Navigating the relationship between Venmo and credit card rewards can be tricky, but I’ll break it down in a way that makes sense.
The Basic Truth About Venmo and Credit Card Rewards
When you use Venmo with your credit card, there’s good news and bad news. The transaction will usually count as a purchase on your credit card statement, but here’s the catch – it’s typically processed as a cash advance rather than a regular purchase. This distinction is crucial for your rewards-earning potential.
Why Most Credit Card Companies Don’t Award Points for Venmo
Credit card issuers are pretty savvy about peer-to-peer payments. They’ve caught on to the fact that people might try to game the system by sending money back and forth just to earn rewards. As a result, most credit card companies specifically exclude Venmo transactions from earning points or cash back.
The Hidden Costs You Should Know About
Here’s something that might surprise you – using your credit card with Venmo comes with a 3% fee. That’s on top of potentially being treated as a cash advance, which usually means:
– Higher interest rates (often starting immediately)
– No grace period
– Additional cash advance fees
Smart Alternatives to Consider
Instead of using your credit card on Venmo, consider these reward-friendly options:
– Link your debit card (no fees)
– Connect your bank account directly
– Use your credit card for direct purchases instead of Venmo transfers
The Rare Exceptions
There are a few specific cases where Venmo transactions might count toward credit card spending. For example, if you’re using the Venmo credit card itself or making purchases through Venmo’s marketplace, these transactions typically count as regular purchases and earn rewards.
Looking Ahead to 2025
As financial technology evolves, we’re seeing more integration between payment apps and credit card rewards programs. Some credit card companies are starting to create specific categories for peer-to-peer payments, though they’re still the exception rather than the rule.
Remember, while it might be tempting to use your credit card for Venmo transactions to meet spending requirements or earn rewards, the fees and potential cash advance charges usually outweigh any benefits you might receive. Your best bet is to stick with direct bank transfers or debit cards for peer-to-peer payments, and save your credit card for regular purchases where you can actually earn those valuable rewards.
