Venmo is a payment platform between individuals (P2P) that allows, unlike Zelle (one of its main competitors), the use of credit cards. Like other P2P platforms, Venmo requires you to add a funding source for payments sent to family, friends, or merchants. Next, we will explain how to use Venmo with your credit card.
You can directly connect your bank account to Venmo or you can add your cards. This payment platform, owned by PayPal, does not charge commissions when you pay someone using your bank account or your debit card, but fees do apply to credit card transactions.
The use of the Venmo credit card is recent and at the beginning only some users of the application were entitled to obtain it.
How to use Venmo with your credit card?
The first thing you should know is that Venmo’s user agreement states that your credit card issuer may treat a transaction as a cash advance when you use it to pay someone through this platform. That same user agreement also makes it a violation of Venmo’s terms to use the service to give yourself or help someone else a cash advance.
Venmo charges a 3% fee when you use your credit card to send money to family and friends, but there is no fee if you use your credit card to make an online purchase at a business that accepts Venmo.
Online merchants that accept Venmo typically have a Venmo-branded payment button on their portal or include the option to pay with Venmo after you first select PayPal as your payment method.
Credit card cash advances typically carry an upfront fee and a higher interest rate, plus interest will begin accruing immediately. So before you send a payment, it’s a good idea to check with your credit card issuer to determine whether or not the transaction will be considered a cash advance.
Keep in mind that the credit card you add to Venmo must have a reasonable credit limit that allows you to make the transactions you want.
Which credit card should you use on Venmo?
Using a credit card on Venmo to pay family and friends is not really a good option as the transaction fee is 3%. But nevertheless, using your credit card on Venmo can help you get the minimum spend amount that can earn you a sign-up bonus on a new credit card, this could offset the 3% commission. Still, chances are there are cheaper ways to meet the minimum spend.
If you buy at a merchant that accepts Venmo, it is advisable to add the credit card that you have with the best rewards to your account, so you can take full advantage of them.
How to use Venmo with your credit card: the rewards policies
You must know and understand the rewards policy of each of your cards if you are thinking of using one with this application. For example, keep in mind that tiered rewards are based on merchant tiers. For example, your rewards program might dictate that in order to earn higher rewards on restaurant purchases, the transaction must come with a Merchant Category Code (MCC) linked to the restaurants or eateries. The business category of Venmo purchases may not include restaurant-related business category codes, which means you won’t be able to earn the maximum number of rewards. In that case, you may want to use your physical credit card, rather than using it through Venmo.
Venmo limits the number of credit and debit cards you can have in your account in a rolling six-month period. You cannot have more than four active or deleted cards on your account in the last six months.
If you remove the fourth card from your account, for example, you may not be able to replace it with another for a few months. Keep this in mind if you plan to rotate your cards periodically to get the most out of your rewards.
How safe is it to use a credit card with Venmo?
Since credit cards have higher fraud protection than debit cards or bank accounts, using a credit card to pay with Venmo may be the safest option. On the other hand, if you are a victim of credit card fraud you will have zero liability, which means you will not have to answer for unauthorized purchases made with your card. Adding a PIN to your Venmo account is also very helpful in making your account more secure.
Although Venmo encrypts all the information in your account, on its website they warn that this transfer mechanism should only be used with known people. It is not advisable to use it with people or companies with which you are not familiar.