Venmo doubles credit card rewards for new customers – does it make it worth it?

As America continues to rebound from the COVID-19 pandemic, credit card issuers are flooding the market with lucrative incentives in an effort to capture as much of this increased consumer spending as possible. One of the most attractive offers comes from a relative newcomer: the Venmo Credit Card.

It’s offering new cardholders 6% cash back on their highest monthly spending category, 4% on their second-highest monthly spending category and 2% on all other purchases through Dec. 31, 2021. To get in on the promotion, new cardholders must apply (and be subsequently approved) between June 1 and July 31, 2021.

Those returns are double the “normal” cash back rates on this card, which initially launched last fall. Unlike most flexible earning cards, Venmo cardholders don’t select their categories in advance. They’re automatically calculated each statement period, and they can change each billing cycle if your spending habits change.

The eligible categories are travel, bills and utilities, grocery, gas, transportation, entertainment, dining and nightlife and health and beauty. In your first 12 billing cycles, the rewards are uncapped. After that, your 3% and 2% category spending applies to the first $10,000 in annual spending.

Is the card worth it?

It doesn’t charge an annual fee, so the main way to calculate whether or not it’s “worth it” has to do with the opportunity costs. Namely, the credit score impacts of adding a card, how it fits into your overall card strategy and whether or not you’re better off saving that slot for something else.

It’s important to note that the Venmo card doesn’t have a traditional sign-up bonus. You could view the doubled cash back payouts as a welcome bonus of sorts (similar to how Discover’s standard introductory offer matches the cash back a new cardholder earns in their first year).

If you sign up for the Venmo card in June or July and spend a lot through year-end, this could be a tremendous deal. But you can also get a big introductory bonus without spending very much.

For example, the Chase Sapphire Preferred Card currently offers 60,000 points to new cardholders who spend $4,000 in their first three months. Those are worth $750 when redeemed for travel through Chase Ultimate Rewards. There are even reports that you can get the $95 annual fee waived for your first year if you apply in a Chase branch (although be prepared to pay the fee just in case).

What about the longer term?

Especially after your first year, the Venmo card becomes more of a niche player, because its 3% and 2% categories are capped at $10,000 in annual spending. If you love to mix and match different cards to maximize different types of spending, it would be smart to use this card to nab 3% in a monthly category that you’re not already maximizing on a different card.

But if you make this your only card in year two and beyond, there’s a good chance you’ll earn a blended return below 2%, especially if you spend considerably more than $10,000 on the card each year. You can do better with one of our best flat-rate cash back cards.

Bottom line

For the next six to 12 months, the Venmo card might be your most valuable card, especially if you’re a big spender. Beyond that, it’s best used selectively for a category or two as part of a multi-card strategy.

Have a question about credit cards? E-mail me at ted.rossman@creditcards.com and I’d be happy to help.