REVIEW: Coinbase’s New CREDIT Card vs. DEBIT Card

Coinbase just launched a new Coinbase credit card. Not a debit card, which I've been using for years, but a credit card. Let's talk about how it works, the pros and cons, and the preview of my how I feel about it, which is I kind of have mixed feelings, but I'll walk you through it. First of all, the way the Coinbase debit card works, which has been available for years now, is that every time you make a transaction with Bitcoin, it immediately converts at the point of sale the Bitcoin into whatever the local currency is to settle up with the merchant. So, if I'm in Honduras, it's Honduran Limpira. If I'm in Europe, it's euros. If I'm in Japan, it's uh, you know, yen, China, Juan, all that sort of stuff. Um, but it happens at the point of sale, so you know exactly the price you're paying. you know the current Bitcoin price because most people who follow Bitcoin closely have a general idea of the ballpark of what the Bitcoin price is uh in any given week. And so you're you're effectively settling up immediately and in exchange Coinbase is giving you 0.5% return on that uh money. Uh so you're getting Bitcoin rewards of 0.5%. So it's settled up immediately. No membership fees required. Um now they do when it when it does that transaction it is a uh bitcoin to US dollar conversion and they do charge I believe a 1% uh spread. A spread is essentially a difference between uh two numbers. So, uh, a spread means if you check the price of Bitcoin on Coinbase and then you go buy something with it, they won't charge you a fee, but the price you will see that the Bitcoin got converted at is 1% higher than the current uh, spot price, which is the instantaneous immediate price um, on Coinbase, for example. So, that's how they make money from you converting into and out of US dollars, which makes sense. I mean, they're not going to do that conversion for free. uh makes you know I'm totally fine with a spread especially if it's a spread or a fee but not both. The problem with Coinbase standard interface if you're not using the debit card if you're just using the standard interface on Coinbase is you get charged a fee and a spread which can add up to you know 2% or more. Uh but in this case with the debit card for years they've had no fees. Um, when it first rolled out, it was a 2 and 12% fee, which was ridiculous. But they dropped that almost immediately. And for many years now, or multiple years now, the Coinbase debit card for at least the last 3 years has been no fees, but they do charge up to a 1% spread on the transaction. Okay, so that's how it works. It instantly converts Bitcoin to any local currency. The credit card on the other hand does not do that. When you are using the Coinbase credit card, it acrus you are spending US dollars on credit and then you are settling up those uh that later. So at a future point once a month you are settling up all of your US dollar expenditures and settling those. In this case you can do it with Bitcoin or you can do it with a bank account uh etc. Now there's there's pros and cons to that. Uh the now the the the biggest pro of the credit card is you can get up to 4% Bitcoin back. That is a very high uh rewards level. 4% is basically higher than you can get on almost anywhere else period. But to get the 4% you have to have a balance on Coinbase above $200,000, which is ridiculously more than I would ever recommend anyone keeping on a centralized cryptocurrency exchange. Uh, now there's some people who just have very high Bitcoin balances in general, and they consider $200,000 on Coinbase not a big deal. Um, it all depends on what your definition of walking around money is. My walking around money is way less than $200,000. So, I do not want $200,000 sitting on Coinbase or River or anything. Balances that and high need to be on Bit Key. Uh, and frankly, balances that high not only need to be on Bit Key, but that Bit Key needs to be at in a safe deposit box at a bank, not just walking around with you, um, or in your car or even at your house. Because, again, if you had $200,000 of jewelry, you probably would not keep $200,000 of jewelry in your house. You know, if you got family heirloom jewel jewelry, which I do not, my family does not. Um, my wife does not, but if we did, we would not keep $200,000 of jewelry in our house. We would keep the most valuable stuff somewhere else. So, same with Bit Key. So, anyway, to get to 4%, you got to have um you got to have a $200,000 balance. Now, it does go up from 2%. So any coin any uh bitcoin balance or I should say any balance on coinbase uh gets you a 2% bitcoin back which is frankly a lot better than 0.5%. So the first and biggest comparison between the debit