Earn 1.5% Back in Bitcoin

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The crypto craze may seem a bit quieter than it was earlier this year, but the crypto credit card landscape is heating up. Upgrade launched a new version of the Upgrade Card today that allows cardholders to earn bitcoin rewards on every purchase they make.

There is no waitlist (other crypto-focused cards have all launched with a sign-up-now-for-access-later approach), and the Upgrade Bitcoin Rewards Card comes with a straightforward earning structure:

• 1.5% back in bitcoin on every purchase
• No annual fee
• Bitcoin rewards must be held for 90 days prior to selling it (and when you do sell, you’ll pay a 1.5% transaction fee)

When comparing Upgrade’s new card with the card from BlockFi, the other major player currently active in the bitcoin rewards space, Upgrade’s is a clear winner in avoiding any confusion. BlockFi’s offering comes with a $200 annual fee and bonus opportunities for trading crypto and holding stable coin assets, which can be potential head spinners for anyone new to the space. Upgrade’s 1.5% back in rewards is a familiar value proposition.

Read more: The best cash-back credit cards to apply for right now

The company launched the new card in partnership with Visa, and it comes with all the standard Visa Signature benefits such as secondary car rental insurance, extended warranty protection, and perks at luxury hotels. 

Creating ‘an on-ramp’ to the complex crypto highway for everyone

Cryptocurrency may be associated with an emerging cast of Gen Z and Millennial consumers, but Renaud Laplanche, CEO of Upgrade, told Insider that the company is aiming to “build innovation for the broader public and for families — not just for a few folks in Silicon Valley.” 

“Many of our customers are not necessarily early adopters,” Laplanche said. “Our average customer is in their 40s. Very few of them actually have a crypto wallet, so it’s really an opportunity to discover cryptocurrencies [when] they might not be comfortable enough to actually buy it.”

Read more: The best Bitcoin wallets for storing and securing your cryptocurrency

Terry Angelos, senior vice president, global head of fintech at Visa, told Insider that he thinks of Upgrade’s new rewards offering as an effective “on-ramp” to crypto. 

“With Upgrade, you have a number of financial services products, and bitcoin rewards is a way for some of those consumers to be exposed to the asset class in a simple manner,” Angelos said. “I go and spend where I normally spend. Rather than receive cash back, I receive bitcoin. A consumer is effectively creating a brokerage account on the fly by opting into these rewards.”

Thinking about the holding period

There are plenty of uncertainties about bitcoin, but there is one undeniable truth for anyone earning a reward payout in the biggest name in crypto: You are going to watch your rewards go through some wild swings.

For example, if you had accumulated $100 in bitcoin rewards on April 15 when 1 bitcoin was valued above $63,000, the value on July 15 would have dropped below $50 when that same bitcoin was worth less than $32,000. 

With that in mind, the 90-day holding period will feel like an eternity for some. And when compared with the traditional credit card rewards landscape, it does feel like a strict limitation around using rewards. Cash back tends to be available at the end of each billing cycle, so waiting for three months may be a turn-off for some cardholders.

Read more: The best credit cards to turn rewards from everyday spending into investments

However, on the flip side, holding is part of a successful long-term investing strategy. In fact, if you think bitcoin can chart an entirely new future of money, you’ll want to hold on to those rewards for much longer than 90 days. 

“Bitcoin, so far, has turned out to be mostly an asset that people hold in the same way they hold stocks,” Angelos said. “Among the people who hold it, there is a belief that it will appreciate in value.”

Laplanche acknowledges the current high level of volatility for Bitcoin, but he cites inflation concerns, big government spending programs, and the currency’s limited supply of 21 million as three key reasons that bitcoin’s future is bright.

“I believe in the long term, there are fundamental reasons why Bitcoin will continue to appreciate,” he said. 

And in the interim, the ebb and flow is not going to make or break a cardholder’s well-being. 

“It’s a safe way to be exposed to the volatility of bitcoin,” Angelos said. “If my rewards balance goes up one day and down the other, this is not a big impact to my financial balance sheet.”

Read more: Financial advisors say it’s not too late to invest in Bitcoin, but there are a few things you must do with your money first

‘Upgrading’ the entire credit card market

Laplanche’s vision for Upgrade involves a bigger picture than figuring out how to help average consumers understand the basics of bitcoin. The company’s other credit cards are designed differently from average credit cards.

Instead of the traditional monthly minimum payment structure, Laplanche said that Upgrade’s cards all operate on fixed-payment installment plans that offer “the forced discipline of paying down principal and interest every month.” The cards charge interest, but APRs start at 8.99% — a significantly lower mark than the current average of 16%. The structure is particularly good for anyone who has fallen into an overspending trap. 

Read more: The best low-interest and 0% APR credit cards

“Credit cards are fundamentally bad products,” Laplanche said. “They have very high rates and fees. The worst feature about credit cards is that they encourage people to remain in debt as long as possible.”