A new comparison of Citi Prestige, Premier, and Preferred cards

Note: This post is a re-write of a previously published post: Citi Prestige vs Premier vs Preferred. Since that post was written, there have been big changes in the ThankYou program…

Lately I’ve had a bit of a crush on my Citi Prestige card. I signed up for the card in September 2014 in order to take advantage of both expiring and new benefits to the card (see “Citi Prestige experiment failed, yet I’m way ahead. Here’s how…”). Since then I’ve practically fallen in love with this card (see: A great combination: American Airlines status plus Citi Prestige).  While it is a fairly expensive card, it’s easy to get huge value from its perks and point redemptions.

That said, recently the Citi Premier card has changed dramatically: Citi has overhauled the card’s category bonus structure, and has expanded options for getting more than 1 cent per point value from its rewards.

And then there’s the no fee but also similarly named Citi ThankYou Preferred card. As you’ll see below, there are a few really good uses for this card.

Which is right for you? Any of them? All of them? Let’s drill down into each, from least to most expensive:

Citi ThankYou Preferred

Annual fee: $0
Current signup bonus: 20,000 ThankYou points after $1500 spend in 3 months.
Category bonuses: 2X dining and entertainment; 1X elsewhere

There’s not a lot to say about this card. Its best traits are its decent signup bonus for a no-fee card and not horrible earnings for dining and entertainment. Unless you also have the Premier or Prestige card, points are worth at most 1 cent each. So, for spend, you would do much better with a no-fee 2X everywhere card such as the Citi Double Cash card or the Fidelity Investment Rewards card. Still, the card is worth considering for its signup bonus alone.

The are, though, two really special things about this card:

1. This card is available as a downgrade from the premium cards (Prestige and Premier). So, if you’ve accumulated points on either of those cards and you want to cancel, but you don’t want to lose your ThankYou points, you can downgrade to this card instead. In my experience, even if you already have a Preferred card, you can still downgrade a premium card to the Preferred card and then have two (or more) Preferred cards.
2. Valuable retention offers are sometimes available with this card. For example, when I called and said that I was thinking of cancelling my Preferred card I was offered 4 bonus points per dollar at grocery stores, drug stores, and gas stations for a maximum total of 35,000 bonus points.

Citi ThankYou Premier

Annual fee: $95 (waived first year)
Current signup bonus: 50,000 ThankYou points after $3K spend in 3 months
Category bonuses: 3X travel and gas; 2X dining and entertainment; 1X elsewhere.
Perks:

• Redeem points for 1.25 cents each towards airfare, hotels, car rentals, and cruises
• Transfer points to participating loyalty travel programs
• No foreign transaction fees

Where the Preferred card is good just for its signup bonus and retention offers (in my opinion), the Premier offers an excellent combination of category bonuses and valuable rewards. If you travel often and/or spend a lot on gas, it’s hard to do better than 3X points, uncapped. 2X for restaurants is competitive with most other rewards cards; and “entertainment” is a broad category for which other banks haven’t offered bonuses. Here’s what Citi says about it:

Q: How is the entertainment category defined?

A: Entertainment is defined broadly as purchases made for live performances (e.g., concerts, theater), movie theaters, amusement parks and cultural events (e.g., zoos, museums). Entertainment merchants include sports promoters, theatrical promoters, movie theaters, amusement parks, tourist attractions, record stores and video rental stores.

When redeeming points, your best value will be to transfer to airline programs such as Singapore Airlines or Air France or to use the points directly to buy travel at a discount. When used to buy travel (airfare, hotels, car rentals, and/or cruises), points are worth 1.25 cents each, which happens to be the same rate offered by Chase with their Ultimate Rewards program for Sapphire Preferred and Ink Plus cardholders.

Compared to the Chase Sapphire Preferred, this card has better category bonuses for the same annual fee, but it has fewer useful transfer partners. Overall, I see this card as being extremely competitive compared to the Sapphire Preferred as an all around go-to travel credit card.

Citi Prestige

Annual fee: $450 ($350 for Citigold customers. Also, those who apply in-branch are often offered the $350 fee)
Current signup bonus: 50,000 ThankYou points after $3K spend in 3 months.
Category bonuses: 3X airlines, hotels, and travel agencies; 2x dining and entertainment; 1X elsewhere.
Perks:

• $250 air travel credit (including airfare) per calendar year
• Free lounge access: AA Admirals Club Lounge access, and Priority Pass Select with free guests
• $100 Global Entry application fee credit
• Use points for 1.33 cents value for any flight; or 1.6 cents per point value on American Airlines
• 15% to 25% Relationship bonus for Citi Gold, Global Client, and Citi Private Bank customers.
• Transfer points to participating loyalty travel programs.
• 4th night free hotel benefit
• Complementary green fees at many golf courses
• No foreign transaction fees

It used to be that the Prestige card offered $200 of travel credits each year, but only to reimburse fees (such as checked bag fees). Now they’ve increased the benefit to $250 per year and made it available for all airline charges. This means that you can pay for a single flight with your Prestige card and automatically get $250 of that charge reimbursed each calendar year. To me, this makes the air travel credit so easy to get that it might as well be considered a discount off of the annual fee. When looked at that way, the annual fee is really just $200 ($450 – $250). Citigold customers (and those who signed up in-branch and got the $350 annual fee) do even better and net a mere $100 annual fee after accounting for the $250 rebate. That’s only $5 more than the Premier card!

