Peer-to-peer payment apps like Venmo, Zelle, and Cash App make it a snap to exchange money from your mobile phone for free—no more waiting for your friends to pay you back for dinner from two weeks ago.
But these apps have to make money somehow, and it’s usually by charging a fee if you connect a credit card to your account and use your card to send money. It’s typical to see payment apps charge a fee of about 3 percent for the convenience of using a credit card to send funds. And while that might not seem like a lot, it adds up quickly.
Imagine you owe your roommate $30 for groceries and you use a credit card to send her the money via a mobile app. A 3 percent fee means you’re really paying $30.90 total. Do that three times a month (your roommate loves grocery shopping, it turns out), and you’ve paid an extra $2.70 that doesn’t even go to your roommate and could have been used on an extra jumbo-sized bag of pretzels for your weekly movie nights.
Instead, stick to your checking account when you need to send money transfers with mobile apps, and plan ahead so you’re not scrambling to take out money via instant withdrawal.