Today TPG Contributor Nick Ewen takes an in-depth look at the Citi ThankYou Premier, including its earning potential, redemption options, and how it stacks up against its main competitor, the Chase Sapphire Preferred.
A few months ago, Citi announced changes to the ThankYou Rewards program, adding 8 airline transfer partners to go along with their existing hotel partner, Hilton HHonors. They then added Flying Blue as another transfer partner just over a week ago. The new transfer options have clearly increased the value of ThankYou points and (by extension) the Citi credit cards that earn them: the Prestige, Chairman, and Premier. (Others, like the Citi ThankYou Preferred, allow you to accrue regular ThankYou points, but to take advantage of transfer partners, you must also hold one of the three mentioned above.)
Last week, we looked at the Citi Prestige and how it compares to the American Express Platinum Card and Visa Black Card, and the Citi Chairman is no longer available to new applicants. So today I’ll take a close look at the Citi ThankYou Premier Card, including benefits, redemption options, and more, to see if it’s worth adding to your wallet.
Let’s begin by looking at the “essentials” of the card. Citi Premier currently comes with a sign-up bonus of 20,000 ThankYou Points after spending $2,000 in the first three months of cardmembership. You can then earn an additional 30,000 ThankYou points by spending $3,000 in the first three months of your second year of cardmembership. The annual fee of $125 is waived for the first year, but since you only earn the 30,000 points in the second year, you would need to pay that $125 to get the full sign-up bonus.
The Citi Premier earns 3 points per dollar spent on dining and entertainment, 2 points on airfare, hotel, and travel agency purchases, and 1 point everywhere else. While most of these categories are self-explanatory, Citi defines entertainment purchases to include sports or concert tickets, movie theaters, amusement parks, tourist attractions, museums, and music stores. Essentially, this earning is a flip-flop on the new Citi Prestige rates that go into effect on October 19, as that card provides triple points on airlines and hotels, and double points on dining and entertainment. It’s also a step above the Chase Sapphire Preferred, which offers double points on dining and ALL travel purchases, but only provides triple points on dining the first Friday of every month.
Like most credit cards, the Citi Premier allows you to redeem ThankYou Points at a rate of 1 cent per point for cash back or gift cards and merchandise from a variety of retailers. Just like the Sapphire Preferred, however, you can extend those points even further and get a 20% discount when redeeming for airfare through the ThankYou Travel Center. This means the sign-up bonus of 50,000 ThankYou Points can net you at least $500 towards travel ($625 worth of points minus the $125 annual fee for the second year).
However, the ThankYou Rewards program offers even more value with their new transfer partners:
- Cathay Pacific
- EVA Air
- Garuda Indonesia
- Malaysia Airlines
- Qatar Airways
- Singapore Airlines
- Thai Airways
- Air France/KLM
- Hilton HHonors
While it’s a shame that the program still doesn’t have a transfer partner based in North America, these options do cover all three major alliances. They also include three airlines that were previously unavailable through Starwood Preferred Guest, Chase Ultimate Rewards, and American Express Membership Rewards: Garuda Indonesia, EVA Air, and Malaysia Airlines. See this post for more information on Garuda Miles and this one for details on EVA and Malaysia. These new transfer options led TPG to increase his monthly valuation of Citi ThankYou points to 1.5 cents apiece last month, meaning you can expect to net at least $625 worth of value from the sign-up bonus when redeeming in this fashion ($750 worth of points minus the $125 annual fee for the second year).
The Citi Premier comes with a variety of additional benefits, including:
- No foreign transaction fees plus EMV chip techology
- Citi Price Rewind, offering refunds if an item you purchase drops by more than $25 within 30 days
- Extended Warranty, adding an extra year to the manufacturer’s warranty on most purchased items
- Auto Rental Insurance
- Lost Luggage Coverage, up to $3,000
- Trip Cancellation/Interruption Coverage, up to $1,500
- Travel Accident Insurance
- Citi Private Pass, giving you access to VIP concerts and other events
- Personal Concierge Service, available 24/7
As I mention above, the Chase Sapphire Preferred is likely the most comparable card to the Citi Premier, and to me, the benefit that most justifies the higher annual fee ($125 to $95) is the earning potential at restaurants and on entertainment purchases. The Citi Premier earns 3 ThankYou Points per dollar spent in those categories, while the Chase Sapphire Preferred only offers 2 Ultimate Rewards points per dollar on dining and 1 point per dollar on entertainment. Depending on your typical spending pattern in a given year, this could make a big difference.
