Update 11/15/20: Transfers from Citi to Shop Your Way no longer have 20% bonus. Point transfers from Citi are no longer recommended.
Last week we reported that Shop Your Way points can be redeemed for gift cards. And the world yawned. But in my mind, this is a really big deal. This development increases the value of Citi ThankYou points for most uses other than transfers to airline partners.
Citi ThankYou Rewards has long offered the option to transfer points to Shop Your Way at a 1 to 12 ratio. This is best thought of as a 1 to 1.2 ratio, though, because Shop Your Way points are worth 1/10th of a cent each rather than the usual 1 cent each. In other words, if you think of your Citi points as being worth 1 cent each, this transfer increases the value to 1.2 cents each.
In the past, I’ve completely ignored the option to transfer Thank You points to Shop Your Way. Shop Your Way points were restrictive in what they could be used for at Kmart and Sears and they expire over time without recourse to renew them (the length of time before they expire depends upon how you acquired them). Now, though, there’s a simple way to give the points the full value they deserve and to keep that value from expiring: convert the points to gift cards.
What this means
We can now convert Citi ThankYou Rewards points to gift cards with 20% more value.
If you go through the ThankYou Rewards portal to redeem points for gift cards, you’ll get only 1 cent per point value (except when they have promotions for certain gift cards). Now, you can get 20% more value for any of the gift cards that Shop Your Way offers. This includes some popular merchants such as eBay, Walmart, Southwest Airlines, Hotels.com, and much more.
To figure out how many ThankYou points you need for a gift card, divide its value (in cents) by 1.2. For example, if you want a $10 gift card, you can divide 1000 pennies by 1.2 to get the answer. You need 834 ThankYou points to get that gift card.
- 834 ThankYou points transfers to 10,008 Shop Your Way points
- 10,000 Shop Your Way points transfers to a $10 gift card.
Why this is exciting
Those who routinely transfer points to airline partners to get great value won’t be interested. But those who like to use points to purchase travel or merchandise should give this deep consideration. Here are some ramifications that have occurred to me so far:
- 20% bonus applies to fee-free cards like Citi Double Cash and Rewards+. Usually you need a premium card to get better than 1 cent value for your points.
- 20% extra value for travel. We’re losing the ability to book travel through the ThankYou travel portal for 25% extra value with the Premier card. Now, though, it’s possible to get close to that for certain types of travel: Hotels booked through Hotels.com, and Southwest flights. And you won’t need the $95 Premier card to do so.
- Gift cards are often better than rewards because they stack with promotions. Suppose you want to buy something at Nordstrom, for example. If you had a way to redeem points for Nordstrom merchandise, you would pay full value. With a Nordstrom gift card, though, you can take advantage of sales, coupon discounts, portal rewards, etc.
- Citi Double Cash now earns 2.4% everywhere (towards gift cards). Citi Double Cash earns the equivalent of 2 ThankYou points per dollar. Now you can convert those ThankYou points to gift cards at a value of 1.2 cents each. 2 x 1.2 = 2.4.
- Citi Double Cash plus Rewards+ becomes an amazing fee-free combo. Rewards+ offers a 10% rebate per year on redeemed ThankYou points. Let’s say that you spend $50K per year on your Double Cash card and so you earn 100,000 ThankYou points. If you redeem all 100,000 for $1,200 in Shop Your Way points (and then gift cards), and if your Rewards+ card is pooled with your Double Cash ThankYou account, then you get back 10,000 points per year. So, for 90,000 points per year, you get $1,2000 value. Let’s now redeem the 10,000 points rebate for $120 in gift cards. In total, $50K spend gets you $1,320 in gift cards. That’s 2.64 cents per dollar!
I plan to do some research to see if the gift card deals are really as good as they appear. I already see a major problem: you often can’t get denominations over about $30 or so. If a vendor doesn’t allow merging gift cards or using many gift cards on a single purchase, this can severely restrict the utility of these cards.