Citi cards - major changes

[PLANT]

So Velocity not further enhanced?
I need 20K not the old 15K to transfer to Velocity....so trying to work out if should spend 2.5K to get the 15% Velocity bonus(targeted email) by 9\4....leaning to not spending!

 

[oz_mark]

Where'd you get the info on the transfer rate changes, didn't see those on the website.
If that's true, those are some brutal changes. Earn rate on SQ going from 1 point per dollar to 0.4 point per dollar.

Anyone know if we can book the free hotel and airport transfers and then cancel the card without affecting the bookings?

If it's true? Do you think I make this up? It's on the last page in the document outlining the changes

https://www.citibank.com.au/global_docs/pdf/Citibank_Rewards_and_Qantas_Rewards_Program.pdf

 

[lovetravellingoz]

Yikes. As someone whose preferred program is Krisflyer I might now have to when I cannot use the various other payment channels (ie when the only payment option is the one large fixed amount to VISA/MC or EFT<=no points and so not an option!>) have to go with VISA earn to QFF.

 

[potm]

If it's true? Do you think I make this up? It's on the last page in the document outlining the changes

https://www.citibank.com.au/global_docs/pdf/Citibank_Rewards_and_Qantas_Rewards_Program.pdf

Wasn't questioning you mate, just shocked Citibank would make such a severe devaluation. Thanks for the link.

 

[albyd]

Missed this thread yesterday. Quite a shock - although not unexpected. Wonder if Land Tax counts as 'government spend'. Though the reduced earn and transfer rates make it a moot point.
I might try to switch to signature especially if I am able to wrangle a free for life deal. My Prestige spend has been dropping so will need to get onto it while I still have some bargaining power.
Had saved my points for a Hilton transfer in November when Citi has annual double bonus offer. Will have to reconsider. Want to send to SQ but wary of the 3 year expiry.
Will wait to see impact on Diners and that may become my go to non-Amex card going forward.

 

[Nutcase]

from pointhacks - major changes coming to earn rates on Citi cards - very disappointing

Citi overhauling earn rates across their rewards card range from June 2017 - here’s what’s changing - Point Hacks

the biggest changes for me with prestige card are

1. ‘Eligible Domestic Spend’ earn rate cut from 2 Citi Rewards to 1 Citi Rewards point per $
2. International spend cut from 5 points per $ to 3 points per $

they have effectively HALVED the earn rate on a $700/annum card to now earn 0.5 KF/VFF per $ which is honestly pathetic.

even with the increase in "bonus categories" to 1.5 KFF per $ this is a horrible overall earn rate

i will most certainly drop my card when renewal comes up later this year.

And replace it with what? This is the new normal.

Im surprised at the outrage. The writing has been on the wall for 12 months and the discussion around this has been endless. I have been warning of this since the white paper was released by the RBA in 2016.

The threats of cutting up cards and moving elsewhere are most entertaining. Given that all scheme cards businesses in Australia are the same with the same revenue and cost drivers, where are you going to go?

AMEX & Diners own the rewards space. You will not get value out of a scheme card any more.

 

[ermen]

Wow this is brutal.
Guess we can blame the RBA for that!
They dont tackle the property bubble in Oz, but tinker with FF reward points

And whilst on this topic - why do Australian banks have one of the highest Net Interest Margins (NIM) in the world? They should tackle that too

 

[Nutcase]

Wow this is brutal.
Guess we can blame the RBA for that!
They dont tackle the property bubble in Oz, but tinker with FF reward points

You are blaming the RBA for your points being reduced. That's like blaming Smith and Wesson when someone gets shot.

Perhaps the blame sits with Qantas loyalty (and the other rewards partners) for charging the banks too much for rewards points in the first place?

Why don't Qantas (and the other airlines) reduce the amount they charge for points?

 

[d00dz]

Well this sucks!!

 

[ermen]

You are blaming the RBA for your points being reduced. That's like blaming Smith and Wesson when someone gets shot.

Perhaps the blame sits with Qantas loyalty (and the other rewards partners) for charging the banks too much for rewards points in the first place?

Why don't Qantas (and the other airlines) reduce the amount they charge for points?

Dont agree with the analogy

It was because of the RBA enquiry into interchange fees that sparked this off... they wanted to reduce the fee pool / profits from credit card transactions as they thought it was too high. It was this high fees that enabled banks to offer credit card points at a reasonable rate.

 

[opusman]

And nothing the RBA has done has reduced prices for consumers, which was the stated goal of the changes in the first place.

 

[Nutcase]

Dont agree with the analogy

It was because of the RBA enquiry into interchange fees that sparked this off... they wanted to reduce the fee pool / profits from credit card transactions as they thought it was too high. It was this high fees that enabled banks to offer credit card points at a reasonable rate.

This is a world wide issue. The EU has a cap at 0.30%. The USA will move in this direction as well and NZ is in play too.

Most governing banks are aware of the problem and are on the way to regulation as the schemes wont regulate themselves. Australia is just part of the puzzle. The RBA did nothing radical except to cause the banks to take some card holders toys away.

Stick with AMEX and Diners and blame Qantas (and other loyalty programs) for having fees that are too high to justify being of value.