card and the credit card is that the debit card um is 0.5% but the credit card starts at 2% bitcoin back and it goes up from 2% up to 4%. Now, if you have, you know, regardless of whether not or not you have a Coinbase balance, a balance on Coinbase, you can get the 2%. Um, if you have the um if you have more than zero balance on Coinbase, if you as soon as it passes $10,000, it jumps up from 2% to 2.5%. As soon as it goes from 2.5%, sorry, as soon as you go from $10,000 to $50,000, it goes from 2 and a half% to 3%. And then when you cross $200,000, it goes to 4%. So again, anybody can get 2% uh back with the Coinbase credit card instead of 0.5% on the debit card. But but to get more than 2% again, you have to have $10,000 uh balance on Coinbase in order to get 2.5%. So that's only an extra half a percent to have more than $10,000. And then an additional half a percent to have $50,000, which goes up to 3%. It goes from 2% to 2 and a half at $10,000 to 3% at $50,000. And then the whole the whole big 1% jump, you got to go all the way up from 3% to 4%. You have to have not only $50,000 at the 3% level, but you have to have an additional $150,000, which is a ridiculously large amount uh to have on a centralized exchange uh to get the 4%. Now, if if you already have a high balance on Coinbase, it should be in Coinbase Vault. Uh Coinbase Vault is not as good as Bitkey because it's still controlled by Coinbase. But at least Coinbase Vault requires you to approve moving Bitcoin in and out of their vault feature with two email address approvals. So your you have to approve if you want to move it from the vault back into your main balance, you have to approve with your primary email address and a secondary email address. So it's a lot more secure to do it that way because hackers have to hijack two email addresses and there's a 48 hour waiting period. So 48 hours, most people who get scammed figure out that they have been scammed in less than 48 hours. And if if you are being scammed or a scammer or a hacker gets control of your account, you're probably going to figure that out within 48 hours and you can go in and cancel the transfer out of your vault and then you're safe again. Um, but it's not foolproof. I mean, it's just not foolproof. So, and also, you know, Coinbase can choose to restrict your balance or freeze your balance or the government can confiscate your balance if it's at Coinbase regardless of whether it's in the vault or not. So, that's why Bitkey is better because nobody can take your stuff. Nobody can freeze your account. Nobody can block you. Uh if it's on Bit Key, it's on you just have complete control over it. So anyway, so but if you have a balance, you know, that's large large enough to make you uncomfortable on Coinbase. You absolutely should turn on the vault feature. V A U Lt. Uh you I think you have to turn it on from the web interface. You can't turn it on from within the mobile app. Uh once you have it turned on, you can move in and out of your vault. I think you have to be in Coinbase Advanced, but you can do it with the mobile app. move in and out of vault. Um, but again, there's a 48 hour there's no waiting period to get it in the vault, but to get uh Bitcoin out of the vault, there is a 48 hour waiting period. Um, which again enhances security and it requires two emails worth of authentication, which also enhances security. Um, so again, maybe for you, depending on how big your balance is, it makes sense to have more than $10,000 in Coinbase to get 2 and a half% back instead of 2% back. or if you have a very large, you know, Bitcoin balance and $50,000 is a small percentage of it, maybe it makes sense to have $50,000 on Coinbase to get 3% back. Almost nobody should have more than $50,000 on Coinbase because even if you your Bitcoin balance is many millions of dollars, keeping 200,000 of it on Coinbase, that just to me that strikes me as a ridiculously large and unnecessarily risky amount to have on a centralized platform that can freeze it or that it could get hacked or scammed or anything like that. So, I think 4% is effectively off the table because that just requires way more Bitcoin on there than makes any sense at all in my opinion. Okay. So, the uh the other difference of course with a credit card versus a debit card is you settle up once a month, which means if you are settling up in Bitcoin, you are taking on uh risk between when you are making a spending decision and when you are settling up. The thing I like about the debit card is that you're settling up immediately. So, if I'm buying things right now, I know Bitcoin's about $111,000. And I know what I'm buying. For example, if I go out to lunch today, Bitcoin's at $111,000. I'm probably