Caveat Venmo!

Be careful about cash advance fees with Venmo

Welcome to Saving Money with Andrew! If you’re new, you might want to check out my top 9 money-saving tips.

I don’t know how it happened, but all of a sudden almost everyone in my life uses Venmo to send each other money. I’m generally an early adopter, but Venmo puts me off for a few reasons:

  • The possibility of messing up and sending money to the wrong person

  • The weirdness of mixing a payment app with a social network. Why do I care that someone paid Joey back for tacos?

  • The security risks inherent in providing my bank information (credit cards generally have far better consumer protection in case of fraudulent activity, and don’t have access to our savings)

So, when we use Venmo, we generally use it with our credit card and are very careful. Sure, there is generally a 3% fee on using a credit card (largely offset by 2% cash back on our card of choice), but we always found it worth it…until now.

Last week, I spotted a $10 “Cash Advance Fee” in our credit card activity. As it turns out, many of the major banks have started treating Venmo (and similar services’) payments made via credit card as “cash advances”, subject to much higher fees than normal transactions.

So, to try to get more info, I called Citi, who explained that Mastercard had started to charge this fee and it would be charged every single time we made a Venmo payment using our Citi card going forward.

I asked if, as a “one-time courtesy”, Citi could refund this fee, and the rep agreed to do so once the charge posts to our statement.[1] From now on, we’re definitely going to stop using our credit card for Venmo, and to address our security concerns I am planning to use a secondary bank account (with a small balance) with these services. Others might prefer to use a debit card, which does not appear subject to these fees. Kind of a hassle, but probably the right move.

I hope this has been helpful. If you liked it, please share it with a friend! Also, please send me your feedback, requests, and success stories.

And, as a bonus for reading to the end…let’s go to Andrew’s pick of the week:

The Lesser Known Sim Games

Thumbnail of the title screen from SimRefinery

The Sim games hold a special place in my heart. When I was only 6 years old, my dad brought home SimCity for our brand new Mac IIci, which we played constantly for a year or so.[2] Almost every subsequent single Sim game of the late 1980’s to late 1990’s evokes vivid memories.

I also love heavily-researched longreads on obscure topics. So naturally I had a ball reading this recent piece on Maxis’s (the original developer of the Sim games) ill-fated venture into the business world in which they made two rather strange games - SimRefinery (for Chevron) and SimHealth (during President Clinton’s unsuccessful attempt to reform the US healthcare system). I hope you enjoy it too!

[1] A helpful tip - always phrase a request to your credit card issuing bank as a “one-time courtesy”, it really seems to be a magic phrase. We’ve gotten a few charges, including interest and a late fee, waived this way.

[2] Some other favorites from that time include Civilization, Prince of Persia, and Glider.