PayPal Cashback Mastercard vs. Venmo Credit Card: How They Differ

One offers the same high cash-back rate everywhere, and the other automatically rewards you more where you spend more.

Sara RathnerDecember 7, 2020
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PayPal and Venmo have a lot in common: PayPal owns Venmo, they’re both ways to quickly send your roommate your share of the water bill, and they both offer no-annual-fee cash-back credit cards issued by Synchrony.

When it comes to how they earn rewards, however, the PayPal Cashback Mastercard® and Venmo Credit Card go their separate ways. Plus, unlike more traditional cash-back credit cards where you redeem rewards for a statement credit or direct deposit into your bank account, the PayPal Cashback Mastercard® and Venmo Credit Card require you to have a PayPal or Venmo account, respectively.

You can open those accounts before applying for one of these cards if you wish, but if you pride yourself on being the person who still writes a check to pay a friend back, there are other cards to choose from.

How they compare at a glance

Annual fee: $0.

Annual fee: $0.

Sign-up bonus: None.

Sign-up bonus: None.

Ongoing rewards: Unlimited 2% cash back on all purchases.

Ongoing rewards:

  • 3% cash back on your top spending category (from the list below) for the billing cycle.

  • 2% on the next category (from the list below).

  • 1% on all other purchases.

The eight bonus categories: transportation, travel, grocery, entertainment, dining and nightlife, bills and utilities, health and beauty, and gas. (After the first year, a combined spending cap of $10,000 applies to the 3% and 2% categories, after which all spending earns 1% back.)

How to redeem rewards: Redeem rewards directly into your PayPal balance and use the funds to make a payment on your PayPal Cashback Mastercard®, pay for a purchase made through PayPal, send money to family and friends or transfer funds to your bank account.

How to redeem rewards: Earned rewards will automatically appear in your Venmo account. Use them to pay your credit card bill, send money to others, shop where Venmo is accepted as a form of payment or transfer the funds to your bank account.

Nerd tip: PayPal also offers the $0-annual-fee PayPal Extras Mastercard®, but it is not a cash-back card. Instead, it earns 3 points per $1 on gas and at restaurants, 2 points per $1 on PayPal and eBay purchases, and 1 point per $1 on everything else. Redeem points for gift cards, merchandise, travel vouchers or cash back into your PayPal account. You can’t have both the PayPal Cashback Mastercard® and the PayPal Extras Mastercard®.

Why choose the PayPal Cashback Mastercard®: Consistent cash back

PayPal Cashback Mastercard
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If you want a simple, steady, straightforward rewards rate without having to think about where and when to use your card, the PayPal Cashback Mastercard® earns an excellent 2% back everywhere. That makes it a good all-around choice if you only want to manage one card. It could also make it a fitting companion for another card that earns more than 2% back in specific spending categories.

This card offers no sign-up bonus, though, so keep in mind that a card earning 1.5% back, with a bonus, may be a better deal for you, depending on your spending.

Don’t want to create a PayPal account?

The Citi® Double Cash Card – 18 month BT offer also earns 2% cash back on all purchases: 1% as you buy, 1% as you pay. Redeem rewards for a statement credit, check or direct deposit to your bank account. You can also convert rewards to ThankYou Points, which can be cashed in toward travel, gift cards and more. The annual fee is $0.

Why choose the Venmo Credit Card: Extra earnings, futuristic features

The Venmo Credit Card features bonus spending categories that automatically readjust each billing cycle based on where you spend the most, which makes it easy to maximize your earnings with minimal effort. You’ll earn 3% cash back in your top spending category (from one of eight possible categories), 2% back in your second-highest category and 1% on all other purchases. There’s no need to activate bonus categories or track anything. The ability to earn bonus rewards could make it more lucrative, for some, than the PayPal Cashback Mastercard®.

Note, however, that you can earn unlimited bonus rewards only in the first year. After that, once you spend $10,000 in your combined 2% and 3% categories, you’ll drop back to earning just 1% back on all purchases for the year. In that respect, it's potentially more complex and limiting than the PayPal Cashback Mastercard®.

The card is built for on-the-go management and cost-splitting. You can track your spending and pay your credit card bill through the Venmo app. You can also split an expense with friends — simply pay, and then your friends can scan the QR code on your card. Your account will pop up on their phone and they’ll be able to send you money. (You also scan your own QR code to activate the card.) Plus, you have instant access to a virtual card upon application approval while you wait for the physical card to arrive.

Don’t want to create a Venmo account?

The Blue Cash Preferred® Card from American Express earns extra rewards in popular spending categories: 6% cash back at U.S. supermarkets on up to $6,000 in spending per year (then 1%), 6% back on select U.S. streaming services; 3% back on eligible transit and at U.S. gas stations; and 1% everywhere else. Terms apply. There’s a $0 intro for the first year, then $95 annual fee, but the card’s welcome bonus helps offset the cost.

The case for carrying both cards

A flat-rate card plus a bonus-category card is a classic credit card pairing that makes it possible to earn more on every purchase, but it does take some work. In the case of these two cards, you’d need to anticipate where you’d spend the most (within the eight specific categories) in a month and use the Venmo Credit Card for those purchases, and then use the PayPal Cashback Mastercard® anywhere the Venmo Credit Card would only earn 1% back, thus earning at least 2% back every time.

Here’s how that could work: You’re booking a pricey trip this month, so travel would be your No. 1 category. Use the Venmo Credit Card to earn 3% back. If you know offhand what your second-highest category would be, you could use the card on those purchases, too, but since the PayPal Cashback Mastercard® also earns 2%, you can just use that for any non-travel spending. Ta-da! Everything you buy earns 2% to 3% cash back.

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