This Week in Your Wallet: Ghosting Digital Debts? Cue The ‘Venmo Vultures’

This Week in Your Wallet:
Ghosting Digital Debts? Cue The ‘Venmo Vultures’

I vividly remember doing the math on group gifts, the kind you’d buy for a friend’s birthday and split 12 ways, PV (pre-Venmo). Checks for $19, or maybe $11, would land in your mailbox if you were the person who bought the gift originally. Sometimes friends would slip you cash. Unless you were a really good tracker (confession, I was not), you were never quite sure if you’d gotten it all back. Then came Venmo and all of a sudden group gifts were a breeze. Well, now we’re seeing the darker side.

The modern convenience offered by payment apps (aka digital wallets like PayPal and Zelle) for splitting costs is giving way to something decidedly more inconvenient. That’s when your friends, family and coworkers needle you to repay them for small purchases – a $4 happy hour draft or your $2 portion of the Uber – they would likely have let slide in less inflationary times. Philadelphia Inquirer journalist Alfred Lubrano writes there’s even a snarky term for those persistently pestering us for a few bucks: “Venmo Vultures.”

Here’s the thing. Those birds of prey may be annoying, but they have a point. We should all pay up when splitting meals, rides, or a birthday gift for the boss. And if more people did that, instead of practicing a form of ghosting known as “Venmo Hush” there wouldn’t be a need for a potential new entry in the Urban Dictionary. So while the requests to get paid back for less than a five spot may make us roll our eyes, the nagging isn’t unwarranted. If you pay up promptly, or, hey, even catch the next round, the Venmo Vultures have no reason to circle your (digital) wallet.

Just In Time For The Super Bowl: Fake Bling Still Sings

It’s hard to look away when celebrities and sports stars dish about how they are just like us. Or, rather, how they intentionally choose to be frugal to save more for the days ahead when the money might not flow as freely. Case in point: Insider reports former NFL wide receiver Chad Ochocinco (Johnson) shared money-saving tips during a recent interview with Shannon Sharpe on his podcast “Club Shay Shay.” A generous tipper, Ochocinco estimates he saved more than 80% of his $48 million earnings while playing for the Cincinnati Bengals and the Patriots. How? He skipped first class and opted for costume jewelry. "You know how hard it is to live like that all the time consistently? To be fly every day?" Ochocinco asked Sharpe on the podcast. "It's impossible to sustain.” Kudos to the professional athlete for sharing his cost-saving moves and keeping it real for the rest of us.

And while we’re dishing on the big game, can this proud mama just point you to New Heights With Jason and Travis Kelce. My son Jake handles social media for this top ranking pod featuring the first set of brothers to appear in the Super Bowl (Go Birds!). The latest episode, he said, made him feel like calling his mother. So, Donna Kelce, can I just say: Thanks for that.

When The Junk Fees Come Tumbling Down

If you’ve ever shelled out as much as $41 (yikes) for a credit card late fee, there’s some potentially good news on the horizon. The Consumer Financial Protection Bureau (CFPB) proposed a rule to slash sky-high credit card fees that cost Americans an estimated $12 billion annually. The new rule would reduce typical late fees from an average of $30 down to $8, with an anticipated cost savings of $9 billion a year for U.S. cardholders, according to the White House. Now, when consumers miss a payment, we get “hit with an exorbitant late fee that far exceeds the credit card company’s costs to collect late payments,” said CFPB Director Rohit Chopra in a statement. Credit card companies have “exploited a regulatory loophole that has allowed them to escape scrutiny for charging an otherwise illegal junk fee,” he added. The CFPB’s new proposal would amend a portion of the Credit Card Accountability Responsibility and Disclosure Act of 2009, to make sure late fees are “reasonable and proportional” to the costs incurred by lenders to handle late payments. Stay tuned.

Robbing Peter to Pay Paul

Regular readers of my newsletter know this advice by heart: Don’t touch the money in your 401(k) or other retirement accounts. Try to forget it’s there, so it can grow, allowing compound interest to work its magic over several decades. Unfortunately, many Americans are finding this difficult. The Wall Street Journal's Anne Tergesen reports a record number of clients with Vanguard Group and Fidelity Investments (both leaders in the workplace space) hit up their 401(k) accounts in 2022 to keep their homes out of foreclosure or pay medical bills, among other reasons. At Fidelity, some 716,000 workers in 2022 dipped into retirement savings, citing emergencies, notes the WSJ, up 26% from 2021.

Why the uptick? Less stringent rules beginning in 2018 for borrowing from the accounts, Tergesen explains, followed by a waiver of the 10% tax penalty in 2020 for withdrawals as a pandemic protection measure. Mike Shamrell, vice president at Fidelity, told the WSJ the withdrawals can serve a purpose. “If the alternative to a hardship distribution is to use high-interest credit cards,” Tergesen writes, “the hardship withdrawal may be a very viable option,” Shamrell said.

Pharmacy Bills Rising

The high price of eggs won't be the only thing giving Americans heartburn this year. USA Today reports drug manufacturers are raising prices on everything from blood thinners to arthritis meds, ahead of Inflation Reduction Act Revisions, with nearly 1,000 drugs seeing price spikes in January. Journalist Ken Alltucker points to data from the non-profit 46brooklyn Research showing a median increase of 5% so far this year on 985 different drugs. Incidentally, he reports, “the price increases come as a new federal law requires companies to pay Medicare a rebate if they increase prices above the rate of inflation.”

Other provisions that cap what Medicare recipients are required to pay take effect in 2024 and 2026. How much more people will have to shell out for certain drugs this year depends on a variety of factors, he says, including the type of insurance plan someone has and if they qualify for income-based rebates. To get the lowest price possible, compare how much local and online pharmacies charge for drugs that don’t yet have a generic equivalent.

Have a great week!

Jean

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