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Verizon launched no-annual-fee Visa card with competitive rewards on groceries, gas and dining

CNBC Select breaks down four things you should know about the new Verizon Visa® Card so you can decide if it's the right choice for you.

Select’s editorial team works independently to review financial products and write articles we think our readers will find useful. We may receive a commission when you click on links for products from our affiliate partners.

Verizon and Synchrony have partnered to launch the Verizon Visa® Card, available to Verizon wireless customers as of June 26, 2020.

This announcement came on the heels of another card launch from U.S. Bank in June 2020 — the U.S. Bank Altitude® Go Visa Signature® Card — as well as card issuers adding limited-time offers for bonus rewards on groceries and takeout.

The Verizon Visa Card offers Verizon customers the chance to earn generous rewards and redeem them to offset their monthly bill or a new smartphone — all at no annual fee.

Below, CNBC Select breaks down four things you should know about the Verizon Visa Card, so you can decide if it's the right choice for you.

1. Restrictions on who can apply for the card

The Verizon Visa Card isn't open to everyone. To apply, you must be a Verizon Wireless account owner or manager on an account with a maximum of 10 phone lines.

If you have a Verizon wireless account with more than 10 phone lines or a prepaid account, you're not eligible to apply. 

Also, note that if you're someone who likes to hop between providers, this card will have limited use. If you cancel your Verizon plan, you'll no longer earn rewards, discounts, bonuses or Verizon Dollars with this credit card — though you can still use your card to make purchases. 

2. Earn rewards on everyday purchases

The Verizon Visa Card offers one of the most competitive rewards programs for a no-annual-fee card. Cardholders earn generous rewards on everyday purchases, including gas, groceries and dining, in the form of Verizon Dollars. Plus you'll receive a decent rewards rate on Verizon purchases.

Here are the rewards rates:

  • 4% back on gas and grocery store purchases
  • 3% back on dining purchases
  • 2% back on Verizon purchases
  • 1% back on all other purchases everywhere Visa credit cards are accepted

Compared to other no-annual-fee rewards cards, the Verizon Visa Card offers more lucrative rewards in select categories. For instance, the Verizon Visa Card will earn you more on gas (4%) and grocery store purchases (4%) compared to the Capital One® SavorOne® Cash Rewards Credit Card, which earns 1% and 3% in those categories.

3. Rewards can only be redeemed at Verizon

Most rewards cards allow you to redeem cash back, points and miles for statement credits, gift cards, merchandise, travel and more. But the Verizon Visa Card limits how you can redeem rewards.

The rewards you earn are called Verizon Dollars, which are only redeemable for Verizon purchases.

You can redeem Verizon Dollars for new devices and accessories or use them toward your monthly wireless bill (it acts similar to a statement credit). Each Verizon Dollar is worth $1 and there's no limit to how many you can earn. For instance, if you spend $30 at grocery stores, you'd earn 4% back, which equals 1.2 Verizon Dollars, or $1.20. These rewards never expire.

4. Receive discounts on your Verizon bill

Since this is a co-branded card, cardholders receive perks on Verizon purchases. When you use the Verizon Visa Card to pay your monthly Verizon Wireless bill, you can get up to $100 in wireless bill credits over 24 consecutive months. The credit is applied to your bill over 24 consecutive billing cycles, equaling a $4.17 credit per bill.

There's another way to lower your monthly bill: First-time enrollees get an auto pay discount of up to $10 per month off each eligible account or line, up to 10 lines max on select plans. Prior to the card launch, autopayments made with a credit card didn't qualify for the discount, but now you can use the Verizon Visa Card to qualify. You must be a Verizon customer on an eligible plan, such as Above Unlimited or Get More Unlimited, to receive the discount. Learn more about all eligible plans and how to set up autopay with Verizon.

Bottom line

The Verizon Visa Card is a strong newcomer that can help existing Verizon customers save on their monthly wireless bill or next phone purchase. You earn competitive rewards on everyday shopping, whether it's grocery runs or takeout, all while benefiting from no annual fee. However, if you're someone who frequently switches wireless providers, you should opt for a general-purpose card since you'll miss out on earning rewards without an eligible Verizon Wireless plan.

Don't miss: 11 tips for saving money at the grocery store

Information about the Capital One® SavorOne® Cash Rewards Credit Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

No Annual Fee - For New Accounts: Variable Purchase APRs are 21.74% or 25.74% for Verizon Visa Credit Card or 18.74%, 21.74% or 25.74% for Verizon Visa Signature Credit Card. APRs are accurate as of 2/1/21 and will vary with the market based on Prime Rates (as defined in your credit card agreement). Minimum Interest Charge is $2.

Click here for additional details on the Verizon Visa® Card.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.