UPDATE 2/14/2022: U.S. clients are no longer able to sign up for or transfer funds to the BlockFi Interest Account (Official Press Release).
Is the BlockFi Crypto Rewards credit card worth it? I have been using the Bitcoin rewards card for the past couple months now and will share some of my thoughts.
Let's dive right in!
What is BlockFi?
Founded in 2017, BlockFi's mission is to bridge the worlds of traditional finance and blockchain technology by redefining banking for the digital age. It provides crypto-backed loans, high-interest crypto savings accounts, and crypto trading services. Check out these previous posts on BlockFi:
Recently, BlockFi has entered the credit card market with the BlockFi Rewards credit card, which I will be reviewing below.
In short, the card offers 1.5% back on ALL your purchases. But unlike traditional cashback cards, this is paid out to you monthly in Bitcoin.
- Welcome Bonus Offer: 3.5% back on Bitcoin during first 3 months (capped at $100 in Bitcoin), see referral link below to earn additional BTC!
- $0 Annual Fee
- No Foreign Transaction Fees
- 1.5% back (in Bitcoin) on all purchases
- 2.0% back (in Bitcoin) on purchases over $50,000 of annual spend
- +0.25% bonus (in Bitcoin) on all eligible trades on the BlockFi platform (up to $500/month)
- +2% extra APY (in Bitcoin) on your stable-coin holdings (up to $200)
- VISA Signature benefits
- Metal credit card *eye roll*
In this section I will list the main pros and cons of the product.
- 1.5% back in Bitcoin is solid - For those bullish on the long-term trajectory of crypto prices, this will be the best "set-it-and-forget-it" credit card ever.
- Stress free application - Check if you are approved before you get a "hard credit inquiry" with no impact on credit score
- BlockFi trading bonus - earn an additional 0.25% on your crypto trades on the BlockFi platform. I already use BlockFi to make regular crypto buys, so getting an additional 0.25% sweetens the deal even more
- BlockFi stable-coin interest boost (update: deprecated) - I already earn 8.25% APY (rate accurate as of this writing) on my GUSD stable-coins. With the credit card, I can now earn 10.25% APY(!!). Check out my detailed comparison article on best high-yield savings accounts.
- Decent customer support - for a small and young crypto startup, BlockFi actually has very decent customer support. When my initial card got lost in the mail, a rep quickly helped me next-day air my replacement card. However, note that during periods of extreme crypto price volatility, reaching a rep can take some time.
- No annual fee - get all the perks without any costs out of pocket
- No foreign transaction fee - for a no-annual-fee card, this is a very good benefit!
- Disappointing signup bonus - 3.5% back may sound like a lot, but it is only limited to $100 worth of BTC, then it reverts back to 1.5% (until you spend over $50k annually). Many entry-level credit cards like Chase Freedom Flex, Chase Freedom Unlimited, or Citi Custom Cash offer more bonus with less spend. However, if you are bullish on the long-term potential, this can be acceptable for a no-annual-fee card.
- Not true dollar-cost-average - it appears that rewards are not calculated/paid based on the exact Bitcoin price at time of transaction, but rather on a monthly basis. Your "points" are paid out in Bitcoin on a specific date every month, so you cannot take advantage of short term fluctuations in Bitcoin pricing to increase your rewards amount (e.g. if bitcoin suddenly crashes 20%, it makes sense to make your large purchase when it is down so you earn more when it recovers). However, on a long-term scale, monthly payouts can still be satisfactory, and can be a good "set-it-and-forget-it" card for crypto bulls.
- Limited app functionality - many features such as paying your credit card bill can only be accessed on the desktop version of the site, and not on the mobile app.
- No instant transaction notification - you don't get instantly notified when a purchase is made. This can be risky as you may not notice when there is an unauthorized transaction. That being said, since it is a VISA credit card, you will not be responsible for any fraudulent charges should it occur.
- Crypto trading + credit card management on one platform - this can be an issue as crypto platforms such as Coinbase, Gemini, and BlockFi tend to have outages when there is a flash crash in crypto. Since BlockFi uses the same website/app for both their crypto trading and credit card management, you could potentially not be able to access your transactions or even go in and make payments during these sudden events. In my experience, these outages are short and only last a few minutes or hours, but something to keep in mind.
- Immature banking system - as a young crypto startup offering a credit card, many typical features you expect on a Chase, Amex, or BoA credit card are not available. For example, transaction disputes cannot be handled through the app and you will have to manually call the support number to handle the situation. The current BlockFi app is also missing basic features such as setting reminder for payment due, changing your payment date, or seeing detailed merchant data.
- Ambiguous tax implications - credit card rewards are not subject to taxes, but capital gains on the crypto you earned are. For example, if you earned $100 in bitcoin rewards in 2021, the initial $100 is not taxable income, but if the value of that reward is now $150, you will pay capital gains taxes on the $50.