going to tip especially generously. I always tip like ridiculously generously, you know, but if if I'm feeling good about Bitcoin, it goes from sort of ridiculously generously to even more ridiculously generously. Um, but if you make spending decisions like you're feeling wealthy, you know, at $111,000 and then suddenly by the time the bill comes due, in my case on the 27th of the month, my the uh the Coinbase credit card that I got just to experiment with, it arbitrarily set the uh settle, you know, the settlement date on the 27th of each month. So, if I'm spending today like Bitcoin is at 111, but worst case scenario, you know, we're at 97 instead of 111 by the time I'm settling up the bill. Then, hey, that's still a lot more than most of the Bitcoin I bought. So, I'm still up on most of the Bitcoin I bought no matter what. But suddenly, I'm thinking, whoa, I'm not nearly as wealthy as I thought I was when I was making those spending decisions. Now, you can short circuit that to a some degree by just settling up immediately. So, if you put something expensive on the credit card, you can go in the mobile app and just pay the bill as soon as it shows up. But it doesn't post for a couple of days. So, even if you put an expensive vacation on the credit card because you could afford it and you wanted to settle up with Bitcoin as soon as possible, it's not even going to let you settle up for a few days before the transaction posts and then you're allowed to settle up because you can't pay a balance that's not there. Now, all credit cards work that way. I mean, you can't when I put something on, you know, that exceeds $2,500, uh, which is the daily spend limit on the Coinbase debit card. If I put something on a separate credit card because it exceeds that $2,500 daily limit, uh, I can't pay off my credit card bill, in this case with Wells Fargo, I cannot pay a Wells Fargo credit card immediately. It won't let me. Like, it just won't let me. Uh, you it because it doesn't show like it doesn't show a balance. So, it takes uh a matter of some number of days before the balance even shows. So, even if you wanted to try to settle up immediately, there's no way to do it because there's a multi-day lag. Now, you can get around that again, depending on how many hoops you want to jump through, you could get around that by saying, "Okay, I'm going to liquidate the amount of Bitcoin I need to settle up to either US dollars or USDC," which is the Coinbase equivalent of US dollars. Um, I'm going to go ahead and sell the amount. Let's say you, you know, you put a, you know, a nice vacation on the Coinbase credit card and you don't want to have any price risk. You can go sell the amount of Bitcoin on Coinbase that you need to settle that up and leave it in US dollars or USDC, which is uh the, you know, US dollar coin, which is Coinbase, uh, put out by Circle, but I think it's owned by Coinbase or largely controlled by Coinbase anyway. So, you can leave it in US dollars or USDC and then use that to settle up your credit card bill. Uh that way you're not taking on any price movement risk. But again now you're go sort of going backwards of like wait you're putting it on a credit card and then you're settling it up later but you're sitting in US dollars. It's like well then the only benefit of doing that in the Coinbase credit card is that you're getting more Bitcoin back. But you could do the same thing with a Wells Fargo card which is buy put something on it, sell the bitcoins, leave it sitting in US dollars or whatever or push it to your Wells Fargo bank account and then settle up that way. So, it just feels backwards the more you're sort of jumping through hoops. Now, part of the reason I've never I've never done a review and you've never even heard me bring up the Gemini Bitcoin credit card, which Gemini is another cryptocurrency exchange. The reason I've never even brought it up is because you can't even settle your balance in Bitcoin at all. So, you can uh incur in incur credit card transactions, but it has to be settled from a US dollar bank account. So effectively, you're getting, you know, 1% 2% 3% Bitcoin rewards, but your balance always has to be settled in US dollars from a bank account, which is just stupid. Like, why would I ever use a Bitcoin credit card that did not even let me settle my balance in Bitcoin? The whole point of using a Bitcoin credit card, in my opinion, or any sort of a payment method in Bitcoin is that I can settle up in Bitcoin. So now it may convert it to US dollars to settle up with Visa or American Express or whatever, but that just makes no sense. It makes no sense to have a Bitcoin credit card that cannot be paid off with your Bitcoin balance, which is what