When considering that the annual fee is not nearly as high as it appears (thanks to the air travel credit), the card’s earning rate and perks are pretty darn good. Unlike lounge club access with many other cards, this one includes the ability to bring in guests for free (even with the Priority Pass Select membership). In comparison, the $450 Amex Platinum card offers free lounge club access only to the cardholders themselves except when visiting American Express’ own lounges. Amex also offers $200 in airline fee credits to help offset the annual fee, but you have to pick a single airline each year and are reimbursed only for fees, not for airfare.

Like the Amex Platinum card, the Prestige card offers a $100 Global Entry fee credit. If you, or a family member, or friend hasn’t yet signed up for Global Entry, I think it is really worth the effort. Even if you don’t travel internationally often, this will give you automatic entry into the TSA-PRE program so that you won’t have to take off your shoes, take out liquids, or any other such hassles when going through security for most domestic trips.

The Prestige card also makes your ThankYou points more valuable, especially when used on American Airlines or US Airways flights. Where the Premier card gives you at most 1.25 cents value per point towards travel, the Prestige card tops out at 1.6 cents per point. For example, with the Premier card, a $500 flight would cost 40,000 ThankYou points. With the Prestige card, the same flight (if on AA or US Airways) would cost 31,250 points. That amounts to nearly 22% fewer points.

On the other hand, the Premier card allows cardholders to buy other forms of travel for 1.25 cents per point value: hotels, car rentals, and cruises. The Prestige card gives you only 1 cent per point value towards those rewards.

Another difference between the Prestige and Premier card is the category bonuses. The Premier Card offers broader 3X coverage: where the Prestige card offers 3X for airlines, hotels, and travel agencies; the Premier card offers 3X for all travel and gas. For some people, the 3X gas earnings, alone, can make the Premier card worth holding above the Prestige card.

One point earning advantage that the Prestige card has over the Premier card is its annual relationship bonus. With a Citigold, Global Client, or Citi Private Bank relationship, you’ll earn an annual point bonus of 15% to 25%:

The relationship bonus explicitly does not include promotional bonus points (such as the signup bonus), but it’s unclear to me whether or not it applies to category bonus earnings. For example, if you spend $10,000 on the card entirely within the 3X category, you’ll end the year with 30,000 points. Then, with a 15% relationship bonus, will you earn 1,500 more points (15% of the base 10,000 points) or 4,500 points (15% of 30,000 points)? Either way, it’s a nice little perk.

Which is right for you?

For those who sign up for cards just for the signup bonus (and then cancel or downgrade to a no annual fee card at the end of the year), I think all three cards are good options. Even though the Prestige card doesn’t waive the $450 annual fee the first year, you can easily recoup more than the fee by signing up for the card mid-year. By doing so, you can earn the $250 annual airfare credit twice before the second annual fee comes due.

Any keepers?

Since the Preferred card is free, there’s no reason not to keep it. However, the question of whether or not to keep the Premier or Prestige card is less clear…

For those who spend a lot on gas and/or on travel not included in the Prestige card’s 3X categories, the ThankYou Premier card is likely to be a keeper. This is especially true if ThankYou points are redeemed for travel (for 1.25 cents per point value) or transferred to high value airline loyalty programs. At the very least, Citi may offer to waive your annual fee each year if you call and ask. Last year Citi let me keep my card for free (details in this post), and this year they offered to wave the fee if I spent $4500 on the card in three months.

If you manage to secure the $350 annual fee (either through Citigold checking or signing up in-branch), then keeping the Prestige card makes sense for almost everyone. Your net annual cost will be just $100, your points will be more valuable when used for airfare, and you’ll get a slew of useful benefits. For everyone else, I think it really depends upon how much value you get from the card’s earning structure, rewards, and perks. The answer to that will depend upon your own situation.

Personally, I’ve already received a huge amount of value from the card’s 1.6 cents per point American Airlines redemptions, the card’s lounge benefits, and the card’s 4th Night Free hotel benefit. So, I’m pretty sure I’ll keep the card.

Most likely I’ll signup for CitiBusiness Preferred Banking in order to get CitiGold checking for free. If that works out, my annual fee will be reduced to $350. I think it’s totally worth it. Of course, I’ll call when the annual fee comes due to see if they can offer any extra incentives to stay on board…

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