 

[Nutcase]

And nothing the RBA has done has reduced prices for consumers, which was the stated goal of the changes in the first place.

Any proof of that?

Australia has some of the lowest Merchant service fees in the world. The RBA changes have been a huge success from that perspective.

 

[Nutcase]

Dont agree with the analogy

It was because of the RBA enquiry into interchange fees that sparked this off... they wanted to reduce the fee pool / profits from credit card transactions as they thought it was too high. It was this high fees that enabled banks to offer credit card points at a reasonable rate.

The RBA called it a cartel (which it is) and wanted interchange to be zero. What we have here is a compromise.

Interchange is an opaque fee that adds no value and provides no benefit.

The acquirer pays the issuer - for what?

 

[ek0409]

I reckon the RBA did what it did - either because of political pressure or some other reason which doesn't matter at this stage.

Banks being banks do not want to cut their margins (billion $ profits!) and are just passing the -ve impact of RBA regulations on to the customers as they always do.

The kicker, I suppose, is merchants are not going to reduce prices overnight just because they are paying less (interchange) fees to the banks. All that this RBA reg. has done is successfully put in a structure in place to move more money into the merchants' pockets.

Ultimately, the customer pays the price (pun intended!) no matter how you view it. Oh well, just another day out there!

 

[opusman]

Any proof of that?

Australia has some of the lowest Merchant service fees in the world. The RBA changes have been a huge success from that perspective.

Allowing surcharging simply meant merchants added surcharges to their existing prices. No prices came down for non-card payments, so prices went up for most people because most people pay by card and most merchants used surcharges as a profit center.

Now we have surcharges plus greatly reduced award points. Hard to see how anything the RBA has done has benefited consumers.

If you work for the RBA (as I assume you do) then perhaps you could enlighten us as to what the changes have actually done to reduce prices for consumers.

 

[trippin_the_rift]

You are blaming the RBA for your points being reduced. That's like blaming Smith and Wesson when someone gets shot.

Perhaps the blame sits with Qantas loyalty (and the other rewards partners) for charging the banks too much for rewards points in the first place?

Why don't Qantas (and the other airlines) reduce the amount they charge for points?

All banks, including Citi approached the FFPs to renegotiate lower rates on buying miles/points, to which many programs have dropped the rates to retain volume. Australia isn't the first country in the world to have interchange fees capped.

The net effect of all the changes from a commercial perspective is:

- Citi obtains a price break on buying loyalty points from FFPs
- Citi devalues their own outbound transfer rates to loyalty programs by 20-30%
- Citi devalues earn rate on international transactions by 40%, despite having increased the xe rate by ~10% in the past 18 months, making Citi the most expensive CC in the country for intl transactions
- The net effective rate for banks on a premium card changes from ~1.8% -> 0.8%, or a 66% decrease
- Citi took the opportunity to wipe out any decent earn on low earning merchant categories
- Citi changes come into effect June 15, while RBA changes are July 1, giving Citi 15 days of super-profits with high interchange and low rewards

Post-June 15 - if transaction volume remains constant and there is no consumer card churning - Citi will profit from these changes.

Let's not forget that Citi recently moved from 55 -> 44 days interest-free.
Citi also has their own breakage program model, and earns interest from some cardholders, so it's not like there's a direct link between a transaction and an airline point cost.
If all that wasn't enough - for the FFPs which don't have downward negotiated rates, the bank would still be paying the 'old rate', thus in effect proving they can survive at the current earn rates for consumers.

I think we'll find FFPs move towards more cobrand cards where they can get tap into easier bank sponsorship opportunities, interest, annual fees and the host airline marketing exposure.
Also, in markets where interchange took a hit - we're seeing annual fees almost wiped out as consumers refuse to accept them when direct spend benefits are simply not there any more. Citi will find it difficult to justify the overpriced annual fees moving forward.

 

[d00dz]

So instead of 1.5pts per $1 earning it will mean 0.5 points harder for me to get my points!!! booooo

 

[dajop]

So for your stock standard vanilla platinum card (maybe they should rename it the Vanilla Card?) is going from 0.5 KF miles to 0.33 KF miles per dollar?

Wow think we'll have to try to get my partner's mum a supplementary card from Singapore, probably worth wearing the 2.8% CC fee to get the 3.05 KF miles per AUD for spend in Australia we have from one of our cards here.

 

[ermen]

Most governing banks are aware of the problem and are on the way to regulation as the schemes wont regulate themselves. Australia is just part of the puzzle. The RBA did nothing radical except to cause the banks to take some card holders toys away.

Stick with AMEX and Diners and blame Qantas (and other loyalty programs) for having fees that are too high to justify being of value.

Yeah that's exactly the problem "cause the banks to take some card holder toys away"... obviously it depends on how you look at it...
the question now is will we see a decrease in CPI (0.5% to 1%?) because merchants are going to drop their prices to account for less interchange fees?

Qantas and other loyalty programs have zero blame here. Banks buy points for say ~1c - to many of us that is fantastic value. Now, the banks have a lower fee pool to buy this points - and who caused the drop in the fee pool? The RBA.

I can't afford a Maserati now. Do I blame Maserati for not dropping their price to match my income?