I started using the Coinbase Card in August 2021 and it quickly became my go-to card for every expense. Here's a brief summary of what the card is, how I use it day-to-day, and why the small issues I've encountered so far are worth the trouble. 

What is the Coinbase Card? 

The Coinbase Card is a Visa debit card that allows users to spend cryptocurrencies held in their Coinbase account. Users can choose to earn rewards in several different cryptocurrencies at different rates. There is no application fee or credit check. Only U.S. residents outside the state of Hawaii are eligible however. Coinbase maintains a fairly extensive Frequently Asked Questions (FAQ) page with further detail. 

Right now users can earn rewards as eight different cryptocurrencies at two different rates:

• Four percent back in either Stellar Lumens (XLM), The Graph, Amp, or Rally
• One percent back in either Bitcoin (BTC), Ethereum (ETH), Dogecoin, or Dai

The Coinbase Card was available via waitlist only when I opened my Coinbase account last summer. The FAQ's webpage implies the card is available to all Coinbase account holders now, so hopefully anyone interested after reading this post can apply for one immediately.  

My Coinbase Card setup

I pay Coinbase Card transactions in USDC and receive rewards in Stellar Lumens (XLM) to pay zero transaction fees and receive four percent value back. I can only speak to my experience using the card in this way — users who choose a different setup may have better or worse viewpoints. 

The Good

My excitement over this card boils down to three reasons — ease-of-use, wide-spread use, and rewards. 

I manage my Coinbase Card from my desktop web browser. I can easily add funds, copy the card number for online purchases, and even lock the card in case I lose it or suspect fraud. Users can instantly change what cryptocurrency they want to spend per transaction and earn back as rewards. 

The best thing about the Coinbase Card for me is that its a debit card that offers transaction rewards — a feature every bank I've used only offers to credit cards. I can therefore use it in every transaction — including large, recurring payments — without worrying about steep vendor fees.  

For example, I pay about $1400 USD per month in apartment rent. Before the Coinbase Card I would pay rent via my traditional debit card or bank transfer because my landlord imposes high fees on credit card rent payments (a normal situation in Texas). The Coinbase Card allows me to charge rent without this fee, while still collecting about $56 worth of XLM rewards every month. 

I now pay all my monthly obligations with the Coinbase debit card. Several examples with their four percent rewards are given below:

• $1400/month in rent, earning $56/month in XLM rewards
• $350/month in auto and property insurance, utilities bill, etc, earning $14/month in XLM rewards
• $250/month in groceries, earning $10/month in XLM rewards
• $100/month in gym and media subscriptions, earning $4/month in XLM rewards

Add all my day-to-day expenses — restaurant dining, drinks, gas, etc — and I've earned near $850 over six months at XLM's current price. 

The bad

I've experienced two main issues so far. 

First off, adding funds to your Coinbase Card can be surprisingly slow. I transfer money directly from my traditional bank checking account into the Coinbase Card account, but only funds less than about $1000 are immediately available to spend. The rest of my deposit is locked for up to five days. My understanding is that Coinbase does this automatically to protect against fraud, but it gets frustrating at times when I want to execute a large transaction. 

Even more confusing — the immediately available funds are not constant. Sometimes its $500, other times its $1000. The best way to handle this is to set up either a recurring deposit so that you will never need to conduct single, large-value deposits that might trigger an available deposit cap; or, plan any large transactions a week in advance. 

The second issue involves some unique spending restrictions that Coinbase enacts, despite the card's Visa status. Users can't pay transactions from several categories like firearms, casino-related purchases, or money services. These restrictions may or may not be a huge deal depending on your spending habits. The only restriction that affects me is the restriction on money services — my social circle uses apps like Venmo a lot, and the Coinbase Card unfortunately declines all transactions related to the app. 

The ugly

Finally, the most  potentially fatal flaw for the Coinbase Card is taxes. The U.S. defines all cryptocurrency transactions as taxable events, so all of my Coinbase Card transactions are taxable. At the very least I'll need to get up-to-speed on what my tax obligations are for this new asset, and at the worst I just dug myself a financial hole. Luckily, Coinbase maintains a detailed webpage on cryptocurrency taxes. You can bet I'll be a frequent visitor in the coming months. 

I don't know how easy or painful reporting my Coinbase Card transactions will be. I don't envision they'll be bad enough to negate the good side I described above, but I'll update the community in a few months after I file on how the experience was. 

Final thoughts

My Coinbase Card experience has so far been fantastic. Its very easy to set up and use, and the four percent XLM rewards have generated fantastic returns simply from using the card. I highly recommend the card for anyone with a Coinbase account who wants to generate some measure of passive income. Just be aware that you'll have some work cut out for you come tax season.