New Citi ThankYou Preferred Versus The No Annual Fee Barclaycard Arrival
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Back in June Citi announced to cardholders that they would be changing several features of their ThankYou Preferred card as of July 28, 2013, including the following.
Bonus Spending Categories: Instead of earning 1 ThankYou points per $1 on all purchases, the card will now earn 2 ThankYou points per $1 spent on dining purchases and entertainment including movies, museums, amusement parks, sporting events, even iTunes and Netflix downloads with no limits on the bonus you can earn - and 1 point per $1 on everything else. In my opinion, this is a positive.
No More Anniversary Bonus: This is the other major change and falls in the negative category. The Preferred’s 1-3% anniversary bonus (the percentage depends on how long you have had the card) on all the points you accrue during your cardmember year will be discontinued after your next anniversary. Clearly not a good change for cardholders, but depending on your spend you can easily make up for this by maximizing the new 2x categories.
Other Bonuses: Finally, the 100-point bonuses for enrolling in Account Online and Paperless Statements has been discontinued.
Although I hate to see a card cut back on its benefits, including an anniversary bonus that could be lucrative if you put a lot of spend on your card, I do think the new category spending bonuses are a big plus since we all spend a lot on dining and entertainment, both of which encompass a lot of kinds of merchants.
Citi ThankYou Preferred Versus Barclaycard Arrival
To put the Citi ThankYou Preferred and its new features in perspective, I thought I would compare it to another popular fixed-value, no-fee rewards card, the Barclaycard Arrival.
Bonus Offer: The Citi ThankYou Preferred comes with 20,000 bonus ThankYou Points after $1,500 in card purchases within 3 months of account opening. That equates to $200 in gift cards or travel. The no-fee Arrival card also has a bonus of 20,000 points, good for $220 in travel (but not other redemptions, which I'll get into below), and you only have to spend $1,000 or more in purchases in the first 90 days after account opening. Although the bonuses are the same, you have to spend $500 more on the ThankYou Preferred and the points are worth less on travel redemptions, so the winner here is the Arrival.
Earning: This is a bit of a toss-up since the Citi ThankYou Preferred now earns 2X points on dining and entertainment, which are both big categories. However, the Arrival card earns 2X miles on dining and travel. So the question is: do you spend more on entertainment (and remember, that includes all kinds of things like iTunes purchases and theme park tickets) or travel, which tends to be big expenses? Personally, I spend more on travel, and I suspect most folks do too since one airline ticket can more than equal all your movie tickets for the year, for example, so the winner is Arrival.
Travel Redemptions: This might seem like a simple calculation, but there’s a little bit more to it than meets the eye. Both cards offer 1 cent per point when redeemed for travel. However, if you have both the Citi ThankYou Preferred and the ThankYou Premier (which has a $125 annual fee), you can redeem your points for airfare at 1.25 cents apiece. That said, the Arrival card offers a 10% refund on your miles redemptions for travel, giving you a redemption rate that’s effectively 1.1 cents per mile. However, remember that if you are spending mostly on restaurants and travel, you're actually getting 2.2% back since you're earning double points on the Arrival, whereas with the ThankYou Preferred, if you're spending most of your money on restaurants and entertainment, you're getting 2% back thanks to the card's new bonus spending categories. So depending on your card combination, this could go either way, but if it’s a straight-up face off, I’d go with the Arrival thanks to that 10% points refund.
Non-Travel Redemptions: The ThankYou Preferred also offers 1 cent per point on many non-travel redemptions including most gift cards and other expenses like mortgage or student loan payments, while straight cash back gets you 0.5 cents per point in value. The Arrival card offers a rate of 0.5 cents per point for statement credits and gift cards, so I’d have to go with the ThankYou Preferred on this count.
Other Benefits: One of my big criteria for a great travel credit card is whether it charges foreign transaction fees, and here the difference is clear: the Arrival card does not while the ThankYou Preferred does. Granted, it might be easier to use the Citi ThankYou Preferred abroad thanks to its SmartChip technology, but it will cost you 3% more to do so. The winner here is the Arrival.
The other major difference is that the Arrival is a World Mastercard and comes with a suite of higher-end benefits including car rental insurance, trip protection, lost and delayed baggage protection and more, while the ThankYou Preferred is a Visa – that still carries some protections, but it’s not a premium product like a comparable Visa Signature would be. Winner here: Arrival.
All in all, though I do think making dining and entertainment permanent bonus spending categories on the ThankYou Preferred is a good move for Citi, in terms of a fixed-value card specifically for travelers, I’d still opt for the comparable no-annual-fee Barclaycard Arrival. However, you can get both cards since they come from different issuers - why get $200 in travel when you can get $400 instead?
Another thing to consider is getting the version of the Arrival card that does have an annual fee since the $89 fee is waived the first year, and the card comes with 40,000 points when you spend $3,000 in 90 days - so basically you're getting twice the sign-up bonus for the same amount of spend and you have a year to put the card to good use before that $89 annual fee shows up on your statement.
For more information, see these posts:
Barclaycard Arrival World Mastercard Bonus Hits 40,000 Miles