Ether.fi has surprised me with their relatively recent launch of on-chain banking services. In particular, they have a credit card that is simply labeled as "Cash". What they have done is different from most crypto cards on the market. As a new member using the credit card, I will share what I have learned about the service.
Something that sets Ether.fi apart from other crypto services is that your account is fully on-chain. The company does not custody your crypto. There is no central server that holds your deposits. When you sign up as a member of The Club, you are creating a new wallet that you access with a passkey. In this way, you aren't bothered with seed phrases or secret keys. The wallet is Ethereum-based, but actually runs on the Scroll blockchain. It can get confusing as your deposit options are generally via Ethereum, BASE, Hyperliquid, and Scroll. Most of my deposits have been with USDC on BASE, which get converted to USDC on Scroll.
Your deposits make up your available credit with different loan to value ratios (LTV). USDC and USDT max out at 90% LTV. There are other wrapped options for ETH and BTC deposits that have lower LTV ratios.
The credit card offers cashback rewards of at least 2%, which is paid in SCR. You can easily convert the SCR to other options within the app. At the moment, there is a promotion of 3% cash back until the end of December.
The credit card has two modes of operation. In the Direct Pay mode, it functions like a debit card, spending your stablecoin deposits down. In Borrow mode, all your deposits act as collateral to determine your total credit limit. You can spend without touching your cryptos. Charges start accruing interest at an annual 4% immediately. Unlike other credit cards, there is no minimum payment or due date. So long as you are well within the margin limit, you can carry a balance. Of course, if your collateral drops in value or your balance gets too high, you might get liquidated.
Paying off your loan isn't a separate process from depositing. You can only pay your loan using your stablecoin balance. What this means in practice is that you'd have to deposit and then pay that amount to the loan, if you want to maintain a set balance. Or, you could spend down your stablecoin balance to repay the loan. You can't pay the loan directly from outside sources.
What I have described is very different to how most crypto debit cards work. Most spend off a balance on the exchange. There is no self-custody option. Furthermore, the Cash card presents to merchants as a full credit card, not a debit card or prepaid card like so many other crypto cards. The closest competitor is the Spritz.finance , which works like a debit card, but presents to merchants as a credit card. What this means for the user is that the card can be used for car rentals, hotel incidentals, or other circumstances that do not accept debit cards.
The closest alternative you might find are actual credit cards like those being offered by Coinbase, Crypto.com, and Gemini. The main difference is that they offer you a line of credit based on your credit report, whereas the Cash card's credit line is entirely dependent on how much you deposit, with no credit check needed. It's your own crypto you are risking, if you decide to do something boneheaded with your spending. Worst case, you get liquidated and have to rebuild your collateral. No stigma. No damage to your credit.
I have been testing the Ether.fi Cash card to make payments. At the moment, I don't have a great deal of collateral on the card. Therefore, I've only been able to make small payments. Mostly, I am checking to see if any of my regular payments would fail to earn cashback rewards. This is a problem with my Crypto.com debit card, which doesn't earn rewards for paying my water bill, my solar panel financing, or taxes. Although it isn't necessary for all transactions to earn rewards, it's still nice to have.
The biggest problem with using the Ether Fi card is going to be on-ramping. Banks don't much care for you having a bunch of crypto purchases, even though they have relaxed a bit recently. There have been reports of people getting their bank accounts shut down because they were too active with crypto. My Crypto.com debit card is used principally for small daily spending primarily because of the bottleneck of transferring money from my bank to the crypto exchange. The Ether Fi Cash card has much the same chokepoint.
Plus, most banks are using Plaid to connect for ACH transfers. You can activate a virtual bank account number for your Ether Fi account to receive ACH or Fedwire deposits. But, it's getting harder to add transfer accounts unless they're listed in Plaid. While it is simple enough to transfer from Ether Fi to other banks, it's not so simple to go the other way. I have been relying mostly on depositing USDC to fund the account. I should warn you that I don't get the full service from Ether Fi as there are many restrictions for Texas residents.
The Ether Fi Cash card is everything we need. Savings, credit, and spending. Once the traditional financial system stops being a bottleneck, it will be the greatest banking experience. I think one could make the experience better by having paychecks or income deposited straight into USDC. No doubt we are getting closer to managing our own wealth.
