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The Citibank 5X drama continues. More and more reports surface everyday of people who have had their Citibank credit card accounts suddenly terminated. The common thread seems to be ownership of a Citi ThankYou Preferred card that earns 5 points per dollar at gas stations, grocery stores, and drug stores for a limited time. People who have had their accounts terminated had used those cards to buy gift cards or reload cards. Citi has been closing all Citi cards held by those individuals, not just the ThankYou Preferred card; and Citi has been confiscating all ThankYou points, including those earned by other means.
One Flyertalker who goes by the handle “Happy” reported that when her Citi cards were closed and her ThankYou points confiscated, a Citi rep told her that buying gift cards was “fraud” (you can read Happy’s post here). If this is really Citibank’s position (vs. an ill-informed phone rep), then it is an extremely strange position to take. After all, gift cards are sold almost everywhere and often by banks themselves. If buying gift cards is fraud, then pretty much the whole world is committing it.
In reaction to this mess, soon to be attorney Paul Cook has setup a petition on change.org to try to force Citi to relent. I doubt the petition by itself will have its desired effect, but it will be very interesting to see what happens if news of these events and the petition reach national media outlets. What will Citi do then?
The downsides of being shut down
There are several negative aspects of getting shut down:
- Losing ThankYou points. If Citibank shuts down your accounts, they will confiscate all of your ThankYou points. They cannot take away miles earned on American Airlines cards or points earned on Hilton cards.
- Losing card benefits. Citi’s American Airlines cards have several great benefits such as free checked bags, priority boarding, and 10% rebates on awards. And, the Citi Hilton Reserve card offers automatic Hilton Gold status. As a cardholder, I wouldn’t want to lose any of those benefits (but losing them wouldn’t be the end of the world either).
- Missing out on sign up bonuses. After Citibank shuts you down, you probably won’t be eligible for new Citibank cards (at least, not for a long time). I don’t see this as a huge loss, though, since most great offers these days come from Chase, American Express, and Barclaycard.
- Credit report consequences. If Citibank closes your accounts, your credit report will show that your cards were closed by the issuer. This may or may not be a problem, but it may be something you would have to explain some day when applying for a mortgage, for example.
ThankYou card options
Many readers who have the now seemingly toxic ThankYou Preferred card have asked me what they should do. I don’t know what the right approach is for you (or for anyone), but here are some options:
Buy and pray: Some have said that they’ll continue buying gift cards and saving up ThankYou points for when they’re most needed. This is the riskiest approach.
Buy and burn: Another approach is to keep buying gift cards, but to also spend your ThankYou points as soon as you get them. That way your total loss will be minimized if you get shut down. One challenge here is that cashing out ThankYou points by using them to make mortgage or student loan payments seems to be one of the triggers that cause shut downs. So, use the points to pay for flights or to get gift cards instead. A good option, for example, is to redeem for Sunoco gift cards at 1 cent value per point.
Buy cautiously: Another approach is to keep using the ThankYou card for regular purchases, but to stop buying gift cards altogether. With this option, you can play it safe and cash out your points each month or you could take a chance and keep your points for someday.
Burn, cut and run: Some people don’t want to risk having Citi cancel their accounts so have chosen to close their own accounts first. So, the approach here is to cash out all of your ThankYou points and then cancel your cards before Citi does it for you. If you go with this approach and you have more than one Citi card, its an open question as to whether you should cancel all of your cards or just the ThankYou card.
Cut and run: Another option is to cancel your card(s) without first cashing out your ThankYou points. This way there is far less risk of Citi cancelling your account before you do.
What to do?
Personally, I plan to buy cautiously (i.e. I will stop buying gift cards) and I’ll use my ThankYou points only when I need them to pay for flights (which I do frequently). If I get shut down, I’ll write about and no-doubt I’ll be upset, but I’ll get over it. Citibank needs customers, but I don’t need Citibank.
How about you, what will you do?
See also:
- Citibank Stork delivers news
- ThankYou Citi, can I keep my points?
- And, this FlyerTalk thread: Citi cards closed for Perk Abuse
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@JC – Clearly, your view of the world from your parents’ basement is one that is black & white. I say Citi shares the responsibility, and you retort with stories of fraud and food stamps…quite a leap. Heeding the advice of the adage that says, “the only fool bigger than the person who knows everything is the person who argues with him”, I will recuse myself from this silliness.
