The Citi Prestige has been significantly devalued since it’s return to the premium card market in January 2019. But since its inception in 2011, the credit card market, consumers, and Citi themselves have changed. Citi has discontinued and revamped the Prestige Card multiple times in the 2010s. Such actions make it seem that executives do not know what to do with it. Therefore, Citi should discontinue the prestige card… permanently.
Citi Appears to Be Pivoting
Sometimes, businesses must change directions in the way of products, people, or resources. This is called a “pivot”. Citi appears to be pivoting away from the travel card market altogether and the results could be a win-win for both consumers and Citi themselves.
Consumers’ Point of View
The Prestige Card suffered the most casualties after Citi announced that they were dropping the benefits from their cards. Prestige cardholders are going to miss its travel insurances, Price Rewind, and car rental insurance, among other perks. These perks were important because they gave Citi a competitive advantage over other banks. Now, there is no longer any incentive for consumers to use their Citi Prestige instead of another travel card.
Citi’s Point of View
Furthermore, the removal of these benefits its Citi’s fault. That’s because they did not communicate enough about them, according to JD Power. But for Citi, the removal of these benefits means they have less information to communicate about in the first place. That saves them money on customer service, advertising, and the benefits themselves.
Citi appears to be pivoting away from travel cards because the people that use them are less likely to pay interest. Citi wants to be more like Capital One in that they want consumers who will pay them interest and make them money. Earning interest is the lifeblood for America’s big banks because it adds to the bottom line.
Moreover, the credit card landscape itself is ever-changing. Citi had a lot to do with its own negative changes. But competitors such as Chase and American Express have been changing as well. The Chase Sapphire Reserve and any version of the American Express Platinum Card is a better overall product than the Citi Prestige. These three cards are the bulk of the premium card market and each one must be considered by a consumer before they apply. After all, premium cards have annual fees of around $500.
The Citi Premier Is a Viable Alternative
Citi’s own mid-tier card is surprisingly a better alternative than the Prestige in many ways. Discontinuing the Prestige in favor of the Premier would work for both consumers and Citi.
Consumers’ Point of View
Both cards have lots in common, most notably their membership in the Citi Thank You (TY) Points “ecosystem”. However, they are also quite different. For example, the Premier has a $95 annual fee compared to the Prestige’s $495 annual fee. That’s a difference of $400 per year!
The Citi Premier has a larger sign-up bonus, which is also Citi’s largest. The Premier’s bonus is worth 60,000 TY points and has a minimum spend requirement of $4,000. Conversely, the Prestige has a bonus worth 50,000 points with the same minimum spend requirement. The Premier is the better card based on sign-up bonuses alone.
The Premier has more bonus categories than the Prestige. It can be used for everyday purchases and certain travel purchases. The Premier earns 3x points on Airfare, Dining, Gas, Groceries, and Hotel purchases. This earning structure was implemented in phases in 2020, one year after Citi changed the Prestige’s earning structure.
The Prestige earns 5x points on Dining and Airfare and 3x TY points on Cruises and Hotels. While the higher multipliers are nice, they do not work for all travelers. And this earning structure makes the Prestige a terrible credit card for everyday purchases, such as Gas and Groceries. Everyday purchases are extremely important to so many people because of the COVID-19 pandemic. And the Premier is the better card for those purchases.
Citi’s Point of View
For Citi, discontinuing the Prestige Card would save them millions per year in benefits that they would otherwise have to offer. The Fourth Night Free and $250 annual general travel credit are significant perks that Citi would probably discontinue or further limit into the future. This could be for one of two reasons: abuse from a small group of cardholders or Citi wants to save money. The former reason is why Citi has been limiting and removing benefits in the first place. But the latter reason could send these perks the way of the Dodo bird.
Lack of Transfer Partners
Transferrable points cards heavily depend on transfer partners to provide value to consumers. Unfortunately, Citi is doing a poor job at providing a suitable list of partners for their cardholders to transfer points to. Citi has the following partners as of September 10, 2019:
- Air France / KLM Flying Blue
- Asia Miles
- Avianca
- Etihad
- Eva Air
- Jet Airways
- JetBlue
- Malaysia Airlines
- Qantas
- Qatar
- Singapore Airlines
- Thai Airways
- Turkish Airlines
- Virgin Atlantic
Most of these partners are international airlines. Citi has no hotel partners and just one domestic partner in Jet Blue. Furthermore, Chase and American Express have a wider range of partners that more travelers could get use out of. Chase has a little bit of hotels, domestic airlines, and international airlines. While Amex specializes in domestic and international airlines. These two issuers are more competitive and successful than Citi because of which partners they have made deals with.
Final Draw
The Citi Prestige Card is a classic “dog” product, according to the Boston Matrix (a tool that compares a product’s market share and growth). That is because its low in both categories given the current credit card market, changing consumers, and Citi themselves. The best strategy for “dog” products is to discontinue them because they are not making the company any money. Instead, “dog” products tie up resources, money, and time where the company could use them elsewhere.
