Citi cards - major changes

[albyd]

I don't blame Citi for reducing earn rate to reflect their reduced interchange revenue.
I think simultaneously reducing conversion rates is just unfair - a double whammy for cardholders.

 

[Nutcase]

Citibank does not fund this. In this sense, it's not something Citibank directly provides as value to cardholders. It just appears that Citibank provides the benefit, so they get the street-cred!
If it's abuse too much you'll see the benefit removed - or at least, restricted to specific properties.

Citibank is clearly NOT being creative with the devaluation and it must be the same short-sighted people who made the illegal Nov-2015 changes.
Personally, I'd fire these folks immediately. It's practically corporate espionage by not exploring the more profitable and more consumer friendly options available. ALL of the affected loyalty programs would have suggested alternatives to Citibank which would have put everyone in a more profitable position without eroding customer value.

Whoa - easy there cowboy.

1) Citibank provide the benefit that you are referring to. How on earth do you think it happens otherwise?
2) Firing the product people will not bring your points back
3) The problem is reduced interchange revenue. This is mandated by the RBA.
4) The solution to the problem is to reduce the amount paid away from the shrinking interchange revenue bucket

Unless the award partners are prepared to reduce the amount that they charge citibank then there is no way around this.

All banks will go this way in the next couple of weeks. Citibank are second behind ANZ with this. This is not corporate espionage, it is economics and how cards businesses run globally.

Citibank are the worlds largest card issuer - they do know what they are doing.

 

[opusman]

So thats a "No"?

As someone with an economics background, I struggle with the idea of "pulling figures out of the air" as you have done and "I bet it would be..." as a premise. Numbers don't lie.

I'm still waiting for you to provide evidence of a benefit to consumers from the RBA's changes


(to be honest, I'm not, because there aren't any. but do your best...)

 

[Cruiser Elite]

Clearly you have not participated in the Prestige 'Stay 4 Pay 3' promotion.

It may be useful to see these promotions in the past tense given up coming changes.

Might be more useful to wait and see if any future announcements actually occur.

Citibank does not fund this. In this sense, it's not something Citibank directly provides as value to cardholders. It just appears that Citibank provides the benefit, so they get the street-cred!
If it's abuse too much you'll see the benefit removed - or at least, restricted to specific properties.

Correct me if I am wrong but is not Prestige a Citibank card? Is not the 'Stay 4 Pay 3' a benefit of holding the Prestige Card?

Abuse? HTF can actually using this offered benefit be ever considered abuse of Prestige?

 

[dajop]

Citibank are the worlds largest card issuer - they do know what they are doing.

How much of these cards are consumer facing cards though vs corporate cards? Just because head office knows what it is doing doesn't always mean local parts of a company do it so well.

I tend to agree with trippin, not particularly creative way Citi have managed this. I guess the assumption is consumers won't move and other banks will follow.

 

[Nutcase]

How much of these cards are consumer facing cards though vs corporate cards? Just because head office knows what it is doing doesn't always mean local parts of a company do it so well.

I tend to agree with trippin, not particularly creative way Citi have managed this. I guess the assumption is consumers won't move and other banks will follow.

It makes no difference what type of card it is, the drivers are the same for scheme cards and so are the revenue buckets.

Non scheme (Diners and AMEX) offer enhanced data which Visa and MC cannot which does make a difference to the product offering.

There are only a handful of scheme card issuers in Australia. The big 4 & Citibank. These make up around 80% of the cards on issue in this country.

With ANZ ditching AMEX and devaluing its scheme cards and NAB, WBC and CBA about to do the same, where do you think these disenfranchised Citibank card holders will go to get points? AMEX of course but the reality is that anyone who wants points is already with AMEX or on the way anyway.

Citibank knows exactly what its doing. They bought the Coles Mastercard from Wesfarmers with a $850bn debt book and 500,000 cards hanging off the back of it. They have the BOQ, Suncorp and Virgin card portfolios as well as their own cards and Diners Club. I think the team there in Pitt Street Sydney are a lot smarter than you realise.

 

[dajop]

It makes no difference what type of card it is, the drivers are the same for scheme cards and so are the revenue buckets.

