If you rely on Venmo, an app that lets you send money to someone or pay a merchant that accepts this cashless option, you may have considered applying for a Venmo Credit Card. The card became widely available in February to eligible Venmo users through the Venmo app.
“Venmo’s decision to launch a credit card follows closely in the footsteps of its owner PayPal, which has its own line of cards,” says Ann Martin, director of operations at CreditDonkey, a personal finance site. “While fintech companies may have emerged as a way to challenge traditional financial institutions, they are taking cues from those same institutions as they expand their services.”
If you’re wondering what a Venmo card is and whether it should take up real estate in your wallet, here’s what you need to know.
[Read: Best Rewards Credit Cards.]
How Does the Venmo Credit Card Work?
The Visa-branded Venmo Credit Card is a secure way to pay on contactless terminals. Eligible Venmo users can apply for the card using the latest version of the Venmo app.
When you are approved for the card, and before it even arrives, you will receive a virtual card number you can use immediately. The card number will live in both the Venmo app and the plastic card you will get for spending online or in-store.
The quick response code on the front of the card is the same as the one in your Venmo app. Scanning the QR code on the card allows you to activate it and friends to pay you or get paid on the spot.
Card purchases earn cash back to your Venmo account at the end of each statement period. You can pocket up to 3% cash back in your top eligible spending category, up to 2% back in your second-largest eligible category and 1% back on other eligible purchases. Sending money to other Venmo users through your Venmo account also delivers 1% cash back.
Eligible 3% and 2% categories are dining and nightlife, travel, bills and utilities, health and beauty, grocery, gas, transportation, and entertainment. You won’t have an earnings cap on the 3% and 2% categories in your first year, but a $10,000 limit will apply thereafter.
Additional Venmo Credit Card details:
— Sign-up bonus: Apply through Sept. 30 and then spend $1,000 on your new card in the first six months to receive $100 cash back.
— Annual fee: $0.
— Annual percentage rate: 15.24%, 21.24% or 24.24% when you open the account, based on your creditworthiness and other factors, and then a variable APR applies.
— Foreign transaction fee: None.
— Cash advance fee: $10 or 5% of the amount, whichever is greater.
— Late payment fee: $29 if you’ve paid the minimum due on time in the last six billing cycles or $40 if you have failed to achieve this.
— Returned payment fee: $29.
What Are the Benefits of the Venmo Credit Card?
The Venmo Credit Card offers a few benefits that set it apart from other cards.
Easily split shared transactions: If you put an expense on your Venmo Credit Card, you can choose how you would like to split the cost. Your group then scans your Venmo QR code to access your profile and provide payment.
Cash back to cryptocurrency: You may elect to purchase cryptocurrency in the Venmo app using cash back earned through your Venmo Credit Card, but your cash back balance needs to be at least $1. You will also be able to manage your cryptocurrency preferences in the app.
“The primary benefits of this Venmo option center around the ease and convenience (of) being able to buy, sell or hold some of the most popular cryptocurrencies,” says Sean Stein Smith, assistant professor in the business and economics department at the Bronx’s Lehman College. Those currencies include Bitcoin, Ethereum, Litecoin and Bitcoin Cash.
“Having the backing and support of an organization like Venmo means that customers have more support services to address any potential issues that arise,” adds the founder of the Institute for Blockchain & Cryptoasset Research.
All-in-one app: You can manage your new Venmo credit card from a familiar place: the Venmo app. That means you won’t need to create a separate online account with its own password and settings.
[Read: Best Cash Back Credit Cards.]
What Are the Pros and Cons of the Venmo Credit Card?
Pros:
— Pay no annual fee.
— Split costs with friends easily using the card’s QR code and the Venmo app.
— Manage your credit card through the Venmo app.
— Earn the most cash back for the categories you spend the most on each month.
— Get 3% and 2% cash back rewards for spending categories such as dining, travel and groceries.
— Convert cash back into cryptocurrency using the Venmo app.
Cons:
— The $100 sign-up bonus offer is low compared with other cards.
— The card is tied to the Venmo app and forces you to become a user if you’re not already one.
— The card limits how much cash back you can earn after the first year.
— The card only lets you purchase four types of cryptocurrency with your cash back.
— The card does not allow authorized users.
What Are Some Alternatives to the Venmo Credit Card?
The Venmo Credit Card has many competitors if you do not want to be tied to the Venmo app and still avoid an annual fee:
Citi Double Cash Card is a straightforward rewards credit card that earns 1% when you make a purchase and another 1% when you pay for it.
Chase Freedom Unlimited earns a $200 sign-up bonus — double the amount of the Venmo Credit Card — after you charge $500 in the first three months. Grocery spending also gets a boost in your first year with 5% cash back on up to $12,000.
Chase Freedom Flex gets 5% cash back on travel purchases through the Chase Ultimate Rewards portal and 5% back on up to $1,500 in bonus categories you activate each quarter. Dining and drugstore purchases earn 3%, while all other purchases earn 1%. You can also earn a $200 introductory bonus after spending at least $500 on the card in the first three months.
[Read: Best Credit Cards for Good Credit.]
Should You Get a Venmo Card?
Are you still asking yourself, “Should I get a Venmo Credit Card?” Consider what you’re looking for in a rewards credit card.
This card is ideal if you prefer a rewards program that adjusts to your spending habits and not the other way around.
Also, the cryptocurrency feature might sound gimmicky, but this feature could be helpful if you’re trying to decide whether this investment option is for you. This card would best serve established Venmo customers who want to get some exposure to cryptocurrency while maintaining a service that’s convenient and familiar, Smith says.
The card targets consumers with good to excellent credit.
With no annual fee and a distinctive cash back program, this card is frictionless if you’re a regular Venmo user and new to rewards. Experienced rewards card users will likely find more lucrative options elsewhere.
More from U.S. News
Everything You Need to Know About Affirm
How Long Does It Take to Get a Credit Card?
How to Use a Credit Card the Right Way
Is the Venmo Credit Card Worthwhile? originally appeared on usnews.com
