Citi is revamping its flagship credit card with new benefits in a bid to compete with premier cards from American Express
AXP, -0.52%
and Chase
JPM, -0.86%
Starting in January, the Citi Prestige Card
C, -1.34%
will offer card members five 5X points for every $1 spent on dining out and air travel purchases. Last August, Citi temporarily stopped signing up new members for the card in advance of its current re-launch, travel website The Points Guy reported.
The Citi Prestige is now “more of an airline and dining card, whereas it used to cater to hotel guests,” said Ted Rossman, industry analyst at CreditCards.com.
A spokesperson for Citi did not confirm the Prestige Card’s new annual percentage rate (APR), but the card previously had an APR range from 17.49% to 25.49% for new members.
Don’t miss: American Express plans major changes to its popular Gold Card
Here are other benefits:
- 3X points on hotels and cruise line purchases.
- 1X points on all other purchases.
- A $250 credit for all travel purchases (previously the travel credit only applied to air travel).
- Starting in May 2019, card members will receive cell phone protection plans that cover theft and damage if the monthly mobile bill is paid with the Citi Card.
With these changes, the Prestige Card is more competitive in the premium card space, Rossman said. The 5X points on air travel “is a shot across the bow of the Chase Sapphire Reserve, which only offers 3X, and on par with the Amex Platinum,” he added.
The Prestige overhaul also makes the card more competitive with other premium card dining rewards. The American Express Gold Card, Capital One Savor Card
COF, -2.06%
and the Uber Visa Card
V, -0.85%
all offer 4X points or 4% cash back on restaurants. However, the Hilton Honors American Express Aspire Card
HLT, -1.78%
offers 7X points on U.S. restaurants.
Here are some restrictions:
- The new card will come with a steeper annual fee of $495, up from $450. Citigold and Private Bank clients will be exempt from the annual fee increases.
- Some benefits Prestige Card holders received in the past will be reduced. A complimentary “fourth night” for hotels booked with the card will now only be available twice a year. Previously, it was an unlimited offer.
- Card members will no longer receive a 25% discount when they redeem their rewards points for air travel.
- Citi also removed 2X points on entertainment, so members will only receive 1X points on those purchases moving forward.
The free “fourth night” hotel perk, as it previously stood was “the single most lucrative benefit offered by any credit card,” said Ben Schlappig, founder of travel website One Mile At A Time.
But the average Prestige card holder didn’t use the perk that much — a Citi spokeswoman said that the card members who did use this benefit did so only once a year on average.
When some card members did make strong use of this benefit, it typically came at a major cost to Citi, said Amber Stubbs, managing editor at personal-finance website CardRatings.com. That’s because some consumers would sign up for the card for that benefit alone and not use it for the bulk of their spending, meaning that Citi was on the hook for thousands of dollars in hotel expenses for each of these users with not much to show for it.
Even if it’s only available twice a year, the “fourth night” perk can still represents over $1,000 in savings, Schlappig wrote, though it also encourages people to book more expensive hotels. “Sometimes I splurge and stay at very expensive hotels,” he added. “I’ll continue using the benefit for those hotels, which will pay for my annual fee and then some.”
Get a daily roundup of the top reads in personal finance delivered to your inbox. Subscribe to MarketWatch’s free Personal Finance Daily newsletter. Sign up here.
Source : MTV