Citi’s executives should use the Boston Matrix (and their MBAs) to make a wise decision in discontinuing the Prestige. It’s a loser for them and a loser for their consumers who are switching to competing premium cards by the day.
Update: As of 2022, Citi has indeed discontinued the Citi Prestige Card…
I think all top level travel cards are losing money, not just with citi. Unlike citi however, chase and Amex are able to harness their relationships to get benefit in other areas whether mortgages, personal loans (especially with Amex) and other investment products. Bofa has its premium rewards program for those who have good account balances on deposit or invested. Citi unlike the other top banks gets half of its revenue from foreign countries so that in itself makes citi a different animal. The type of people who will take advantage of the citi prestige ormhad in the past with… Read more »
The Prestige serves as a sort of halo product for Citi. If you have a high networth account with them, you get this card for free effectively (in India at least). Considering Citis strength in that space, they might be okay with low profits / incurring losses on this product as it supports their broader HNI banking product
This would be easy to fix. Instantly add unique value that no one else has and has hugely broad appeal:
Add American Airlines as a transfer partner. As much as everyone loves to bash on AA, tons of people fly them and participate in AAdvantage. If AA were a transfer partner, people would spend spend spend on the Prestige. The wouldn’t even have to share with the “lowly” Premier. Just like the no-fee ThankYou cards can’t access any airline partners, limit AA transfers to Prestige cardholders.
Hi Erik,
Thanks for reading PYCR! I agree with you that Citi should add American Airlines as a transfer partner. But AA doesn’t want to budge. Making that deal would be very expensive for both Citi and AA, even if it would be exclusive to the Prestige card. It doesn’t seem realistic to me because Citi is trying to save money and AA is very poorly ran.
Jet Blue is the only airline that you can transfer points to on all Citi TY cards. But it’s a lower ratio for the no annual fee cards.
Best Regards,
Anthony
Citi’s customers will have to decide for themselves if earning 5x on dining and airfare is worth $250 per year (~$500 annual fee minus $250 if buying any plane tickets). For example, if you’re buying lunch every day from the cafeteria or from some other place and also go to a restaurant once or twice during the weekend, you can easily spend $200 per week (so 10k per year) on dining. Add to that perhaps $2000 per year, for plane tickets (and/or award ticket fees). So can very easily get to $12k dining plus airfare spend, which means 60k points.… Read more »
Hi Martina,
Thanks for reading PYCR! This is why I always say that “you’re mileage may vary” which here means that a certain card might not be for everyone.
Best Regards,
Anthony
This is a poorly researched set of comments on the Prestige card. Just about anyone can offset the $450 fee with the $200 travel credit. While the card may not be the absolute best option for a domestic USA traveler, for people who actually fly and travel internationally the value can be huge. Earning 5X points on airfare is the best out there and the fourth night free hotel benefit (your article fails to mention this is now capped at two times per year) can, even used twice, easily makes this card a winner and a go-to card for many.… Read more »
Hi Geo1004m, Thank you for reading PYCR! I understand that many people love this card and I agree with you that it’s beneficial to the right traveler. I also agree with you that some people get a lot out of the fourth night free and the travel credit. But those two perks are really what’s left on this card. There are no other benefits left including travel insurances in case something goes wrong. I would not want to put any travel on the Prestige for that reason alone. Also, American Express cards are great substitutes (as frustrated as I am… Read more »
it has up until a yr ago the only transfer partner I wanted: EVA. C1 also doe it now but its a Visa where as Prestige is a lot more useful for plastiq. based on spending I’ve been given $350/yr credit twice to offset AF. Now lets see if they will keep that this yr. yes its at a tipping point & I am watching it closely, any more negative move could push me over to C1.
I have had the Citi Premier for over 3 years and was thinking about getting the Prestige until the recent changes in Prestige. Even though the 5x airfare is tempting enough to still make me consider it…. to be honest I earn about 60K – 120K just from the 3x travel on charges to the Citi Premium each year and that is not counting the 40K – 80K miles that I fly every year. I don’t know that I really need that much more miles. I am sorry to see the Travel Insurance eliminated though…I used it once when I… Read more »
Hi Franklin,
Thanks for reading PYCR! This is why I added the section about the Citi Premier being a viable alternative. You still have the transfer partners, but you also have a lower annual fee (by $400!), and a great earning structure.
Best Regards,
Anthony
Good luck trying to use the 4th night free with any notable success now that concierge servicing ended on Aug 31st. Several times I tried using it but found it cost more even with the 4th night free. The Citi portal frequently has the highest daily rate of any hotel booking site out there so it makes the 4th night free minimal.
The Fourth Night Free now only applies if you pay the higher-than-rack rate and forego all the benefits provided for “booking direct”. So you pay 30% more than the rate you can get online, pay taxes and fees based on that inflated rate, and then get a quarter of the base rate refunded. And do without or pay extra for wifi, breakfast, early check-in, late check-out, or a second person in the room. I suppose it might work out in a few cases, but it’s not the “huge benefit” that some claim.