Mom! Where’s that meatloaf!
Does everybody in your trailer park think it’s the world shares the blame because you can’t afford a new double-wide? Good luck in first grade with that myopic sense of entitlement.
@ JakePB: I realize that deadbeat attitude you have was probably fostered in your kindergarten last year, but I’m wondering where Citi is at fault for not having ESP. You see, on this planet they use credit reports and FICO scores. Even if Citi requires the highest score there is still an approximately 2% chance of default. Are you going to give us the lame line that if someone is, say, Kansas is victim of a devastating tornado and can’t pay their bills it’s somehow Citi’s fault, too? Here is the prefect analogy for you: You are on food stamps. Your neighbor borrows your lawn mover and refuses to return it to you because he thinks you are a deadbeat anyhow. Good luck next year in first grade.
@FM @FC – thanks for the advice. Much appreciated as always!
Skyhigh — Ty points might come in handy booking hotels in Europe where there’s a lot of non-chain properties that are pretty decent and go for an equivalent of $100-200 a night through the TY portal.
Skyhigh: It doesn’t sound like you are at risk of getting shut down, so I’d recommend that you keep your points for their best use: cheap flights at 1.33 cents per point value. You’re right that they’re not good for premium international flights, but you can get really far domestically with 200K points!
So what’s the best use for thank you points now? Have 200,000 accumulated over the years (TY Premier with flight points – no 5x, no manufactured spend). Do I blow them all on a couple domestic F tickets? Burn slowly on necessary personal flights in coach? Use them to fund some mileage running activity? Or just cash out with gift cards?
Have honeymoon trip to Europe coming spring 2014 that I always thought I’d use them for, but now realize that strategy doesn’t really play, as TY booking site shows international F to Europe would eat all points and still require many thousands of dollars in addition.
Any help is much appreciated!
david: The Citi thankyou Preferred card has no annual fee. Is yours the ThankYou Premier? If you have a ThankYou card with an annual fee, then I’d recommend that you call and ask to downgrade it to a no-fee ThankYou card. Best bet: Citi Forward card (5X at restaurants, movies, bookstores, etc.)
FM,
Can I cancel my Citi Thank you (don’t want to pay annual fee) and still keep the points or I have to ‘transfer’ them similar to Chase UR if you close the account (like transferring them to United, etc)
Thanks
[…] Citi is targeting the people who are using its ThankYou Network cards most heavily and shutting accounts down and confiscating earned points. FrequentMiler has some thoughts on that. […]
Please sign the petition if you believe that Citi is wrong. I ask you to take a stand because it is the right thing to do.
I’m at 77 signatures. If I can get 100, I believe I can ask for a meeting with the CEO.
@JC – I have no idea how on earth you concluded from my statements that I’m saying it’s okay to defraud Citi. Did the immigrant defraud Citi and I missed it somehow? Whether someone is credit worthy or not is independent of their ability to speak English. Citi is responsible for making good loans – they didn’t leading up to the fiscal crisis and didn’t in the case of this recent immigrant, period. Citi is trying to have it both ways, whether you recognize it or denounce it as lame. Your burglary analogy is what’s beyond lame. Good day.
“Happy” had it coming for all the grief she has given to
newbies on FT. (eyeroll)
[…] Miler expands on the recent negative developments of Citibank closing accounts and confiscating Thank You Points. Use them points and lay low. I am not too upset now for getting denied on getting this 5x promo […]
For those of you who want to redeem their TYP, know that Amazon gift cards are available over the phone! While you cannot get them online, you simply have to call them to redeem your points over the phone. I did that a couple of days ago to get rid of my 50k TYP.
@Joe (comment #1) The agent handling my wife’s FR asked what we bought, we said GCs, she said OK, did the FR, and a week later we were up and running again, still buying FRs. Nothing has changed. There is nothing against buying GCs at any CC. Earning points on them may be a thing, but it is NOT against the rules even on citi! And so your agent was wrong/trying to scare you–like the one who told Happy it was GCs that were considered fraud. There is no fraud. It’s crap. Dont be scared out of using your Citi card. Instead, learn how to fight them. Say NO