Citi Revamps Prestige Card by Boosting Credit Card Travel Rewards
This article was featured on USA Today
Oct. 23, 2018
A year after bowing out of the competitive credit card rewards game, Citi has come roaring back.
Starting in January 2019, its Prestige card will provide five rewards points for every dollar spent on dining or air travel, up from three points for those purchases. Hotel spending still receives three points for every $1 spent.
The move comes almost three weeks after American Express introduced its revamped Gold card that offers four points for every dollar spent at restaurants and supermarkets. Chase last month also debuted a premium checking account with perks and rewards aimed at its well-heeled Sapphire Reserve cardholders.
“The competition for more affluent cardholders is huge in the credit card world, and Citi had fallen a bit behind Chase and American Express,” said Bill McCracken, president of Phoenix Synergistics, a financial services research company. “Now it just put out one of the most compelling travel rewards cards and, on the surface, is hitting a home run.”
Along with the increased rewards for dining and air travel purchases, the card is expanding its existing $250 credit to include all travel-related purchases instead of just air travel spending. In May, cardholders also will get cellphone protection for damage and theft if the card is used to pay the monthly cell bill.
Several other features will remain the same, including:
- 1 reward point for every $1 on all other purchases
- $100 statement credit for the Global Entry application fee
- Other ancillary benefits including concierge services, travel and emergency assistance, trip cancellation and interruption protection, trip delay protection and price protection
Some changes may disappoint cardholders. Starting in September 2019, the hugely popular get-the-fourth-night-free hotel perk will be capped at twice a year. Before, it was unlimited.
The annual fee will also increase to $495 from $450 at this time. Cardholders also won’t get the 25 percent higher value when redeeming points for air travel through its travel center, and entertainment purchases earn only one point instead of two.
This summer, Citi had stopped taking new applications for the Prestige card while it re-evaluated the rewards program. It’s expected to begin accepting applications again in January when the new program takes effect. A sign-up bonus is also likely.
“I wouldn’t expect anything less than $50,000 points,” McCracken said. “If they want to make a big splash it could be twice that.”
When Chase introduced its Sapphire Reserve card in 2016 – effectively heating up the rewards battle – it offered a 100,000 rewards incentive for new cardholders. Since then, Citi, American Express and Chase have been competing to be the top-of-wallet card for big spenders. It hasn’t been without problems.
In the second quarter, Chase had to set aside an additional $330 million because its cardholders were redeeming their rewards for cash or travel more than expected. Overall, credit card profitability has been sliding heavily as Americans jump from one card to the next, looking for the next best rewards offer.
“These rewards are expensive,” said Brian Riley, director of credit advisory service at Mercator Advisory Group, a consulting firm. “It’s become a zero-sum game for banks. How long can this go on?”
Indeed, Citigroup’s chief financial officer John Gerspach told analysts on an earnings call last year that the issuer was concentrating on no-fee cards with no interest for an introductory period instead of travel rewards. “We shifted our focus away from rewards because of the competitive heat,” he said at the time.
Not anymore. Citi’s back in a big way.Back to learn