Venti reads my blog and makes some big, immediate improvements

Back in February I wrote about Venti, a very-high-interest savings account with a gimmicky twist: the “interest” on your savings is credited to a separate “points” balance that can only be redeemed for travel through the Venti flight and hotel shopping portals.

Since I’m one of the biggest Venti deposit-holders, it’s perhaps unsurprising they stumbled over that blog post and held a few team meetings about solutions to some of the problems I identified (from an e-mail: “We understand that you’ve been quite critical of Venti in the past through your blog. However, it would be a mistake on our end not to learn from you how to improve”).

I politely disagree with them that I was “quite critical” (they should read what I say about Gary Leff) but I’m glad to see they’ve already annouced three big improvements for existing customers and a few unannounced changes for those who have not joined.

I’ll break down the three announced changes in the order they were listed in the announcement.

“Increased Points Redemption”

Here’s the first change:

“The number one request was to allow for more Points to be used per transaction. Venti is not currently supported by outside funding/venture capital (despite some assuming so). Thus, limitations are in place until we accomplish certain milestones. As of this email, any flight under $250 can be booked solely with Points. All other flights have a flat $250 off MSRP. Hotel orders under $120 remain fully bookable with Points. In the future, you can expect the redemption ratios to improve significantly as we grow and onboard more members.”

This is terrific. It means you can spend down your points balance (the part that’s locked into Venti’s reservation ecosystem) first, before having to spend any of your cash balance (the part that can be moved in and out of other banks).

Right now that only applies up to $250, but the point is, it’s the first $250 of each reservation. For airlines that price all flights as one-ways, you can book each leg as a separate ticket to spend down your point balance $250 at a time. This crystallizes the value proposition I identified in my original post: “Venti is a way to earn above-market interest on your savings if you sometimes pay cash for airfare.”

“Updated Points Disbursement Schedule”

Here’s the second announced change:

“The current model heavily favors wealthier members who often begin their Venti experience with thousands in deposit. For the average member, it takes too long to accumulate Points at a rate that unlocks free travel. Starting June 1, we're changing Points disbursement to weekly instead of Monthly. Our rewards APY will remain at 9% for all paid membership tiers for 2024. Buddy Pass holders cannot deposit funds.”

This is phrased a little confusingly but you can understand the general point: the more frequently they award points, the more likely smaller-deposit accounts will be to get redeemable quantities of points. Smaller, more frequent redemptions are more likely to keep smaller depositers invested in the program, since they won’t have to wait months or years to get enough points to redeem for a domestic flight or a single hotel night.

Since one of my primary concerns is with the viability of the company as a whole, my personal feeling is that this also gives larger depositors confidence that their weekly points disbursement reflects their running balance. If the number suddenly jumps or drops or skips a week, then it will be an early clue that all is not right in Venti-land.

“Allowing Credit Cards”

The third announced change is arguably a bigger deal than either of those:

“The greatest area of friction within our product was only allowing flights and hotels to be booked with cash savings (and Points) from your Boarding Pass. Our goal was to avoid credit card processing fees since Venti does not profit from the sale of flights. In June, we'll enable credit card payment options for all membership tiers, including Buddy Pass. You will be able to use Venti Points along with your favorite credit card at checkout for flights and hotels.”

In principle, if you pay your credit card balance in full each month, then you should be almost indifferent between paying with your Venti cash balance or a credit card. In reality, one of the things we pay for on many annual-fee credit cards is travel benefits that are triggered by paying for airline tickets (and rental cars) with that particular card. Most trips don’t have qualifying events (like missed connections or late or lost baggage), and most people who suffer qualifying events never claim the benefit, but being unable to pay for flights with credit cards meant that no Venti flights were eligible for them at all.

I believe as long as you keep good enough records to connect the Venti reservation to the credit card charge, you should now be eligible for those benefits as long as you charge at least $1 of your airfare to the credit card.

Unannounced positive changes

While I was fooling around on their website, I noticed Venti had made a few more changes I had not seen them previously announce.

The “Priority” tier, which was previously listed at $72 per year and earning 5% APY (in points) on up to $15,000 has been slimmed down: it now has no annual fee but earns 9% APY on up to $7,500 in cash deposits.

The “First Class” tier is still listed at $500 per year (remember that I signed up when the First Class price was just $9.99), but now offers 9% APY on up to $250,000 in deposits, up from $100,000.

These are both positive changes. Early adopters like me can decide next year whether to switch over to Priority and keep $7,500 in the account trundling along earning 9% APY (compounding discipline requires constantly finding new places to stash your compounded returns), while heavy hitters can stuff $250,000 into First Class accounts and earn (after the $500 annual fee) roughly 8.8% APY and cover $22,000 in paid travel per year.

The “Business Class” tier appears to never have been actually launched and isn’t available on the website for signup, so no great win or loss to report there.