Another improvement, and giving up on Venti, the gimmicky travel savings account
/I’ve written before about signing up for Venti and about some improvements they made after reading my initial post. To recap, you deposit money through them with a partner bank, and you earn a notional interest rate on your deposit of 9% APY (the earning rate used to vary by account type, but they seem to have suspended that for now). The “interest” is credited as “points,” which can be used through through their booking portal to pay for part of your flight and hotel reservations.
I recently finished withdrawing my cash and redeeming the last of my points through Venti, and don’t plan on adding any more. I’ll explain why in a moment, but first I want to mention an additional feature they added recently.
Topping up cash interest with points
On July 12, 2024, I got an e-mail announcing Venti was partnering with credit unions to offer points on top of the cash interest earned on your self-managed credit union accounts, in addition to the points you earn on your “Venti Classic” balance. They call this new “cash-and-points” earning option “Venti Pro.”
As a reminder, your Venti Classic balance is held at Veridian Credit Union, but can only be managed through the Venti interface: you’re not given routing information to make deposits or withdrawals, and in fact you’re not given any information about “your” account at all. That balance earns 9% APY in Venti points, which can only be redeeemd through their hotel and airline booking portals.
Venti Pro allows you to earn Venti points on up to $25,000 in savings balances on your external accounts at their partner credit unions. They currently have four such partners:
You continue to earn cash interest as usual on those externally held accounts. But by linking them to your Venti account (through one of the usual third-party services), you’ll also earn 3% APY in Venti points on your balances up to $25,000. The program is sparse on details, so there’s no indication of how many linked accounts you can earn Venti points on, another of the many oversights Venti has shown since they launched.
The page also includes this tortured sentence: “This promotional offer is limited to new credit union accounts created within the last 30 days of your Venti account.” I’m sure this makes sense in the original Estonian, but I can make no sense of it in English.
This is such an obvious extension of Venti’s original business model that I assume it was part of the plan all along and they have been working out the kinks, either on the business or technology side. Just like with Venti Classic, credit unions pay Venti to harvest deposits for them. Venti then divides that payment by the (lower) amount they value Venti points at on their books, and turns the result over to their customer in points.
To illustrate this with some sample numbers, if in a Venti Classic account Veridian pays Venti 3% on an uncapped balance, and Venti values their points at one third of a cent each, they pay customers 9% APY on the balances they manage.
If Venti Pro credit union partners pay Venti 1% on new balances up to $25,000, then the same transformation results in the 3% APY they pay on Venti Pro-linked balances. This is surely also the reason for the tortured sentence I mentioned above: Venti Pro partners only want to pay the finder’s fee on new balances; they don’t want to pay another 1% in interest fees on existing accounts!
The MSU Federal Credit Union only pays the advertised rate on the first $999.99 in savings, and I can’t find the avertised GUAS FCU savings rate at all, but the Wings Credit Union savings account is nationally available (with a $5 membership fee to some non-profit). It offers 4.75% APY, with a $25,000 minimum opening balance and no interest earned if your average daily balance is below $25,000. The final option, Meriwest, offers 5.5% APY on the first $10,000 of your Premier Savings balance, but enforces its geographical requirements (in my experience), so is probably most interesting to folks who live in Northern California or Pima County, Arizona.
Is it worth opening a Wings account to earn additional Venti Pro points? My answer is a qualified yes: it is if you want to deposit exactly $25,000 and value Venti points at or close to their nominal value of $1 each. 4.75% APY in cash and 3% APY in “travel funds” is a great return on $25,000 in self-managed, insured cash.
But it’s not for me.
Goodbye to all that
Perhaps the most essential characteristic of a travel hacker is being game, and I’m game for just about anything. I once took the train to Philadelphia to open a prepaid debit card at a check-cashing place to earn 5% APY on the linked savings accounts (remember, interest rates were 0% for close to a decade). But when you’re game for anything, you also have to be unusually alert for warning signs.
I’ve mentioned various warning signs about Venti that were flashing yellow from the start: the slim-to-nonexistent documentation and the inconsistent descriptions of the various products did not make me terribly optimistic about the product or its long-term future.
But after all the warning signs, my red light only came on during my first Venti redemption, when I booked a flight deliciously close to the $250 point-redemption level (you can use points to pay for the first $250 of flight reservations). I booked a $258.20 flight, paying $250 with Venti points and $8.20 with my credit card (an option they added after my first post).
As soon as the flight populated to my American Airlines account, I saw that I had been booked into Basic Economy, even thought the checkout page and confirmation e-mail only said my ticket was in Economy. Since I wasn’t sure about the dates of the flight, and needed to maintain flexibility, I canceled the flight immediately through my American Airlines account. Since I’d booked the flight just minutes before, it was obviously eligible for a refund, and sure enough the $8.20 was refunded to my credit card immediately. Venti was another matter.
First, a confused Markus (who I assume runs the company, since he’s the only person I’ve ever interacted with) asked whether I had canceled my flight. I thought this was a nice personal touch, and assured him I had and mentioned why (being unable to identify a Main Cabin flight).
He replied and explained that “It skips because our broker does not provide that step for one-way flights.” Interesting, but none of my business.
He then replied a few days later and assured me that it was my user error, since he thought the website made it clear the reservation was in Basic Economy. Again, agree to disagree, none of my business.
But then Venti didn’t refund my points, which made it my business. So, I pulled my money out and redeemed the last of my points. I’m not going to war over $250 in travel credit, but if $250 is worth $83 to them (in the illustration above), it’s worth $0 to me if I can’t refund a refundable ticket, and interest rates are too high to earn 0%.
Conclusion
I’ve strived while writing about Venti to be gracious to a fault. A group of entrepreneurs struggling with English started an American company in one of the most regulated sectors of the economy to use technology to squeeze some arbitrage out of the banking system in a somewhat novel way (although it is in some ways patterned on the much-closer debit card relationships between Delta and Suntrust, Alaska and Bank of America, and American and UFB Direct).
And after all this, I still do not think that Venti is a scam. I think they really do deposit your funds with Veridian Credit Union. I think deposits really are federally insured up to the relevant maxima. But banking is an industry that is built on trust, and when you run out of trust, you run out of money pretty quickly afterwards.
Further reading:
