Venmo to charge 3% fee for credit card transactions
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Venmo along with Amazon Payments was one of the best tools in the 40+ Powerful Ways To Complete Your Credit Card Minimum Spending Requirements. That’s because you could transfer up to $2,000 to another person for free with a credit card. This made it pretty easy to complete minimum spending requirements for new credit cards.
Of course, Venmo was likely eating the ~3% charge on each credit card transaction and was willing to do so to grow and gain new users.
Well, Vemo announced that it will charge a 3% fee to new users who want to use a credit card to send money to another person.
Existing users will also have to pay the 3% fee, starting from May 1, 2012, once they cross their lifetime free credit card allowance of $500.
Paying 3% to earn miles and points doesn’t make sense in most cases, but it does make sense if you have no other way to meet the minimum spending on a credit card. For example, I’d gladly pay $90 ( 3% of $3,000) to complete the $3,000 minimum spending requirements on a credit card if that was the only way I’d earn the 50,000 mile sign on bonus.
This isn’t good news, but it isn’t unexpected either. Venmo, which lacks the deep pockets of Amazon, couldn’t bear the 3% cost indefinitely. If something is too good to be true, it likely won’t last forever!Bottom Line: If you already have a Venmo account, you have only 2 months (March and April) to make fee-free transfers using a credit card before the 3% fee goes into effect.
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