Disclaimer: This should not be interpreted as financial advice, and it’s important to discuss major financial decisions with your financial advisor prior to executing.
When I first heard about the following rewards program, I thought it sounded too good to be true. But sure enough, over the past month and a half, I’ve tried it for myself and can confirm that it absolutely works. Here’s how I’m saving big time on my monthly expenses by paying with crypto currency:
Step 1: Sign Up for Coinbase
I’m sorry to plug a third-party right at the offset of this post, but in this case, a Coinbase account is necessary for pulling off this money hack. They’re by far the biggest name in crypto currency today, and any funds you keep in your Coinbase account are insured similarly to your traditional bank accounts. Plus, if you follow any of these links, you’ll get $10 in free Bitcoin to start you off.
Step 2: Apply for the Coinbase Debit Card
That’s right… Coinbase has their own debit card (issued by VISA) that you can use in the same way you use your bank-issued card. They currently have a waiting list for issuance, but if you show some activity in your account, then you should be approved within a week’s time. Once your card is issued, you’ll be able to use it immediately for online purchases, as well as real-world purchases via Apple and Google Pay. Your physical card should arrive within two weeks of your issuance date.
One important thing to note about the Coinbase Card: You’ll want to pay exclusively with USD Coin (USDC)… a stable coin that is tied to the value of the US Dollar. The reason for this is two-fold. First, Coinbase will charge a 2.5% transaction fee on purchases made with Bitcoin, Etherium, Cardano etc., which can become costly when you get into big-ticket purchases. Second, whenever you make a purchase with a non-USDC currency, Coinbase actually has to SELL that holding on your behalf, which is viewed by the IRS as a capital gain. So, at the end of the year, you’d be liable for all of these ‘micro-profits’ being made through regular use of your Coinbase card. Moral of story… set your preferred currency to USD Coin.
Step 3: Select Your Reward
This is the part where you can make big money back and save big on your monthly expenses. Coinbase offers a number of very enticing crypto-back rewards. From the dropdown list, you’ll see rewards for the big names (Bitcoin, Etherium, etc.) in the amount of 1% cashback… but what you want to do is select the higher percentage rewards for the lesser known currencies. You can a get whopping 4% back in Stellar Lumens, Amp, Graph, and Rally.
So, for example, if you spend $200 on your power bill, then you’ll get $8.00 back in the 4% reward of your choosing. At that point, you can either let it ride in that currency, convert it to another currency of your choosing, cash-out for US Dollars, or simply convert back to USD Coin so that you cash-back rewards retains a stable value.
Step 4: Spend With Your Coinbase Card Anytime You Can
Because this 4% universal cash-back is a better deal than any other debit card currently sitting in my wallet, I’ve started paying the majority of my day-to-day expenses with Coinbase. Heck, I even get 4% back on my rent! I’m not going to tell you how much I pay for my apartment, but as you can imagine, getting that much money back on my biggest monthly expense puts a lot of money back in my pocket. Of course, this only works if you pay your landlord in a manner which is conducive to using a debit card. I personally use Venmo, which is still classified as a ‘purchase’ as far as Coinbase is concerned.
Other expenses I’m getting 4% back on: the power bill, the water bill, my car, life, and renter’s insurance premiums, my health insurance premiums, eating out at restaurants, grocery shopping, getting gas, and pretty much everything else that I would normally use a debit card to pay.
As you can imagine, my cash-back rewards are substantial and they absolutely dominate any other rewards program I’ve seen from other debit cards.
Bonus Step: What to Do with Your Rewards
I started talking about this above, but you do have a number of options in regards to making the most of your rewards. Again, I’m not your financial advisor, so do whatever makes the most sense for you and your financial situation. But to recap, you can:
- Cash-out Your Crypto reward for US Dollars
The value of your rewards won’t fluctuate after you cash-out, and you can withdraw to your traditional bank account for other purchasing methods.
- Convert your Crypto Reward to USD Coin
You can keep your rewards in a crypto currency that’s linked to the value of the US dollar to avoid volatility, and your balance of USDC in Coinbase will earn 1% APY.
- Convert to an Alternate Crypto Currency That You’re Interested In
If you believe in the future of any currencies, then this is a good way to invest in them with money you would have otherwise spent.
- Let Them Ride in the Reward Currencies
If your chosen currency is Stellar Lumens, for example, then you can absolutely keep your rewards there. The value of these currencies rises and falls the same as your household names like Bitcoin and Etherium.
Other Benefits of Using the Coinbase Card
- No Transaction Fees on International Purchases
If you’re a frequent traveller outside of the US, then you know the heart ache that comes from the associated fees for using your traditional debit card. Crypto currency doesn’t need to go through 10 “middle men” like the US Dollar does.
- No ATM Fee Charged by Coinbase
This is contingent upon USDC being your selected currency. This also does not account for any fees charged by the ATM provider. This is also massively helpful for international withdrawals. When I was traveling with my Wells Fargo debit card, I would often get a $5.00 fee charged by Wells Fargo, IN ADDITION to a $5.00 fee charged by the ATM… so I was paying $10.00 everytime I wanted to take out cash.
- Earn Interest on Your USDC and Other Currencies
As mentioned, you can earn 1% APY on your balance of USD Coin (as of the writing of this post). Other currencies, such as ATOM, enable you to earn as much as 5% APY on your balance. Leveraging these interest rates along with your rewards is another way to maximize the benefit of Coinbase.
- It’s a Great Conversation Starter
A crypto currency debit card is still a pretty novel idea… so it’s sure to drum up some interesting conversation at your next happy hour or networking event.
So, that’s how I’m saving big on my monthly expenses by using crypto currency. If you want to do the same, then go ahead and sign up for Coinbase (use this link to get your free $10 in Bitcoin), apply for your Coinbase Card, and you’ll be off to the races!Happy spending!