Let’s say you typically spend $1,000 a month in restaurants and $200 per month on entertainment expenses (for a total of $14,400 annually). Here are the points you would accrue in the first year of cardmembership on these two cards:
- Citi Premier: 43,200 ThankYou points ($1,200 x 3 points/$ x 12 months)
- Chase Sapphire Preferred: 26,400 Ultimate Rewards points [($1,000 x 2 points/$) + ($200 x 1 point/$)] x 12 months
Based on TPG’s August valuations, Citi ThankYou points are worth 1.5 cents/point, and Ultimate Rewards points are worth 2.1 cents/point. This provides the following return on your spend in these categories:
- Citi Premier: $648 / $14,400 = 4.5%
- Chase Sapphire Preferred: $554.40 / $14,400 = 3.85%
Clearly the Citi Premier is the better option in this case.
Once the second year begins, the annual fee for both cards kicks in, and that changes the value proposition a bit. The difference in annual fees is $30, so let’s see what level of monthly (and yearly) spending will justify that additional fee incurred by the Citi Premier. To answer that question I’ll consider dining alone, because if you’re like me, your entertainment expenses vary significantly from month to month and year to year.
Based on TPG’s August valuations, Ultimate Rewards are worth 0.6 cents more than Citi ThankYou Points. This means that to cover the higher annual fee, you would need to earn 5,000 additional ThankYou Points each year ($30 / 0.6 cents per point). This is equivalent to $5,000 in yearly dining spend, since that would earn you 15,000 ThankYou points and 10,000 Ultimate Rewards points. That equates to $416.67 a month. If your monthly spend at restaurants is higher than that, the Citi Premier will offer a better return; if you typically spend less than that, the Chase Sapphire Preferred is the better option.
Keep in mind that is only part of the equation, and you may not agree with TPG’s valuations. There are many other factors that go into the apply/don’t apply or keep/don’t keep analysis. One that really comes into play on the Citi Premier is the current sign-up bonus. One of the biggest drawbacks of the card is that you only earn 40% of the sign-up bonus during the first year, with the rest coming after you incur the annual fee. The vast majority of other cards on the market (including the Chase Sapphire Preferred) give you the full bonus during the first year, allowing you to make use of your points right away.
Another negative is the lack of an online shopping portal. As TPG discussed earlier this year, the Citi ThankYou Rewards program used to have a portal called the ThankYou Bonus Center, but it was closed as of January 19, 2014. This came less than a year after American Express shut down their online shopping bonus mall, and both were a definite devaluation to their respective programs. Fortunately, the Ultimate Rewards shopping portal is still going strong, along with many others from specific airlines & hotels, as well as cash back sites like Ebates and Big Crumbs.
A final strike against the Citi Premier is the limited utility of the ThankYou Rewards program transfer partners. Don’t get me wrong; the changes announced in July were a huge improvement to a program that previously couldn’t compete with Ultimate Rewards or Membership Rewards. However, the program still doesn’t have any premier partners (no pun intended). As I discussed in a Weekly Wish post last month, adding American Airlines as a Citi ThankYou transfer partner would add enormous value to the program. Unfortunately, I don’t see that happening anytime in the near future, as AA clearly has their hands full with the US Airways merger.
However, I do think an argument can be made for having both the Citi Premier and the Chase Sapphire Preferred. The first scenario in which this makes sense is if you have a significant amount of entertainment spend in a given year, as Citi Premier offers a much better return than Sapphire Preferred in this category (3x points instead of 1x points).
Another scenario where the Citi Premier offers great value is for current cardholders of another Citi card that accrues ThankYou points that are not transferable (like the Citi ThankYou Preferred). When you have both a premium and non-premium card in the ThankYou Rewards program, you can combine points across accounts and thus turn your entire balance into more flexible, transferable points (just like Chase Freedom points turn from simple cash back to full Ultimate Rewards points when you have a premium Chase card).
Finally, the Citi Premier can be another way to diversify your points & miles balances. It’s essential to have pots of travel currencies in a variety of programs, and Citi ThankYou points do offer additional flexibility, both with unique transfer partners and the ability to redeem points for airfare at 1.25 cents apiece (especially since airfare purchases through the ThankYou Travel Center are treated as paid tickets, and are thus eligible to earn redeemable and elite-qualifying miles). If you happen to have a need for miles or points on any of the aforementioned airline/hotel partners, or if you want additional points to cover an upcoming flight, the Citi Premier could be a good option for you.
Two things are holding me back from applying for this card: the staggered sign-up bonus, and lack of a truly useful transfer partner (at least for me). If the 50,000 point sign-up bonus became available in its entirety in year one and the ThankYou Rewards program added at least one North American transfer partner (like AA or even SPG), then the Citi Premier would be a no-brainer for the first year and (depending on your dining/entertainment spend) could even be a long-term keeper. As is, the value offered isn’t enough to draw me in.
What do you think of the Citi Premier? Do any cardholders out there that feel strongly about the value proposition of this card (one way or the other)? Please share your thoughts in the comments section below!
Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.
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