for me to stack sats. Stacking Satoshis is the bitcoin phrase for adding to your position. Remember that 0.00000001 bitcoin is also referred to as a Satoshi. In the three months of charging and immediately paying off my BlockFi Bitcoin Rewards credit card I have earned .00355187 BTC or 355,187 sats. Today that is equivalent of $217, although next year, maybe it's worth twice that? (Bitcoin moved to $61K the day I published this.)
Back to that Free Financial Advice, you should certainly pay off all your existing credit card debt, if you are carrying any, before opening a new card. I think you should also pay off all your high-interest debt before investing in crypto. If you owe a bank 25% on money they lent you, Bitcoin is NOT going to dig you out of that hole. But, if you are not carrying any debt, and are already earning 1-3% rewards on your current card, perhaps you want to earn 1.5% back in Bitcoin. The way their setup works, is you earn 1.5 points on every $1 that you charge, and then once a month they convert your points to bitcoin at a rate of $0.01 per point.
BlockFi will also pay you 4.5% interest on your first 0.1 bitcoin that you hold at their institution. That's not much, but it's way more than you are earning at your checking account, and more or less frictionless, and I think this is a good way to Dollar Cost Average a small amount of your money into bitcoin. My biggest complaint with BlockFi is that they keep lowering the cap on the interest reward on the crypto you store there. As BlockFi has lowered the rewards, I have moved crypto holdings away from them to places like Celsius or Voyager where I earn higher rewards.
Finally, this was the coolest packaging I've ever seen for a credit card:
Comments