Citi cards - major changes

[Cynicor]

My prestige was cancelled today. I will find better value in a combination of card shuffling and the Plat Charge I think.

 

[theblank]

We have to find a card to pay land tax, shire rates and water rates after the middle of June. I cleared out the warehouse a few days ago.

I have got lots of credit cards and have started my own personal matrix, I guess that's not for everyone, but that's my sort of thing and its not as if i need to look at it more than once very few months.
I have assigned my 'govt' payments to use AMEX or ANZ

 

[theblank]

Prestige member- just got email today- advice please- transfer points to krisflyer OR velocity? Have almost 1 million in citi- time to get them out- Conflicting advice out there and mostly from overseas...

After June, and since SQ changed the points required to redeem a flight, and removed some of the surcharge, its exactly the same Citibank points to redeem for a SQ flight, whether transfer them to Kris Flyer or Velocity.
So its in your advantage to transfer to KrisFlyer now! Particulary that it seems to be easier to find reward seats on SQ with KF directly. Via virgin it appears to be scatty sometimes.

eg,
BNE>SIN economy reward, is 56000 KF, or 70000 VFF plus about $85 taxes
and both = 140000 citibank points (after June)

p.s. I did the math on this a few weeks ago, I hope i recalled correctly.

 

[maz1]

In situations like this its important to see rewards (and the ability to redeem those rewards) as a privilege and not a right. The other option is to pay market value for the ticket that you want.

None of these card products guarantee that you will get what you want when you want it nor do they guarantee the value (current or future) of the rewards points.

Once you accept that points earning on scheme cards is finished things will get easier.

Use an AMEX or a Diners instead.

yes, it is certainly starting to seem easier to just pay for a ticket- wait until there are sales, and dive in. The other way I was booking award flights was to buy AA miles when on sale, and then book business flights, however, even that's becoming tricky.

by the way, ANZ have cancelled their Amex cards from mid year.

 

[CJEMNMAC]

I am jacked that the signature card transfer to KF is 2.5pts to 1 KF....so cough

 

[Supersonic Swinger]

AMEX and Diners are the true travel and entertainment card products due to their enhanced spend data, analytics and control. Visa and Mastercard cannot compete on this footing.

Huh? For consumers and merchants, Amex and Diners are exactly the same, over engineered franken-products that are just payments mechanism with an unsecured debt facility hanging off the back of it with even more insane fees than Visa and MC charge.

 

[Nutcase]

Huh? For consumers and merchants, Amex and Diners are exactly the same, over engineered franken-products that are just payments mechanism with an unsecured debt facility hanging off the back of it with even more insane fees than Visa and MC charge.

Thats completely untrue.

As closed payment networks AMEX and Diners are able to offer services that Visa and Mastercard cannot. These are mainly relevant for back office functions such as finance and accounting.

By way of example, Diners Club is the Australian Government's card for airfares, car hire and accomodation.

https://www.finance.gov.au/procurement/travel-and-related-services/travel-suppliers.html

The reason for this is the enhanced data that Diners Club is able to provide to the government. There is also built in GST reporting which is ATO compliant which is very relevant for the Government spend as GST needs to be adjusted. As a result of this compliance, there is no need for receipts to be kept. AMEX corporate programs offer similar reporting and the ability to sign off card spend electronically and eliminate paper.

Diners Club does not have a credit facility.

As far as "Insane fees" that Visa and MasterCard charge, keep in mind that the issuing Banks are levying these charges, not Visa and MasterCard. The ancillary fees charged are in direct relationship to the benefits offered. It's only insane if you pay these fees and get nothing in return.

Diners was the original Travel and entertainment card and AMEX was a close second. The reason for these cards in the first place was so that the finance department would only have to pay 1 bill at the end of the month and get some control of their T and E expenditure.

As the market moved away from the core functions of these products and demand for more bells and whistles for card holders emerged, card products changed and we have ended up where we are now - the land of the franken card product.

Cardholders demand more rewards and lower fees. Merchants are seeing increasing demand for card acceptance and want that at a lower cost. Something has to give and we are seeing that now with regulated interchange, reduced points earn and higher fees.

 

[Supersonic Swinger]

Well considered answer Nutcase, but working on the assumption that the bulk of the 0.8% Visa/MC interchange fee is to provide the consumer bells and whistles:

- 0.6-0.7% of the roughly 2.0% Amex/Diners merchant fee is used to provide the same bells and whistles?
- is the +1.0% remaining really justified for these backoffice services?
- If it genuinely is, then that is a benefit to the employer issuing the card to their employees, which the employer should be paying, not a cost which the merchant should be funding?

With most payments being digital now, shouldn't you do away with rewards, the interchange fee be a sliver of a %, and if you want the benefit of these back office benefits you the cardholder pay that extra rather than it being imposed on the merchant?

 

[Nutcase]

Well considered answer Nutcase, but working on the assumption that the bulk of the 0.8% Visa/MC interchange fee is to provide the consumer bells and whistles:

- 0.6-0.7% of the roughly 2.0% Amex/Diners merchant fee is used to provide the same bells and whistles?
- is the +1.0% remaining really justified for these backoffice services?
- If it genuinely is, then that is a benefit to the employer issuing the card to their employees, which the employer should be paying, not a cost which the merchant should be funding?

With most payments being digital now, shouldn't you do away with rewards, the interchange fee be a sliver of a %, and if you want the benefit of these back office benefits you the cardholder pay that extra rather than it being imposed on the merchant?

