The benefit of using credit cards to pay for expenses is that you earn rewards for purchases you previously planned to make. And often these rewards translate into cash back in your pocket.
It’s easy to think of this cash back as free money. After all, you accumulated this money simply by paying for your expenses with a piece of plastic instead of cash or a debit card. As such, you may think your reward dollars are yours to spend however you want, whether that’s to use them for taking a vacation, upgrading your cell phone, or shopping for new clothes.
But if you can’t wait to get in on the cryptocurrency action, you may be inclined to use your credit card rewards to invest in digital coins. Here’s how to tell if it’s a good idea.
Should you buy cryptocurrency with credit card rewards?
If you are in a strong financial position, you should feel free to spend this money as you wish. But if you already have credit card debt or don’t have a fully loaded emergency fund, you need to use your credit card rewards to lower your balance or boost your savings account.
Assuming both are in good shape, there is nothing wrong with using your credit card rewards to start investing in cryptocurrency. There are many people who have had financial success buying digital coins, and this could be a real money making opportunity for you.
That said, cryptocurrency is a pretty risky investment. The value of digital coins can vary wildly from day to day, and if you want to invest money in cryptocurrency, you have to accept the fact that you risk losing everything. If that’s right for you, feel free to research the different types of cryptocurrency (there are several thousand of them) and see which one works best for you.
The advantage of investing your credit card rewards in cryptocurrency is that if you to do losing money, it may not sting as badly as if you were to lose some of your hard-earned paycheck. After all, credit card rewards can be thought of as free money, so you might find it easier to part with them.
Another investment option for your credit card rewards
Of course, if you want to invest your credit card rewards, there is another option to consider: stocks. Stocks have been around longer than cryptocurrency, and while they are certainly not without risk, they are less volatile. If you are new to investing, you may want to start by buying stocks and eventually make your way into cryptocurrency. Or, you can find a brokerage account that allows you to invest in both stocks and cryptocurrencies.
Credit card rewards are a nice perk to enjoy, and investing yours in cryptocurrency could put more money in your pocket. Just make sure you’re comfortable with the risks associated with buying digital currencies, and do your research before you get started.