Gemini has. So thankfully, Coinbase does that properly. They do that, right? Coinbase lets you settle up your uh credit card bill with Bitcoin, but again, you're taking on some price movement risk between when you incur the expense and when you actually let it autopay from your Bitcoin balance, or you let it um uh or you pay it manually as soon as the transaction posts, which is a multi-day delay. Um, also on the uh Oh, you know, the other thing I'm concerned about with credit card versus debit cards is lots of people get themselves in trouble with credit cards. They just do. Um, you know, with debit cards, you're always seeing your balance drop every time you use it. But with credit cards, a lot of people just feel, I don't know, they just feel like they're immune to the, you know, the cost of actually having to settle up. So, I'm a little bit reticent with just the concept of a credit card as compared to a debit card, just cuz a lot of a lot more people get themselves in a lot more trouble with uh with uh credit cards as compared to debit cards. Um but anyway, now the upside of course is if you're settling up your bill once, you know, on December 20 or the 27th of every month, that means you are floating US dollars. In general, you're setting up in the future. um you're settling up in the future, which means you're getting the benefit of shorting the dollar for a period of time. So if right now on November 20th, I'm I can spend stuff on let's call it at the end of this month on November 28th, I can make expenditures on November 28th, then I don't have to pay off with my Bitcoin balance till December 27th. So there is some benefits there. You're taking on price risk, but in general, Bitcoin is higher in the future than the present, even though that's not always the case. more often than not that will be the case and so there is some benefit there. Uh so when I when I think about all this in summary you know 2% 2 and a half% you know uh bitcoin back by having a balance of either you know below 10,000 or above 10,000 to get 2% or 2 and a half% back is pretty compelling. You're still paying that 1% spread whether it's a debit card or a credit card. You're still paying that 1% spread. Um, but uh, you know, obviously 2 and a half% let's assume you keep your balance just above $10,000 because if it has to settle up your credit card bill anyway, you have to have some balance in there big enough to settle up your credit card bill. My credit card bill on a given month is, you know, well, between debit and credit, I don't know, call it $5,000, $7,000, $6,000, $4,000, something like that. So, I've got to keep a healthy balance in there to settle up regardless of whether I'm using the debit card or the credit card because there's got to be a balance to satisfy either one. So, excuse me. So, if you have a balance in in there anyway, it might make sense if you have a lot of Bitcoin to keep that balance above $10,000 to get 2 and a half%. Obviously, 2 and a half% is better than 0.5%. It's two whole percentage points better than the debit card. The conversion from Bitcoin to US dollars to pay the balance is the same on the debit or the credit card. They're both both going to pay the spread to Coinbase of up to 1%. Sometimes it's 0.5%. It can be up as high as 1%. Uh so you're paying that regardless on either one. Um I I the my main holdup with the credit card is how much Bitcoin you have to have on their platform to get 3% or 4%. $50,000 for 3% or 150,000 sorry an additional 150,000 for a total of 200,000 for 4% is a ridiculous amount of money to have at risk on a centralized platform of any kind whether it's River or Coinbase. So my my main holdups is how how much Bitcoin balance you have to have on there to get you know to get those levels of um you know of of rewards. Uh, and then my second biggest concern, or maybe my first biggest concern, is I just don't like the concept of having to settle up at a later time with an unknown price of Bitcoin. I would just much prefer when I'm making spending decisions to be instantly settling up, knowing exactly what the price of Bitcoin is, exactly how much I'm paying for whatever I'm paying, and then there's just no surprises. Um, now again, in general, I think you're better off by deferring payment into the future, uh, because Bitcoin is likely on average to be higher in the future than the present. So, in general, I think you'd win you'd win with the credit card. But again, the the thought that I'm just I'm incurring expenses now when I don't know the price of Bitcoin on the 27th of each month, I don't know. It just it makes me hesitant. I would rather be constantly settled up with the universe, constantly at any time without any sort of unknown