What is going on with the the Citi Prestige Card? For the last several months, it has fallen off many’s radar as Citi stopped accepting new applications. Those who had it, kept it, those who didn’t forgot about it. However, we’ve got some new rumors, let’s run over them.
Where we Currently Stand
The Citi Prestige Card has always been a great value proposition. Before getting into the updates, let’s talk about the card’s earn rate today. We’ve got 3 ThankYou Points per dollar on airfare and hotels, 2 points per dollar on dining and entertainment and 1 point per dollar on everything else. At this moment in time, I value Citi ThankYou points at 1.86¢ a piece. This is roughly a 15% discount to the more valuable transferable points from Chase and American Express, both coming in around 2 and a quarter, but still very good. Even at 1.86¢, Citi ThankYou points are still more valuable that just about any individual airline or hotel award currency.
In general, these bonus earn categories are not currently as good as the card’s most direct competitor, the Chase Sapphire Reserve. It offers 3x points on all travel and dining. Just as importantly, the card earns Ultimate Rewards, worth 2.19¢ each. With a more lucrative earn rate, many people were using their Citi Prestige card for one purpose, the extremely valuable 4th night free perk. A benefit unique to the Citi Prestige that reimbursed the cardmember the cost of the 4th night at a hotel after 3 paid ones. In the olden days, people used to plan their trip so that the 4 night was the most expensive, however, Citi put the kibosh on that last year and started averaging the cost. Nevertheless, it could still add up to monster savings. Even using the benefit twice a year, at a modest $200 a night hotel, means one could just about pay for the card with these two transactions alone. The remaining 50 could be easily justified by taking advantage of the card’s $250 annual air travel credit. So, looking at is this way, the Citi Prestige may be the easiest premium card to justify, because it’s effective annual fee is negative, even without worrying about the value of points earned on spend.
As mentioned before, I’m guessing that due to the Sapphire Reserve’s better earn rate, the Citi Prestige sat in the safe until it was time to book a hotel. While this flexibility is great for the points and mile game player, it’s terrible for Citi’s bottom line. So, it’s my opinion, that Citi’s decision to suspend new applications was due to a combination of competitive pressure from Chase and Amex, and the increasing sophistication of points maximization strategies.
Where we’re Going
Now that we’ve got the historical precedent set. Let’s see what Citi has on tap for us going forward. Of course, these are still rumors, to the best of my knowledge, Citi hasn’t announced them directly. That said, they are coming from multiple sources, so I’m tending to believe they’re true.
Starting with the re-launch in January 2019, we’ve got 5 ThankYou Points per dollar on dining and air travel and 3 points per dollar on cruises, 3 points on hotels and finally, 1 point on everything else. Temporarily continuing is the 2 point per dollar bonus on entertainment, an often hard-to-define category, though it looks as if this will go away in September of next year. I have seen some conflicting reports on the new bonus structure, but the one just presented comes from what I consider the most reliable source.
Continuing is the $250 annual credit, but is’ being expanded to include general travel purchases. I consider this a very big improvement, even though the legacy benefit tied directly to air travel wasn’t exactly hard to use.
A Devastating Blow
Then, following these very positive changes, comes one semi-devastating one. A nerf to the 4th night free perk, also effective September 2019. The previous benefit was unlimited. In theory, someone traveling every week for work could have used this 52 times. Under the terms of the re-launched card, this benefit will be capped at just 2 times per year. For frequent travelers, this is nothing short of heartbreaking.
Taking a look at the annual fee, and it’s increasing by $45 to 495. Rounding out the bad-news, is the removal of the 25% bonus on points redeemed for travel via Citi’s portal. It’s now going to be done so at just 1¢ per point, down from 1.25 under the legacy benefits.
