Venmo, the popular person-to-person (P2P) payment platform, today announced a credit card that offers a unique cash-back rewards structure. Unlike other rewards cards with rotating or static bonus categories (such as 3% cash back for travel, 2% back for gas, or 1% back for miscellaneous purchases), the Venmo Credit Card’s “personalized rewards” ensures you’re earning the top rate for the things you spend the most on—even as that changes month to month.
Select Venmo app users can now apply for the just-released Venmo Credit Card, and availability will expand to all U.S. users in the coming months.
- The new Venmo Credit Card offers a novel rewards structure that gives cardholders the most cash back based on cardholders’ top spending categories each month
- The top spending category earns 3% cash back, and the second top spending category earns 2% cash back, on up to $10,000 per year. Everything after that (and everything else) earns 1% cash back.
- The card charges no annual fee.
- Making a person-to-person Venmo payment with a credit card incurs a 3% transaction fee, even when using the Venmo credit card.
This take on personalized rewards is new in that cardholders are always guaranteed to earn the highest rate for their top spending category. Other credit cards either have fixed bonus categories or rotate the highest-earning categories each quarter, though there are a couple of cards that let users select their top categories. In contrast, the Venmo card automatically adjusts the top-earning categories every month based on each individual’s changing spending habits.
Cardholders get 3% cash back for their top spending category for the month, 2% back for the second highest, and 1% back for all other purchases. So, if you spend the most on entertainment and the second most on gas this month, you’ll earn 3% and 2% respectively in those categories. But next month, if booking an expensive trip and high supermarket bills elevate travel and grocery into your top spending slots, the 3% and 2% rates will shift to reflect that. There are eight categories: grocery; bills and utilities; health and beauty; gas; entertainment, dining and nightlife; transportation; and travel.
The Venmo Credit Card has slightly different rewards categories than what other cards typically reward. For example, health and beauty includes drug stores and pharmacy purchases, as well as health club memberships, which may be treated separately by other issuers. The card’s rewards terms and conditions explain the complete breakdown of categories.
There’s a limit to the offer, however: The 3% and 2% cash-back earnings only apply to the first $10,000 you charge in your highest-spending categories each year. The clock resets on your anniversary date—the date you open the account—so if you open the card in October 2020 and spend $10,000 in your highest-earning categories by August 2021, you’d only earn 1% cash back on all purchases until October 2021.
The Venmo Credit Card comes in five colors, and features an individual QR code that can be scanned by a mobile phone camera or in the Venmo app. Similar to a Venmo app QR code, this allows you to initiate a payment from the card, or give friends an easy way to send or request a Venmo payment. Now, you can use the Venmo Card to cover dinner, and you can then apply your friends’ Venmo’ed contributions directly toward your credit card balance.
Paying someone via Venmo with a credit card incurs a 3% transaction fee, and there is no exception when using the Venmo Credit Card, which is counterintuitive and can quickly eat away at your earned rewards.
Once you are approved for the Venmo Credit Card, which is issued by Synchrony Bank and on the Visa network, you manage everything right from the Venmo app. In fact, any cash back earned is automatically added to your Venmo account at the end of each statement period. You can use your earnings toward your credit card bill, to send money to Venmo friends, or to make purchases via the app.
Also worth noting, the Venmo Credit Card does not have any annual fees or foreign transaction fees, and the variable APR ranges from 15.24% to 24.24% based on creditworthiness. There is no welcome bonus as of now, however, which might be a missed opportunity to attract rewards shoppers looking for some extra incentive. The Venmo card also has contactless payment (tap to pay) technology.