OK, I'll go back into my box. Except I will disagree. The drivers for corporate cards (as they appear at the personal card holder level) are somewhat different to the drivers of consumer cards. I've had three different Citi corporate mastercards (across two employers) and had no visibility on what benefits my employer accrued from the scheme - assume they are meaningful enough (rebates) to have the scheme in place. But I know exactly what benefits my personal cards provide.

Citi do very well here in SG with consumer cards I believe, and they know what they are doing - eg. they have a very good card that whilst is not as generous as some on the earn side (1.2 vs 1.4 points per $ with competitors) - makes up for that by having a wealth of different options available, whereas most competitors lock you into Krisflyer (all) and Asia Miles (some). I am not sure what advantage they bring in AU vs competitors.

 

[JessicaTam]

[mod hat]
A number of posts have been removed.

Play nice ... or suffer the consequences.
[/mod hat]

 

[Nutcase]

OK, I'll go back into my box. Except I will disagree. The drivers for corporate cards (as they appear at the personal card holder level) are somewhat different to the drivers of consumer cards. I've had three different Citi corporate mastercards (across two employers) and had no visibility on what benefits my employer accrued from the scheme - assume they are meaningful enough (rebates) to have the scheme in place. But I know exactly what benefits my personal cards provide.

Citi do very well here in SG with consumer cards I believe, and they know what they are doing - eg. they have a very good card that whilst is not as generous as some on the earn side (1.2 vs 1.4 points per $ with competitors) - makes up for that by having a wealth of different options available, whereas most competitors lock you into Krisflyer (all) and Asia Miles (some). I am not sure what advantage they bring in AU vs competitors.

The maximum rebate I have ever negotiated on a scheme corporate card was 1%. Basically the Bank split the interchange with the card user. The main advantages are the reporting, spend control (Merchant category blocking) and limit management (at a company level and spend level). There is better global acceptance for scheme cards of course.

That deal would not fly today as business card interchange will be capped at 0.80% so the rebate would be 0.40% in today's world which is hardly worth it.

SG is a very different market to Australia. The SG government controls credit limits based on income.

Credit Cards - MoneySENSE

The dreaded interchange is not controlled in Singapore so there is more revenue (as a % of spend) to pay away as a reward for the card holder.

You cannot compare the AU market with SG for the purposes of rewards and cards. The markets are very different.

 

[dajop]

You cannot compare the AU market with SG for the purposes of rewards and cards. The markets are very different.

I understand that, but you can compare Citibank's respective position in markets, even if the markets are very different.

My point was that Citibank manages to provide an attractive offer relative to competitors that is not dependent on having the highest "bang for the buck" in terms of earn/burn rate. In the AU market, after these changes, I am failing to understand what makes Citi attractive over it's competitors, which gets to trippin's remarks he originally made about their lack of creativity.

 

[kamchatsky]

I understand that, but you can compare Citibank's respective position in markets, even if the markets are very different.

My point was that Citibank manages to provide an attractive offer relative to competitors that is not dependent on having the highest "bang for the buck" in terms of earn/burn rate. In the AU market, after these changes, I am failing to understand what makes Citi attractive over it's competitors, which gets to trippin's remarks he originally made about their lack of creativity.

I think if anything, it is more of banks rely on people's inertia; i.e. cannot be bothered to move to another bank at all. All banks rely on us to do that.

Now the AFFers are always very switched on and will maximise any benefits and minimise costs. However we are only a very small % of Citibank's customer base.

 

[trippin_the_rift]

I think if anything, it is more of banks rely on people's inertia; i.e. cannot be bothered to move to another bank at all. All banks rely on us to do that.

Now the AFFers are always very switched on and will maximise any benefits and minimise costs. However we are only a very small % of Citibank's customer base.

Given how active the banks are in acquiring new cardholders, I'd say they're doing a great job at disrupting any perception that people can't be bothered to switch banks.
AFF might be small but the base would be reflective of the majority, because - low-end and high-end cardholders tend to stay put. They find something, set it and leave it. It's the "middle class" members who engage the most, take up the most offers, give feedback and tell their friends. AFF is full of these 'middle class' folks (note: middle class in this example has no link to actual financial status or income).

 

[coolkid101]

And replace it with what? This is the new normal.

Im surprised at the outrage. The writing has been on the wall for 12 months and the discussion around this has been endless. I have been warning of this since the white paper was released by the RBA in 2016.