expenses and unknown bills. Now, my Tesla is financed, so but it was financed when Bitcoin was 85,000 a coin. So, I have a lot higher confidence that that will essentially always be up for the life of the vehicle the entire, you know, 60 months, 5 years of payments on that. I am very confident Bitcoin will be above $85,000 for the vast majority of those payments as opposed to all of my payments throughout the month. I'm just less certain that the price on the 27th of each month is going to be above the price I was incurring expenses throughout the month. Again, on average, it will be. And the whole time I'm getting 2% more Bitcoin back. So, you know, it'd have to be more than 2% worse at the end of the month for me to be, you know, better off with the debit card instead of the credit card. But again, when when you add up all those things, oh, and then the other thing with the credit card is you have to be a Coinbase One member. Now, that's only, you know, $50 a year, not a month, but a year. 50. So, $50 a year, you're going to make that back very quickly on the 2% or 2 and a half% back with the credit card. So, and then you get, you know, lower trading fees, and there's a bunch of perks that come with it. So, in general, I think that's a a small deterrent having a $50 uh annual fee given that the benefits you get from Coinbase with zero trading fees and all this other stuff. Um, at least zero trading fees up to like $500. I think if you pay $30 a month, you get zero trading fees up to $10,000 or something like that. So, um, in general, Coinbase 1, if you're using Coinbase a lot and you have relatively high balances and you're converting in and out of Bitcoin regularly, Coinbase 1 probably makes sense if you're using Coinbase anyway. Uh, River has low fees regardless. And so, that's why I recommend River to most people, especially people just starting out. It works. River works better for most people most of the time. Uh, so anyway, again, I I've got conflicted thoughts about it. on the upside, you know, 2% or two and a half percent Bitcoin back makes a ton of sense. Deferring payments into the future versus the present and shorting the US dollar in the interim between the those two points makes a lot of sense. Um, but again, on the flip side, you have to be a Coinbase One member for $50 per year, not month, but year. And then the uncertainty around what the price of Bitcoin will be on the 27th of each month. You will win more than you lose, but you might lose three, four, five months in a row. and then win on the sixth month with a huge upswing in the price of Bitcoin, you know, that settles up a ski vacation, you know, at 20% discount. It's just, you know, you're going to win in the grand scheme, but it's, you know, might be a little bit, you know, paying that bill every month on the 27th, uh, especially if it's set to autopay, you're just incurring Bitcoin price risk. Now, if you're paying off everything with a bank account rather than Bitcoin anyway, then I guess that doesn't matter. But again, for people like me, I've already converted all my US dollars to Bitcoin anyway. Um, let me think if I can think of anything else. So, you know, the upsides are the higher Bitcoin rewards and the deferred payment. The downside is also the deferred payment because you're incurring price risk plus the $50 uh, you know, annual fee to get the basic uh, Coinbase One. Uh, and also it's just the the credit card doesn't have the cool factor of instant Bitcoin conversions. Um anyway, uh and then the other downside is American Express is the credit card is American Express, the debit card is Visa. I'm told that Visa is accepted in more places than American Express, but I don't know. I I've never, you know, looked into that. Um all right, let me see if uh there's a couple comments on here. Um all right, uh Lindy brought up the Strikes bill pay feature. Uh you can pay off your uh credit card with Bitcoin. Uh, so yes, that works on Strike, although I think Strike is harder to use than River, and there's not really upsides as compared to River, although a lot of people like Strike, and I'm a huge fan of Jack Malers who runs it. Um, but you can also uh pay off your balance with your Coinbase balance. It's just again, it's if it's on auto bill pay, it's at the end of the or it's the 27th of the month or whatever yours is. Um, all right. And then Brett says, "Love the credit card. I hate that it's MX, though." Yeah, I mean, a lot of people just say MX. I don't know. Maybe maybe AMX has caught up to Mastercard and and Visa as far as availability of merchants that accept it. Maybe it has, maybe it hasn't. I don't know. Um but anyway, so I'm going to try it out. The credit card, um it won't have really