Who is this card NOT for?
- Those concerned about adding to your 5/24 count: In this case, get Chase cards like Chase Freedom Flex, Chase Freedom Unlimited, Chase Sapphire Preferred etc first. In short, Chase will automatically deny you if you have opened 5 or more cards in the last 24 months across all banks, hence it is recommended for most people to open Chase cards first, then circle back to get cards from other issuers.
- Those that do not believe in long-term potential of Bitcoin: There isn't much point in accruing "points" in the form of Bitcoin if you do not believe that it is going to increase in value over time. Rather, traditional cashback or travel cards such as these favorites will be the better choice.
- Those concerned about Crypto taxes: If your crypto appreciates in price, you will have to pay capital gains on it when you sell. This really isn't any different than buying/selling stocks. Personally, I see taxable gains better than no gains, but totally understand if some people want to keep their finances simple. Good news is BlockFi recently announced a partnership with TaxBit to help US Clients streamline their tax reporting** Please consult a professional for tax advice! **
- Other circumstances: Since BlockFi is a pretty new company, I would not recommend having this as your ONLY credit card. Additionally, since the website/app functionality is not fully built out, many standard features like merchant dispute is not currently automated, so be prepared to call in if you run into issues. Hopefully things will improve over time.
Who IS this card for?
- Those looking for simple one-card-setup: If you don't want to get a bunch of different cards and want to just brainlessly put all your transactions on there, this is probably the best non-category card out there. Sure, you can get 2% back on your Citi Doublecash or 1.5x Chase Ultimate Rewards with the Freedom Unlimited. But if you don't actively invest this money or hoard the points, earning Bitcoin that is automatically invested in the markets might be the best long-term strategy. In the approximately 3-month timeframe since I got the card, Bitcoin prices have climbed over 50%!
- Existing BlockFi Users: If you already trade crypto on the BlockFi platform, this no annual fee card is a no-brainer. Not only do you earn an extra bonus on all your purchases, your stable-coin APY is also increased by 2%, this means you can essentially earn 10.25% APY on your GUSD account! Check out this earlier post on using BlockFi as high-yield savings account.
- International students / limited credit history: Many banks like Chase have weird algorithms that seem to disproportionately penalize international students or those with thinner credit profiles - even after they graduate and earn 6-figure salaries! You may have a better shot with BlockFi and at least you can check to see if you are approved or not before officially "applying" (aka showing up on credit report). Then once you build out your credit history, circle back to Chase as the rewards are still (in my opinion) industry-leading.
A Better Alternative
Can you achieve the same goal of accumulating Bitcoin over time through credit card rewards and beat the 1.5% back that BlockFi offers? YES! * if you are willing to put in more work. * Here's how:
- Beating 1.5% back on non-bonus categories: This is easy to do. For example, the Citi Double Cash gives 2% cashback on ALL purchases, so one strategy is just put your spend on this card instead and use the cashback to purchase Bitcoin whenever you want. Alternatively, the Chase Freedom Unlimited offers 1.5% on ALL purchases, but that can be worth at least 25% more if you hold a Sapphire Preferred or Ink Preferred, or 50% more if you have the Sapphire Reserve.
- Get 5-8%+ back on bonus categories: If you are very strategic with your spend, cards like the Chase Freedom Flex offers 5% on quarterly-rotating categories, or the Citi Custom Cash with 5% on your top spending category every billing cycle (e.g. gas or transit). Cards like Amex Gold offers 4x on dining and groceries, and the Amex Platinum offers 5x on airfare.
- Achieving true dollar-cost averaging: Since BlockFi rewards are paid out on a monthly basis after statement closing, you do not get to truly "time" your purchases and buy in during dips. This can also hurt you if Bitcoin has appreciated dramatically between when you made the purchase and when your rewards are paid out, since you are now essentially "buying" at a much higher price. With the cards mentioned above, you can accumulate higher rewards elsewhere and just buy in whenever you want, without waiting for BlockFi to pay you out.
As an existing BlockFi user, I have found the extra perks like trading bonus, APY boost, etc beneficial. Additionally, the BlockFi credit card has become my go-to card for non-bonus spend (outside of the usual categories like dining, travel, etc.) when I do not want to worry about the hassle of dollar-cost-averaging, so I do potentially see this as a long-term keeper card for me.
That being said, as I have outlined in the sections above, there are serious limitations to this relatively young product and you can optimize your strategy to beat the 1.5% returns if you are willing to put in a bit more work.
Even if you are not ready to try out their credit card yet, you can open a free BlockFi account and earn $10 in Bitcoin ($40 for card signup) after depositing $100 when signing up using my link using code
Crypto is a rapidly emerging space and the credit card feels very much the same. There are definitely many shortcomings in the current iteration of the product, but I'm very excited to see the developments over the coming years!
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