Can you use a credit card on Venmo?
Seventy years ago Americans were baffled by the new credit cards presented to the public. Today there are all kinds of ways to pay for goods and services, including Venmo. But can the funds used to pay through Venmo come from somewhere other than your bank, like a credit card?
To answer that here, we’ll cover:
- What is Venmo
- How the payment app works
- Your options for using a credit card with Venmo
What is Venmo?
Venmo is a payment app that lets you send money wherever you need it. Want to pay the person who mows your lawn but doesn’t have cash on hand? Venmo allows you to send the funds directly to that person’s bank. While Venmo is frequently used to pay for goods and services, you can also use it to send money to friends and family without having to take out money or remove (and dust off) the checkbook. .
Venmo was created by college roommates who wanted to make their lives easier by paying for each other via their smartphones. The startup was bought by PayPal in 2013 and took off from there. Today, over 60 million people in the United States use the app to make payments.
As a business, Venmo has grown. Not only can it be used as a payment method on any website that accepts PayPal, there is also a Venmo physical debit card that allows you to get money from your Venmo account at an ATM or to pay for your purchases in person. There is also a Visa-branded Venmo credit card, although it is currently only available to certain customers.
Learn more: Read our Venmo review
Can you use a credit card on Venmo?
Absoutely. To use Venmo, download the app on your iPhone or Android device and create an account. During setup, you will be prompted to enter a funding source. This funding source is where the money will be taken whenever you pay someone using the Venmo app. You can choose to link a bank account, debit card, gift card, prepaid credit card, or traditional credit card.
Do I have to use a credit card on Venmo?
There is no right or wrong answer as to whether you should use a credit card on Venmo. Your decision depends on several factors, including why you choose to fund Venmo payments through a credit card rather than your bank account. Here are some of the pros and cons of adding a credit card to Venmo.
Benefits of using a credit card on Venmo
- When the credit card you link with Venmo is a rewards card, there is a chance to accumulate more rewards, especially if you use Venmo to pay for your daily purchases.
- Using a credit card means you don’t have to worry about the ebb and flow of your checking account. So you can use Venmo to pay for things even when your checking account is low.
- Paying off your credit card each month helps build your credit score.
Cons of using a credit card on Venmo
- It is possible to exceed your credit limit and incur charges from your credit card company.
- Linking a credit card to Venmo makes it easier to get into debt.
- You will be charged a 3% fee for sending money to friends and family using a credit card as a source of Venmo funding.
- Your credit card company may think of the money you send to friends and family as a cash advance. This usually means a fee of 3% to 5%, and interest starts accruing immediately. It could also mean paying a higher interest rate on the funds sent.
Conditions for opening a Venmo account
You must meet these conditions to open a Venmo account:
- Be physically located in the United States
- Have an American cell phone that can send and receive text messages.
- The number you are using cannot be registered with another Venmo account.
- You must be at least 18 years old (or the age of majority in your state).
How to get the most out of adding a credit card to Venmo
The best reason to add a credit card as a source of Venmo funding is to make the most of the reward points. The following steps can help you do that:
- Only use your credit card if you are making a free purchase. Venmo allows you to configure separate preferred payment methods. For example, if you buy a gift on Etsy from an authorized merchant, use your card and earn reward points. If you’re sending money to a friend, change your payment method to your bank or debit card.
- Keep track of purchases made and money sent with your credit card. You want to avoid two things: going over your credit limit and spending more than you can afford to pay off.
- Make sure you get more than you give. Is your main reason for linking a credit card to your Venmo account to score reward points? Then make sure you pay off your credit card balance in full each month so you don’t get hit with interest payments that cost you more than the value of the points or cash rewards.
Alternatives to Venmo
Venmo isn’t the only payout game in town. Here are three alternatives.
1. Google Pay
You can use Google Pay the same way you use Venmo. While it can generally be used to make purchases at no cost (unless the merchant charges their own fees), you will likely need to pay a nominal fee if you use a credit or debit card.
2. Apple Pay
Apple Pay allows you to link your credit or debit card to a digital wallet. It’s free to use Apple Pay at checkout, at least on the Apple side. If a merchant charges for the use of credit cards, they won’t make an exception for Apple Pay. Like Venmo, if Apple Pay is tied to a credit card and you use it to transfer money to an individual, you’ll have to pay a small fee.
Zelle won’t charge you for sending money through their app, but you will need to check with your bank to make sure they won’t charge a fee. Before downloading the app, check if your bank offers Zelle. Most do.
As long as you set up separate preferred payment methods when signing up as a Venmo user, you’ll likely appreciate the convenience of being able to pay on the go. No matter where you are, you can make a Venmo payment without wasting time, and in today’s busy world, that’s added value.