The premium credit card market has really heated up over the last couple of years and each major issuer has their own card. We have the old-timer American Express Platinum, the Citi Prestige, the Chase Sapphire Reserve, and the new US Bank Altitude Reserve. While they offer some nice points, the real value of these premium cards is the perks they come with. But, it appears Citi feels it is best to replace perks with points.
Citi Prestige Changes Replace Perks with Points
The Citi Prestige instantly drew a lot of fans when it came out, thanks to its nice sign-up bonus and some pretty great perks such as:
- Use points at 1.6 cents per point for travel on American Airlines (1.33 cents on other airlines)
- American Airlines Admirals lounge access
- 4th Night Free perk at hotels where the 4th night was free, no matter the price and it included taxes (but you had to call in)
- $250 in airline credit
- Global Entry reimbursement
- Priority Pass lounge access
- A cool free golf benefit (3 times per year at courses around the world)
Those were the headline items and they were good! The bonus fluctuated a bit between the high of 50,000 points and 40,000 points (and I believe even a period of time when there were no points offered).
However, Citi apparently realized that the card was popular enough and used enough that those benefits were not sustainable on a $450 annual fee. So, they announced changes last year and now we have a full picture of what is going to happen to this card after July 23.
- 75,000 points (up from 50,000 points) on the sign-up bonus after $7,500 in spending
- Use points for all airlines at 1.25 cents per point
- 4th night free is now an average of all 4 nights and does not include taxes
- can be booked online but may not work for getting elite credit/perks
- can still be booked over the phone
- ThankYou points can be redeemed a 1 cent per point for hotels (bad idea since you could cash out at that price and get credit card points from this spend on the hotel)
- Can cash out points at 1 cent per point
- Coming with metal (seriously – this seems to be a headline perk these days!)
- No more free golf
Breaking Down the Changes
Ok, so when we look at what is changing, it is not all that great! While the convenience of online bookings is a nice thing, you will receive the 4th night free as a discount instead of a statement credit to your card. This means you will not get the spending for the room on that night plus you will (likely) not receive elite credit at the hotel or receive your elite perks since it is being made through the online travel reservation system (through the Citi travel concierge it does count).
Blow to AA Flyers
The reduction of the value of points for airlines, especially with AA, is also a blow to people who have been using their points more for redemptions like this than transferring to partners. Also, the ability to cash out at a value of 1 cent per point is really a positive for the bank, not the consumer. With a premium card like this, I think it is safe to say that probably no customer will find value in that.
Of course, the loss of AA Admiral Club lounge access is huge as well. If you are traveling on AA a lot, especially domestically, it is great to be able to hop into a lounge and get some snacks/drinks, free internet, comfortable seating, etc. Taking that away leaves that perk to the Citi Executive AAdvantage card, another premium card but one that is AA-centric.
And, what are future customers getting in exchange for those big losses/changes? The ability to spend $2,500 more in 90 days to get 25,000 points more than the previous sign-up bonus offer (total of 75,000 points for $7,500 in spending). That is a nice 50% increase, but at what cost? The loss of lounge access with AA, the loss of .41 cents per point when booking on AA, and the loss of the true cost of that 4th night being credited back to you.
Example of Replacing Perks with Points
Let’s look at something. Suppose you use your points through Citi’s travel portal at the 1.25 cents per point and that you do that on AA flights. Your total value will be $937 in AA flights. Compare that to the previous high bonus of 50,000 points and being able to use those at 1.66 cents per point which would total $830. That means that if you are an AA flyer, you are not only losing the lounge access with AA (Priority Pass continues) but you are now suffering those losses on that card with only a true value of $107 to make up those losses!
Of course, you can still transfer to other partners at the same rates or redeem on other airlines at the slight reduction from 1.33 cents to 1.25 cents but I use the above example to demonstrate that the sign-up bonus hike isn’t necessarily a sufficient replacement for the loss of the Prestige card’s perks.
For sure, the math is different if you already have this card. You do not get anything from that sign-up bonus but you do get to feel the pain of the loss in perks. While it is nice to be able to book hotels online and get that 4th night free benefit, the people that really were getting some great value out of it will not be getting that same value anymore since you cannot be strategic as to when that 4th night is to get the most value (for example, having the 4th night fall on New Year’s Eve would have that entire price of the 4th night be issued as a statement credit – now, it will be the average across the 4 nights and will not include the taxes on that 4th night so the value is significantly less for those redemptions).
The Points Guy blog when it was revealing these changes had this to say: “It’s great to see a credit card company upping its game in an unmatched way.”
Sorry, I don’t see replacing perks with points (as a one-time thing) upping the game at all – unless it is for the credit card company itself. This is a credit card issuer realizing that their premium card offering was too great to sustain and hacking it up to adjust. For the $450 annual fee, unless you use that 4th night benefit a lot, there are not a lot of reasons to keep this card going forward. Sure, the $250 airline credit is nice and can substantially decrease the net cost of the annual fee but other premium cards, like the Chase Sapphire Reserve, still offer a better value (even Chase had to shift a little when they changed their travel credit from annual to cardmember year for reimbursement).
I know, I am a blog that has an (indirect) relationship with credit card issuers so I should be talking up these changes. But, the truth is, these changes just demonstrate that the premium card market competition is real and that Citi doesn’t seem to be playing for a win here.
Will you get the new Citi Prestige card offer? If you already have it, will you be keeping it for another year?