The fierce competition among credit card companies is unleashing a new wave of signup bonuses – and consumers are biting. The lure of 30,000, 40,000 and 50,000 bonus points has rewards hounds scrambling to find new ways to meet the minimum spending requirements as if it were a sport.
Their challenge is to find ways to spend $3,000 to $5,000 in a three-month period without breaking their budgets. Many have turned their attention to Venmo’s popular payment transfer service as a way to boost their “spending.”
The short answer is yes, you can use payment transfers through Venmo to satisfy minimum spending requirements. But there are things you should know beforehand.
Compare Rewards Cards
Chase Sapphire Preferred® Card
- Get 60,000 points after spending $4,000 on purchases within the first 3 months of account opening
- Earn 2X points on travel and dining at restaurants worldwide, 1X points on all other purchases
Capital One® Savor® Cash Rewards Credit Card
- Earn 4% cash back on dining and entertainment
- Earn 2% at grocery stores, and 1% on everything else
Capital One® Quicksilver® Cash Rewards Credit Card
- Get unlimited 1.5% cash back on every purchase
- Lengthy intro APR on balance transfers
What is Venmo?
Venmo is a leader in the fast-growing payment transfer space, which also includes Zelle and Apple Pay Cash. Venmo is owned by PayPal, a pioneer and global leader in digital payments. Venmo is popular among college students and young adults who prefer cool apps to carrying cash. Popular uses include splitting a dinner tab or settling a debt with a friend. Users can transfer funds to anyone with a phone number or email.
Using Venmo to Meet Spending Requirements
Transferring and receiving funds through Venmo is free if your account is linked to a checking account or debit card. Users can link their Venmo account to a credit card, but they will be charged a 3 percent fee – and therein lies the rub for users who want to use Venmo to satisfy their minimum spending requirement.
If you transfer $2,000 through Venmo using your credit card, you will incur $60 in fees, so you need to determine whether the value of the bonus points is worth the additional expense. Venmo has capped its maximum weekly transfer limit at $999 (unless you request a higher limit in writing, then it’s $19,999 per week with a $2,999 limit per transfer). In any case, the monthly minimum limit would be enough to meet the spending requirements for many credit card signup bonuses.
For example, if you are trying for 20,000 bonus points and you still need to spend $2,000 before the three-month deadline, you could transfer that amount to friends, family, your landlord, or anyone else for whom there is a legitimate purpose for sending the money.
If the points are valued at 2 cents each, they would be worth $400, which would make the $60 Venmo fee a pretty good investment. Just be sure to repay the money before you incur interest charges so you don’t totally wipe out the bonus.
It appears that fund transfers do show up on credit card statements as a purchase and not a Venmo cash advance, according to users. That is huge, because if it were considered a Venmo cash advance rather than a purchase, it might not count toward your spending requirement – and there goes your signup bonus.
Concerns About Using Venmo
There are two areas of concern when using Venmo for this purpose. First, Venmo is known for freezing accounts if it determines they are being used to support illegal activities or for purposes they don’t approve of. To ensure your fund transfers are viewed as legitimate by Venmo, be certain your payment descriptions reflect a valid purpose, such as repaying a debt.
Secondly, Venmo had been in the news for security lapses that resulted in the hacking of its users’ bank accounts. Venmo has since beefed up its security, and there have been no recently reported cyber breaches. However, it is always something to be mindful of whenever you use any digital payments app.
If you are in a crunch to meet your spending requirement for credit card signup bonus points, Venmo could be a way to go as long as its fee doesn’t completely erase your profits. If you use Venmo for any other purpose, you’ll save money by linking your Venmo account to a free money source, such as your bank checking account or debit card.
Author: Jeff Gitlen
Your Guide to Financial Freedom
Money tips, advice, and news once a week
Join the LendEDU newsletter!Thanks for submitting!Please Enter a valid email
Best Credit Cards by Type
Credit Cards by Brand