Taking it all In
We’ve got a lot to unpack here, but overall, I don’t think the changes are all that positive for the multi-card points and miles enthusiast. For the single-card wallet guy, I think they’ll work out nicely. I think it’s a net-negative for the multi-card holder because the Citi Prestige is transitioning to an everyday spender, as opposed to a hotel-only card. In other words, we’ve already got a fantastic option for airfare, the Amex Platinum, a great option for groceries, the Amex Gold and a great option for dining, the Sapphire Reserve.
The big variable, that we just don’t know anything about at the moment, is any potential signup bonus. With all this in mind, let’s take a look at where one would end up after one year of spending on the re-launched Citi-Prestige vs the Chase Sapphire Reserve. As I’ve done the last couple videos, I’m going to use my own 2017 spending patterns and apply them to a hypothetical $18,000 ran through each card.
The first thing we see above, is the fact that not all category bonuses match up directly with their card’s earning structure. This is due to the fact that some categories straddle bonus and non-bonus earn.
First out the gate is the new Citi Prestige. Despite ThankYou Points being worth less than Ultimate Rewards, the greater earn rate more than compensates for this. I estimate that year one points earned on the Citi Prestige will be worth $661.21 and those earned on the Chase Sapphire Reserve worth $559.98.
Dropping those numbers into our overall valuation and we can continue. Next up is the travel credits. Both now offer broad category ones so I don’t hesitate placing their full-face value here. $250 to the Citi Prestige and $300 to the Chase Sapphire Reserve. Both offer Priority Pass access. I only assign a value of $100 to this benefit, as I conservatively estimate the value at $10 per visit, 5 times per year, 2 guests each time. I know Priority-pass themselves value each visit at more than double this, but I think that’s obscene. I’ve never been in any Priority Pass lounge that I’d pay that much for.
Global Entry or TSA Precheck is offered with both, pretty straightforward, $100. Next up is miscellaneous insurances, I’m going $100 for both here. Both offer differing levels of price or return protection, but going down the path of exploring those nuanced differences is beyond the scope of a video that focuses on unofficial changes to an existing card.
And finally, what could be the most valuable benefit to the Citi Prestige Card, the 4th night free. The benefit cap of 2 times per year is devastating, but this benefit is still valuable. We’ve got two reimbursed stays, estimated at $300 a night here. $600 total.
Citi also has something called Price Rewind. A benefit not exclusive to the Prestige card by the way. Other Citi cards are eligible. Chase use to offer something similar, Price Protection, but it was discontinued in August of this year. Anywho, Citi will reimburse the cardholder up to $200 per item and $1000 per year, if an item purchased with an eligible card is advertised for a lower price within 60 days. Pretty great, right. They even automate this process with an online price tracker, though it’s not particularly accurate. The actual value of this benefit is a shot in the dark. I’m going $200, but, as I just said, could be up to $1000.
Last month, I was genuinely surprised when I found the new SPG Luxury Card from American Express to be more valuable than the Sapphire Reserve. This month, the shock has worn off. It’s become pretty obvious that Chase’s competitors have taken notice of the CSR’s success and are all starting to offer more competitive products.
If the rumors turn out to be true, and I suspect they will, I feel confident in saying the Citi Prestige offers a higher projected return than the Chase Sapphire Reserve, by $806. Furthermore, the Citi Prestige looks to offer even greater upside. If one is strategic about their use of the 4th nigh free benefit, gleaning upwards of $1,000 in value is a real possibility. The Sapphire Reserve just doesn’t have anything to match it. As I mentioned earlier, the one nuanced, but often important difference between cards is their various insurances or price-protections. Once the card is officially re-launched, I’ll be eager to dive into those and see if the Sapphire Reserve can’t make up some ground, as its ancillary benefits are generally outstanding.
Ultimately, I see the increased competition in the premium credit-card market a good thing. A couple years ago, Chase’s decision to offer 3 points per dollar on all travel and dining spend was groundbreaking, now, it feels a little light. It’s hard to imagine that Chase would already be looking to improve the card’s benefits, especially considering the report that, at least immediately after launch, they were losing money on it. That said, in the face of intense competition, it’s are to imagine them not.