a material impact on uh my tracking of the sort of evergreen debit card. Whether it's a credit card or debit card, it's pulling from the same Bitcoin balance. Um so I'll probably try it out and let you know my thoughts uh of what I think. again, it'll slightly affect the numbers by, you know, a fraction of a percent if I use it for a month or two. Um, just because it's like, again, it's the difference of 0.5% rewards versus, you know, 0.5% rewards. But I'll probably try it out and let you all know what I think from real world experience. Um, but again, I got mixed mixed thoughts from the deferred payment, the high balances that are required, the fact that it's credit versus debit, and that means I'm not instantly spending Bitcoin. It doesn't feel like spending Bitcoin the way I want to feel like spending Bitcoin, which is, hey, I'm spending Bitcoin at the point of sale. That's what I like. So, the fact that it's a credit instead of debit, I don't know, it feels sort of counter to the Bitcoin ethos. That being said, the Coinbase uh credit card has the Bitcoin Genesis block etched on it. So, it's uh you know, the visuals of it are deeply, you know, Bitcoin. Oh, the other thing I don't like is the credit card is metal, which means it's 17 grams. The average uh plastic card is 5 g. So, there is a 12 g difference between those. And if you're somebody like me who's a minimalist who uses a, you know, um, a wallet case with my iPhone, that's literally got two cards in it. It's my Coinbase debit card and my driver's license. Those are the only two things. I have my phone and two cards in a wallet case. And it's like the th the thinnest, slimmest, lightest wallet case you can possibly get. And I have an iPhone 17 Air, which is the lightest iPhone you can even buy. So adding an additional 12 grams to that setup, I'm not going to do that. So even if I use the credit card for, you know, touch payments, Apple Pay, you know, basically if I use it for everything for in-person transactions at like restaurants where you have to physically give them a card, it will be the debit card because I absolutely refuse to carry around a 17 g metal card connected to my phone all the time. That's just ridiculous. They should have offered an option to have a plastic card or a metal card. You know, I get it. The metal is super cool. It looks cool. It's got the Bitcoin Genesis block etched in it. I get it. It's super cool. There's no way I'm carrying an extra 12 g around with me everywhere I go. In my pocket, on my phone, when I'm holding my phone, I've got an extra 12 g all the time. That's ridiculous. For a minimalist like me, there's no way I'm carrying a metal card. Uh that being said, a relatively small percentage of my spending is in person. is basically restaurants. I think restaurants is about the only place that I'm physically handing somebody a card. Uh for everything else, I'm doing touchless payments, which I can use the credit card without having it with me. Uh and online, it's obviously, you know, you So, I I think I think I'll still do restaurants that require you to hand them a card. That will be the debit card because the metal card will not be on my person because I refuse to carry the extra 12 grams. Um but uh but I'm going to try using the credit card for everything other than in person uh where I have to hand them a card and I'll see how it works and I'll keep you in the loop and you know let you know what I think of it. So um all right that's that's the update. Kind of a long one. Um I'm hoping Dan Chase who did the big review of uh the five different um Bitcoin exchanges. I'm hoping he'll ultimately do a uh sideby-side comparison of the Coinbase credit card, the Coinbase debit card, and the Gemini credit card as an, you know, comparison. Um, and I think at some point Strike, S R I ke Strike. I think they're going to come out with their own credit card at some point as well. I know Lindy's a big fan, uh, there. Um, and and a lot of people are big fans of Strike. If River did not exist, I would be recommending Strike. So, I'm a big fan of Strike. I just think River's better. So, um, and Stripe doesn't have a feature where you can send people Bitcoin via a Strike link. So, River's got the River Links where I can send people Bitcoin. It's super easy. Stripe does not have Strike links. And so, there's no easy way on Strike to send Bitcoin to people unless you have a Bitcoin receive address, and that's more complicated than most people want to figure out. U, so anyway, we'll see how it goes. I'm super excited that there's innovation in the Bitcoin payment space, even if it's a credit versus a debit card. And, uh, I'll let you know how it goes. It's going to be fun. So, thanks for watching.