If you’ve thought about signing up for the Venmo Credit Card, now may be the time to seriously consider it.
The popular digital wallet has upped the ante by doubling the cash back offer on its new credit card for a temporary period. That means new users can get up to 6% cash back on some purchases each month!
But is that temporary gain worth it?
In this article, I’ll take a look at the offer, get money expert Clark Howard’s take, sift through the fine print and explore some of the perks and drawbacks to holding this credit card for the long term.
Venmo Offers To Double Credit Card Rewards Through 2021
Venmo will double cash back rewards for new cardholders through the end of 2021.
That means people who act quickly could get six months of double cash back earnings. For your top spending category, that’s 6% cash back each month.
Here’s a look at the advertisement that Venmo has emailed to many of its digital wallet users.
In case you’re not familiar with how the cash back rewards for the Venmo Credit Card work, here’s a quick rundown.
Under normal spending conditions, you earn 3% cash back on your top spending category each month. That category, which can range from things like groceries or travel, can change from month to month based on your spending habits.
You get 2% cash back on your second-highest spending category. Again, this category can rotate each month based on your spending patterns.
While those returns are nice, all other purchases earn a paltry 1% cash back for that month.
The bonus offer from Venmo doubles those 3/2/1 tiers to 6/4/2 percent returns for the duration of 2021.
Venmo calculates your spending in its predetermined categories each month and then automatically credits your cash back at the end of each billing cycle.
What Clark Howard Says About the Venmo Credit Card Offer
Money expert Clark Howard recently addressed the Venmo Credit Card offer on an episode of his podcast.
Clark typically prefers to take the long view on credit cards. He says that the long-term usefulness of a Venmo credit card likely depends on how much you spend in certain spending categories.
“It depends on your charge volume,” Clark says. “Read the terms and conditions on the Venmo card. There are caps on how much dollar volume of charging you can earn the high rewards on. After that the reward drops to 1%, which is not very rewarding.”
Clark didn’t say it in the clip but we know this to be true because he’s told us a thousand times: He doesn’t want you to consider this card if you’re going to carry a balance. These rewards are useful only if you’re paying your bill in full each month, because the interest you’d have to pay on a balance would likely cancel out any cash back earnings. (If you must carry a balance, Clark recommends that you get a low-interest rate credit card from your local credit union.)
I followed Clark’s advice and dug into the terms and conditions on both this new offer and the long-term cash back program with the Venmo Credit Card.
What the Fine Print Says on This Venmo Credit Card Cash Back Offer
There’s nothing worse than reading through the fine print of a credit card offer, so I did the grunt work for you on this one.
Here are the key takeaways that you need to know before moving signing up:
- This offer, which you must apply for by July 31, 2021, is valid only for qualified new Venmo credit card customers.
- There is no limit to the amount of double cash back you can earn on purchases through December 31, 2021.
- Cash back rewards are credited to the balance of the Venmo account connected to the credit card.
- For the first year of card membership, there’s no cap on the bonus rewards in your two most-used spending categories each month.
- However, there is a $10,000 spending cap on 3% and 2% rewards beginning in Year 2. That means you can earn no more than $300 in bonus category cash back before all purchases revert back to a 1% cash back return for the remainder of that year.
Defining Spending Categories
For the purposes of calculating your “Top Spending” (3% cash back) and “Second Spending” (2% cash back) categories each month, Venmo uses Visa’s merchant category codes (MCCs) to sort your eligible purchases into the following categories.
The credit card’s fine print defines these nine spending categories as follows:
- Dining & Nightlife: Restaurants that sell prepared food and drinks for consumption on the merchant’s premises, carry out, drive-through or delivery; plus, establishments that sell alcoholic beverages such as wine, beer, mixed drinks, and other liquors and beverages for consumption on the premises.
- Travel: Airlines, hotels, motels and resorts. This category may include bed and breakfast establishments, resorts, cabins, cottages, hostels, timeshares, short-term property rentals less than 30 days in length, and local inns. The specific MCCs defined as Airlines and Hotels will be referenced as Travel in your Venmo app.
- Bills & Utilities: Telecommunications, internet service providers, ongoing delivery of television/radio/streaming content on a subscription or fee basis, subscription products or services (such as magazine/newspaper subscriptions), electric or gas power, water supply, and refuse disposal or other utility services.
- Health & Beauty: Drug stores and pharmacies that sell prescription drugs, over-the-counter medicines, vitamins, and may also sell related items such as cosmetics and toiletries and cosmetic stores that sell beauty products. This category also includes sports and recreation facilities that require membership such as health clubs, tennis, golf and swimming clubs.
- Grocery: Stores that sell food merchandise for home consumption, convenience, bakery and delicatessen stores, and wholesale clubs that sell a full range of goods (often in bulk) and services in warehouse-style stores. The specific MCCs defined as Grocery and Wholesale will be referenced as Grocery in your Venmo app.
- Gas: Service stations that sell engine fuel.
- Transportation: Ground transportation such as rental cars, taxicabs, ride share merchants, limousines, bus lines and passenger railways. This category also includes tolls, parking meters and parking garage fees. The specific MCCs defined as Ground Transportation will be referenced as Transportation in your Venmo app.
- Entertainment: Movie theaters, theatrical and concert promoters, video rental and game stores, books and newsstands, amusement parks, music stores, and toy and hobby stores.
- Other: Any other Eligible Purchases that do not fall into the categories described above are not eligible to earn 3% or 2% Cash Rewards, and when the Card Account is used to send money to other Venmo users through your Venmo account.
How Much Money Could You Earn With This Promo Offer?
By now you’re probably wondering about the upside of signing up for this credit card’s promotional offer.
You’ve read already about the $10,000 spending cap on bonus cash back categories found in the fine print for this card, but it’s important to note that doesn’t take effect until your second year of cardmembership.
That means you’re not restricted on how much cash back you can earn with this promotional offer through the end of the year.
So the actual value of this welcome offer depends on the volume of your spending over the coming months and how concentrated that spending is in one or two categories each month.
In other words, the more 6% and 4% cash back purchases you can make between now and December, the more this offer is going to be worth to you.
Here are some sample monthly spending totals to give you a better understanding of how much cash back you could earn each month with this promotion.
|Monthly 6% Spend
|Monthly 4% Spend
|Monthly 2% Spend
|Total Monthly Cash Back Earned
So … Should You Sign Up?
Clark has long said that picking a credit card is a long-term decision.
As such, jumping on a welcome offer for temporary gain can be a risky proposition if you don’t first do your homework on the merits of the card for the long haul.
So for many people, the answer on whether you should sign up for the Venmo Credit Card should come after an analysis of how its 3/2/1 tier cash back rewards system compares to an everyday 2% cash back card based on your spending habits.
Clark typically recommends opting for an unlimited 2% cash back credit card before applying for a tiered rewards credit card. That way you know that every purchase you make is going to earn you a solid cash back return.
For those of you who already have an everyday spender and are looking for a way to cash in on the Venmo Credit Card offer, there is some potential for short-term gain.
If you are spending $1,000 per month or more in a single spending category for the next six months, you would gain a minimum of $360 in cash back on your 6% category spending alone. That’s a nice little addition to your wallet!
More Clark.com Content You May Like: