Venmo Credit Card review: Enjoy up to 3% cash back, plus use it to buy crypto

Most people rely on Venmo to instantly send and receive money to their friends and family. However, if you've taken a look at the app's other features you'll notice there's a lot more that the mobile payment service offers — such as the Venmo Credit Card.

With the no-annual-fee and contactless Venmo Credit Card, users can take part in a customized rewards program earning them cash back on where they spend the most. From the Venmo app, cardholders can then cash in their rewards to pay their credit card bill, to complete Venmo requests, to pay authorized merchants, to cash out to their bank account and to even buy crypto.

In addition to the card being automatically added as a payment method in your Venmo app, you can also use your Venmo Credit Card everywhere Visa® credit cards are accepted. Plus, your friends can easily "Venmo" you or request a payment on the spot by just scanning the QR code on your Venmo Credit Card.

Below, CNBC Select breaks down the rewards, benefits and fees associated with the Venmo Credit Card to help you decide if it's the right card for you.

Venmo cardholders earn cash back every month based on their personal spending: they'll automatically earn 3% cash back on the top eligible top spend category, 2% on the next and 1% on the rest.

This could look like, for example, earning 3% cash back on groceries, 2% back on bills and utilities and 1% back on everything else, if those were your top spending categories. Eligible spending categories are expansive, including bills and utilities, dining and nightlife, entertainment, gas, grocery, health and beauty, transportation and travel.

For those who don't want to wait for the physical Venmo Credit Card to arrive in the mail, Venmo offers instant access once you're approved with a virtual card number. And if your card is compromised, you can reset your virtual card number.

Being a part of the Visa network, the Venmo Credit Card also comes with Visa Signature® card benefits, such as zero liability policy, lost or stolen card replacement, emergency cash assistance, Roadside Dispatch® assistance program, travel and emergency assistance services, Visa Luxury Hotel Collection benefits (like room upgrades when available), Audi rental car discounts and 24/7 Visa Concierge to help make reservations, bookings or gift purchases. You can read more about Visa Signature benefits on the Venmo website.

Although Venmo doesn't offer a welcome bonus for its credit card, you can see if you are eligible for a special offer by checking the credit card section in your Venmo app.

Earning cash back with the Venmo Credit Card

Select calculated how many rewards the average American can earn if they optimize the way they use their Venmo Credit Card. We worked with the location intelligence firm Esri, who provided us with a sample annual spending budget of $22,126.

The budget includes six main categories: groceries ($5,174), gas ($2,218), dining out ($3,675), travel ($2,244), utilities ($4,862) and general purchases ($3,953). Here's a breakdown of how much cash back you would earn with the Venmo Credit Card.

• Groceries (3%): $155
• Gas (1%): $22
• Dining out (1%): $36
• Travel (1%): $22
• Utilities (2%): $97
• General purchases: $39
• Total: $371

With all spending considered, you could end up earning roughly $371 within the first year. Over a five-year period, cardholders could potentially earn $1,855, although the total amount would depend on an individual's annual spending habits.

Redeeming Venmo Credit Card cash back

Venmo will calculate your cash-back rewards automatically, so keeping track of your own spending is pretty hands-off. Your earned cash back will reflect in your Venmo account at the end of each statement period and your top spending categories reset every month, tailoring to your personal spending.

There are a few ways you can redeem your cash back, from using it to make purchases to authorized Venmo merchants, to cashing in to pay your credit card bill or completing Venmo requests. You can also take the cash back and deposit it directly in your bank account.

As a bonus, Venmo cardholders interested in digital currency can redeem their cash back rewards to buy crypto. Simply turn on the "purchase crypto" feature through the app and choose between the four cryptocurrency tokens available. Once your cash back is transferred to your Venmo account at the end of every month, Venmo will then use it to automatically purchase crypto without any transaction fee. Users, however, will still incur fees for any crypto purchased or sold outside of the cash-back feature.

The Venmo Credit Card has a regular variable APR of 15.24% to 24.24%.

There is no annual fee and no foreign transaction fees. Late payment fees can be up to $40.

Note that, similar to when using other credit cards, the Venmo Credit Card is subject to Venmo's standard 3% fee when used to make person-to-person payments.

If you're considering the Venmo Credit Card, you're likely already an avid user of the Venmo app. But is its credit card the best option out there for earning cash back? Here's how the Venmo Credit Card measures up to two other credit cards that offer money on your spending.

Venmo Credit Card vs. PayPal Cashback Mastercard®

The PayPal Cashback Mastercard® is a straightforward cash-back card that offers 3% cash back on PayPal purchases and 2% on all other purchases. The cash back you earn goes directly into your PayPal account and the card has no annual fee.

If you use PayPal more than Venmo, or vice versa, it's probably worth going with their respective credit cards. The Venmo Credit Card's cash-back earning is based on spending categories, 3% cash back on your eligible top spend category and 2% on the next top category. You can analyze your spending habits to see which one might yield more rewards.

Venmo Credit Card vs. Chase Freedom Flex®

The Chase Freedom Flex® is another cash-back card, offering new cardholders can earn a $100 bonus after spending $500 on purchases in their first three months from account opening.

The Chase Freedom Flex offers a more robust cash-back program at a higher rate, yet pay attention to the rotating bonus categories to first see if they make sense for your spending. Take a look at the Chase Freedom 5% cash-back calendar and it's past bonus categories — previous categories include Amazon, grocery stores (excludes Walmart® and Target® purchases), select streaming services and more. The cash back you can earn, along with the welcome bonus, may make the Chase Freedom Flex a better choice than the Venmo Credit Card.

If you're a frequent user of Venmo, the Venmo Credit Card could be worth considering if you want to centralize your financial life in the app. On top of the credit card, Venmo also allows for you to have a debit card and receive your direct deposit to your Venmo account. You can manage your credit card and Venmo balance all in the app, while using your cash-back rewards to pay your friends, spend with authorized Venmo merchants or offset your credit card bill.

The card may also be appealing to those who want their bonus reward categories to automatically adapt to their monthly spending habits.

The Venmo Credit Card is a good pick for earning personalized cash-back rewards and those who are frequent Venmo users.

Individuals who don't often use Venmo can consider other cash-back cards on the market, such as those mentioned above.

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