The RBA has wanted interchange to be 0.00% since the late 1990's. They were not a fan of Scheme debit then either and wanted EFTPOS to work better however that didn't work out so well. Visa and Mastercard fight very hard when it comes to maintaining interchange and legal fights with them are brutal. Walmart in the USA knows this all too well.

Keep in mind that AMEX and Diners were originally charge cards (the latter still is) and as such their revenue was only card fees from card holders and merchant fees from merchants. LDC made up a small amount as did FX fees. In the last 15 years or so, AMEX has added revolving balances to their card fleet where Diners has not. This has meant that AMEX can broaden their card member base as well as reduce their merchant fees due to additional revenue streams.

The reason I mention this is that AMEX and Diners need to pay the banks to carry transactions on their networks. This is a real cost to them and each network (CBA, ANZ, NAB, WBC, Tyro etc) all have costs. This goes some way to explain why AMEX fees are higher.

As for rewards being removed - this is what the RBA ultimately expects for scheme cards as a result of interchange reduction. Rewards can be paid by AMEX and Diners who charge the merchant a higher fee. The merchant can then decide if they want to accept these cards and if they surcharge.

Ultimately the card holder demand drives the merchant acceptance. This is how Diners club had a renaissance in the 1990's with Ansett and the Ansett Golden Wing Diners club card.

The back end benefit of enhanced data is already paid for by the card holders employer as part of their corporate or business card program fees.

 

[d00dz]

What to do.. got 153k points...

 

[cove]

I saved $400 plus on a 4 night stay at the Marriott Marquis in Broadway NYC using Citi Prestige. Before too long it will really add up.

 

[Jacques Vert]

So what to do with the leftover CitiRewards points?

I have ~4,500 on my CitiBusiness card (which I haven't used much since the last devaluation). Only kept the card as a backup since they waived the fee last year. Given the new earn rate I won't be keeping it or using it so out it will go come annual fee time.

As I don't have enough points to transfer to an airline program, I guess I'll just buy a girt card as I don't have enough points for a toaster:shock:

If I increase my balance to 4,700 points I can get a $25 fuel voucher; better than letting Citi keep the points.

I'll need to do it soon though:

Effective 15 June 2017, we will be making changes which will increase the number of Points required to redeem a range of gifts cards, merchandise and travel available.

Point values and reward selections vary based on your credit card and may be different from those shown before you sign on.Signing on provides you the most complete program experience tailored to your credit card.​

 

[PLANT]

Or spend $16k and you can transfer to velocity

 

[Jacques Vert]

If I was to spend 16k, I'ld put it on one of my current "go to" cards and do far better. But thanks for the suggestion.

 

[DaveB]

Hopefully not wrong but seems Citi has gone from one extreme to the other with their changes to Prestige. I for one will miss their past card rewards generosity and being able to store and send points to various programs.
Despite my best endeavours, never ended up using their other products that simply never competed with my main two banks NAB and Westpac. Really can't see Citi staying in Oz much longer.
Will be interesting to see how further the banks will go in adjusting to the new landscape given they are seemingly now more tied to Visa/MC over Amex. Massive sign up points offers surely will go unless just matching the first year fee cost.

 

[albyd]

I don't think Citi is going anywhere.
It's not yet and might never be a 'mainstream' bank in Australia.
It's already well entrenched here as one of the largest card issuers - apart from its cards, it issues cards for smaller institutions that don't have the critical mass e.g. Virgin, BOQ, Suncorp.
I think this shock will eventually work its way through the system and everyone will adapt. We've still got to make the payments we've got to make - just won't get as much in rewards as we've been used to so far.
I doubt everyone will cancel their Citi cards en masse especially once the other issuers fess up to their plans.
I don't know non AFF members are as savvy so Citi's popularity on AFF may fall but not necessarily across its wider base.

 

[yohy?!]

Citi has exited retail banking in many Asian markets where they couldn't break the existing players hold on market share (as is the case here). I wouldn't count their outsourced back office management of card portfolios in the same space - they could conceivably continue these arrangements whilst scrapping their own direct retail business. As it stands they probably are just maintaining a token service offering to access mortgage and commercial market segments.

 

[cove]

Citi Prestige has been a biggie for both of us but now the RBA changes on the interchange fee is dramatically changing our points/miles. I still need cards to keep activity on our Qantas and Virgin accounts.Kris Miles have a use by date so no issue there. I plan to wait for the the annual fees on all our cards to fall due before making any decisions.

 

[ric_melb]

With operations in 17 Asia Pacific countries, and retail banking in some 14 of them its highly unlikely that Citibank Australia will close down its retail operations. And in Australia they are certainly not just maintaining a token service. As far as credit cards go they have a substantial card business in their own right. The white labelling will continue side by side with their own cards. Doubt Coles would have entered a 10 year contract with them without assurance of their commitment to retail banking in Australia.

 

[Nutcase]

With operations in 17 Asia Pacific countries, and retail banking in some 14 of them its highly unlikely that Citibank Australia will close down its retail operations. And in Australia they are certainly not just maintaining a token service. As far as credit cards go they have a substantial card business in their own right. The white labelling will continue side by side with their own cards. Doubt Coles would have entered a 10 year contract with them without assurance of their commitment to retail banking in Australia.

Citibank are the 5th largest issuer of cards in Australia. They are also strategic about what part of the retail market they play in. Unlike the big 4, Citi are happy to leave some products alone. They are also have the Diners Club Business which has the Australian government contract for Travel, accomodation and rental car spend (the largest spend of its kind in the country).

Their strategy is to run 2 parallel cards businesses. Their own home brand citibank cards and their white label "card services" program.

They aren't going anywhere.