The threats of cutting up cards and moving elsewhere are most entertaining. Given that all scheme cards businesses in Australia are the same with the same revenue and cost drivers, where are you going to go?

AMEX & Diners own the rewards space. You will not get value out of a scheme card any more.

Well for one I'll be looking at the virgin velocity high flyer visa. They are keeping the earn rate at 1:1 velocity points which will yield about 0.7 kf converted over. The monthly cap is lowered to 8k from 10k so while may not yield huge amounts it'll still be useful.

While I agree this will likely be the new norm, my gripe is with the high fee for a earn rate like most cards on the market, especially when they were previously trying to differentiate themselves by offering just that little bit more than competitors, which made the annual fee more palatable. At least 3+1 hotel and hopefully yq transfers are still staying

 

[Jacques Vert]

I still have a CitiBusiness card in the drawer which I kept following the previous changes as they waived the fee; although I haven't used it for months.

18 months ago it was 1.25 pts per $ with 1:1 transfer to Qantas.
Now 0.75 pts per $ with 3:1 transfer to Qantas. By my maths that's 0.25 QF points per $, down from 1.25:shock::evil:

ANZ ditching Amex but the fee is $425 (+ $65 additional cardholder) = $490! I don't think so.

Can't see me keeping either unless they waive the annual fee which I think will be unlikely.

For now I will keep using my DJ Amex and Woolies Visa until all the dust settles.

I think the winners (at least in the short term) will be Amex and the merchants who accept Amex with no or a small surcharge.

 

[Supersonic Swinger]

I think the winners (at least in the short term) will be Amex and the merchants who accept Amex with no or a small surcharge.

Although I wouldn't be surprised if merchants begin to surcharge more for Amex or continue to reduce acceptance to Diners Club levels. That incremental Amex merchant fee will equate to about 1% of their revenue, and a much larger percentage of their actual profit margin...

 

[albyd]

I hope Amex don't follow Diners and reduce MR earn and transfer rates to mirror what Citi/Diners have done just because they can.

 

[Nutcase]

Well for one I'll be looking at the virgin velocity high flyer visa. They are keeping the earn rate at 1:1 velocity points which will yield about 0.7 kf converted over. The monthly cap is lowered to 8k from 10k so while may not yield huge amounts it'll still be useful.

While I agree this will likely be the new norm, my gripe is with the high fee for a earn rate like most cards on the market, especially when they were previously trying to differentiate themselves by offering just that little bit more than competitors, which made the annual fee more palatable. At least 3+1 hotel and hopefully yq transfers are still staying

You know that virgin card is issued by Citibank right? Citibank has a "one size fits all" approach to cards like this. They issue Suncorp and BoQ as well. All of them are the same.

 

[oz_mark]

You know that virgin card is issued by Citibank right? Citibank has a "one size fits all" approach to cards like this. They issue Suncorp and BoQ as well. All of them are the same.

Citibank have advised what they are doing with the Virgin Money cards. They are retaining a 1:1 rate for the first $8,000 per month for the High Flyer card. They are also making the same cuts to government spend.

 

[amaroo]

FWIW BOQ specialist.....

Qantas

1 point for every $1 spent on eligible purchases in Australia up to 10 000 points per month and 0.625 points per $1 thereafter
1.5 points for every $1 spent on eligible international purchases
1 point for every $1 spent on eligible BOQ Specialist finance contracts
1 additional Qantas Point per $1 spent on selected Qantas products and services in Australia.

Virgin

1 point for every $1 spent on eligible purchases in Australia up to 10 000 points per month and 0.625 points per $1 thereafter
1.5 points for every $1 spent on eligible international purchases
1 point for every $1 spent on eligible BOQ Specialist finance contracts

 

[coolkid101]

yes i know they are issued by citibank - and if you had a look at my post i did say post June the earn rate was going to stay the same only with a drop in the cap. so no not "all of them are the same".

here's a helpful link for you to correlate what i've said, might be useful for you before your sweeping comments make it seem like i haven't done my own homework before posting - Virgin Money Velocity High Flyer Visa & Flyer Visa - Point Hacks Review

You know that virgin card is issued by Citibank right? Citibank has a "one size fits all" approach to cards like this. They issue Suncorp and BoQ as well. All of them are the same.