When (and why) you should downgrade from the Citi Premier to the Citi Rewards+

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Sometimes, a card that you have in your wallet no longer serves you like it used to. Fortunately, there are other options besides outright canceling your card, which could potentially affect your credit score and forfeit all of the rewards you've accumulated.

In this series, we'll help existing cardholders figure out when (and why) they should downgrade to a card with the same issuer. We'll start with the Citi Premier® Card, a popular midrange travel credit card with a $95 annual fee.

While it's likely that most cardholders can get enough value from the card to justify paying this fee, for some, it may start to lose its luster. For instance, the card's annual $100 hotel savings benefit is somewhat limited, requiring you to book through Citi ThankYou and spend at least $500 (excluding taxes and fees) for the statement credit to kick in. While the card's points transfer opportunities can be lucrative, you may want to move onto a different transferable points program or earn cash-back rewards instead.

Whatever your motivation is, let's analyze when (and why) cardholders might want to downgrade from the Citi Premier to the no-annual-fee Citi Rewards+® Card.

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You get to keep your Citi ThankYou points

Rather than canceling your Citi Premier, downgrading to the Citi Rewards+ ensures that you won't lose any of your hard-earned ThankYou points in the process.

Be aware, though, that your ThankYou points will lose significant value once they are transferred over to your Citi Rewards+ balance. That's because the Citi Premier unlocks points transfer opportunities to 15-plus airline loyalty programs, which helps you land closer to TPG's valuation of 1.8 cents per point.

The Citi Rewards+ does not allow for points transfers, save for the option to move your points to JetBlue TrueBlue at a less lucrative 5:4 ratio compared to 1:1 with the Premier.

But if losing points transfer abilities doesn't matter to you, your Citi ThankYou points will be worth 1 cent each — or less — with the Rewards+ card. As a cash-back card, your redemption options are buying gift cards at 1 cent per point or shopping with points at Amazon and Best Buy at less than 1 cent each.

Still, having these redemption options are better than losing your points altogether.

The sign-up bonus on the Citi Rewards+ is marginal

With the Citi Rewards+, new applicants can earn a sign-up bonus of 20,000 points after spending $1,500 in purchases in the first three months of account opening and for a limited time, earn 5 ThankYou points per dollar at restaurants up to $6,000 in the first 12 months; then 1 point per dollar spent thereafter. But when you downgrade (also known as a product change) from the Citi Premier to the Citi Rewards+ card, you're ineligible to receive a sign-up bonus on a card.

That said, missing out on 20,000 bonus points isn't the biggest deal in the world. For comparison, the Citi Premier offers 80,000 bonus points after spending $4,000 in the first three months of account opening — worth $1,440.

Following the previous point (get it?), you'll get to preserve any of the ThankYou points earned through your Citi Premier when downgrading to the Citi Rewards+, eliminating the risk of losing your rewards balances altogether.

Related: Can you downgrade and then upgrade to the same card?

You'll keep some of the same bonus categories — with a round-up benefit

Admittedly, the Citi Premier comes with one of the best rewards rates, awarding bonus points on both travel and everyday purchases:

• 3x on the following:
• Air travel.
• Hotels.
• Restaurants.
• Supermarkets.
• Gas stations.
• 1x on other purchases.

While downgrading to a no-annual-fee card often means you'll lose that full earning potential, the Citi Rewards+ preserves some of this rewards rate by offering 2x on supermarkets and gas stations (on up to the first $6,000 spent per year, then 1x) and 1x on other purchases.

If your spending has decreased significantly — especially for travel — since the start of the pandemic, then the Rewards+ will ensure that you'll still earn bonus points on two common purchase categories.

What's unique about the Citi Rewards+ is the 10% points bonus benefit. In other words, all purchases will round up to the nearest 10 points. To illustrate this, imagine that you buy a $1 bottle of water at a vending machine. You'll earn 10 points on that purchase, despite it typically earning 1 point with most other cards.

While this benefit is marginal, the points earning opportunities can add up over time. Therefore, the Citi Rewards+ also becomes a useful card for those small, routine purchases you'll have in your everyday life.

You'll automatically get 10% of all the points you redeemed back

Another unique benefit of the Citi Rewards+ that's not found on the Premier is the ability to get 10% points back for the first 100,000 points you redeem each calendar year.

Let's say that you redeemed 50,000 points with your Rewards+ in a year. You'll receive 5,000 points back, worth $50 toward gift cards. While not a huge benefit, this is an easy benefit that takes no work on your part — a great feature for a card with no annual fee.

Double down with both cards

Here's an alternative strategy: Double down with both cards instead. Here's a preview of the benefits of doing so:

• Snag an additional sign-up bonus (so long as you meet Citi's eligibility criteria).
• Earn more Citi ThankYou points by using your Citi Premier for 3x earning and the Citi Rewards+ for non-bonus and small purchases.
• There's no additional annual fee associated with adding the Citi Rewards+ to your wallet.

Adding the Citi Rewards+ can make carrying your Citi Premier more valuable, so it's definitely worth considering if you are on the fence about discontinuing your participation in the ThankYou program.

Related: Why you should double down with the Citi Premier and Citi Rewards+

Bottom line

TPG staffers are used to routinely evaluating what's in their wallet, making decisions to keep, downgrade or cancel cards when it comes time to pay an annual fee. If you've carried the Citi Premier for some time now — and the $95 annual fee is about to hit your statement — know that downgrading to the Citi Rewards+ is a secure option.

Official application link: Citi Premier.
Official application link: Citi Rewards+.