Citi cards - major changes

[ermen]

Transfer rates, they are a changing
View attachment 94927

This is brutal too.

For what was a very good card for international (especially) and domestic spend - back in the day recall it was 1.5 points per KF point?), it has now seriously devalued (ie 1.33 points per dollar to 0.4 points per dollar?)


I am not sure I can justify even the A$350 p.a. discounted fee...

Edit: maybe it may still have some value on spend for the major restaurants / flights category. But has zero value for international now.

 

[ChrisFlyer]

It's kind of ironic that the RBA changes were somewhat designed to reduce the disadvantage for small businesses by making credit cards cheaper to process (versus large retailers which receive heavy volume discounts: such as Aldi paying 0.5% as-is), yet many of Citi's products will award half as many points when supporting small business compared to making the same purchase from a national chain.

 

[Nutcase]

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.

I am not a fan of surcharging however I am a fan of businesses doing their own thing. Personally, I also wont use a merchant who surcharges or has a minimum transaction amount. The reason for this is that the merchant is not paying a click fee on transactions and if they are paying more than about 1.5% in fees and they cannot absorb that then their business in unviable and its not my responsibility to support that.

The reason why I say this is because the fact that credit cards are surcharged (in some cases) and cash is not shows very clearly that prices have in fact come down in as much as cash customers are not subsidising non cash customers. That was the RBA's point.

Interchange has always been a rort. Governing banks have always hated it and the RBA went after it like a rabid dog in the late 90's. They also hated scheme debit cards as well and they lost that battle but won the war by having interchange charge at a flat rate for those cards.

You can see from the RBA's perspective that the cost of a $100 transaction down the same Visa or Mastercard pipe costs the same. Why should the value of the transaction or the colour of the card determine the cost? Answer - Points.

This is what sticks in the RBA's craw.

 

[Spizz]

Just seeing if my maths is correct.

From June 15th for Signature Card Holders-

For Velocity Rewards transfers

$1 = 1 point for international spend
$1= .75 points for Petrol And Supermarket Spend
$1= .5 points for Everything else

For Krisflyer, etc

$1 = .80 point for international spend
$1= .60 points for Petrol And Supermarket Spend
$1= .4 points for Everything else

 

[Nutcase]

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

Ok - Then you cant buy a Maserati now.

Its the same with the citibank changes. You cant have the same points as you once did.

 

[opusman]

The reason why I say this is because the fact that credit cards are surcharged (in some cases) and cash is not shows very clearly that prices have in fact come down in as much as cash customers are not subsidising non cash customers. That was the RBA's point.

It may have been their point but it is misguided because practically no one pays with cash. Therefore all that happened in reality is that prices went up 1-3% for 90% of consumers.

 

[oz_mark]

You can see from the RBA's perspective that the cost of a $100 transaction down the same Visa or Mastercard pipe costs the same. Why should the value of the transaction or the colour of the card determine the cost? Answer - Points.

To the RBA, credit cards are just a payment mechanism. The question that arises, is why should your choice of payment mechanism result in a swag of loyalty points?

 

[Moindardt]

Wow. The is just mind-boggling. Consider the fact that the "Prestige" is top of the lines with the highest income requirement and $700 Annual Fee. Now it is no better than a run of the mill card. I think this is getting the big pair of scissors.

And why would I go for 3 Citi points for a restaurant over 3 Amex Points??

 

[oz_mark]

And why would I go for 3 Citi points for a restaurant over 3 Amex Points??

You wouldn't - but Citi aren't (won't be) getting enough out of interchange to make a better offer

 

[BacchusMarsh]

And why would I go for 3 Citi points for a restaurant over 3 Amex Points??

Agreed, but it might not be safe to assume that Amex points won't be changed too.

 

[Nutcase]

To the RBA, credit cards are just a payment mechanism. The question that arises, is why should your choice of payment mechanism result in a swag of loyalty points?

You are right. Its a payments tool with (in this case) a credit facility hanging off the back of it and a lot of lipstick and makeup.

It will be impossible to extract more value out of any scheme card than the annual fee.

 

[Nutcase]

It may have been their point but it is misguided because practically no one pays with cash. Therefore all that happened in reality is that prices went up 1-3% for 90% of consumers.

Cash is still used extensively and whilst ATM use in in decline (and so is cash) "practically no one pays with cash" is not accurate.

ATMs on the decline as customers go digital

Do you have statistics for your claims that prices have risen by 1-3% for 90% of customers?

 

[lovetravellingoz]

Are the transfer rates also changing as of 15 June? Citibank aren't making it easy to find the details of these changes.

From the same page as the table:


Reward redemption

• Effective 15 June 2017, we will be making changes which will increase the number of Points required to redeem a range of gift cards, merchandise,prepaid cards and travel available in Citibank Rewards. The new number of Points required will be published on the rewards website at that time.

So another mass points migration for the first half of June then.

 

[lovetravellingoz]

It will be impossible to extract more value out of any scheme card than the annual fee.

Impossible?

Even with the stated changes to some cards one can still derive value greater than the yearly fee.

Plus:
- There are still some cards that have no yearly fee but earn points
- There are some cards where the yearly fee is waive due to packages, or by belonging to various organisations or companies, buy owning some types of shares
- There are some cards which are neutral as other befits equal, or exceed the yearly free, and then there is point earn
- I would imagine from time to time there will still be sign-on offers with either the yearly fee waived and/or a significant benefit offered.

 

[Cruiser Elite]

It will be impossible to extract more value out of any scheme card than the annual fee.

Clearly you have not participated in the Prestige 'Stay 4 Pay 3' promotion.

 

[Nutcase]

Impossible?

Even with the stated changes to some cards one can still derive value greater than the yearly fee.

Plus:
- There are still some cards that have no yearly fee but earn points
- There are some cards where the yearly fee is waive due to packages, or by belonging to various organisations or companies, buy owning some types of shares
- There are some cards which are neutral as other befits equal, or exceed the yearly free, and then there is point earn
- I would imagine from time to time there will still be sign-on offers with either the yearly fee waived and/or a significant benefit offered.

For now....

 

[Nutcase]

Clearly you have not participated in the Prestige 'Stay 4 Pay 3' promotion.

It may be useful to see these promotions in the past tense given up coming changes.

 

[opusman]

Do you have statistics for your claims that prices have risen by 1-3% for 90% of customers?

In 2015 53% of payments were by card, and the figure is growing every year. Cash payments would on average be smaller than card payments. Obviously I pulled the 90% figure out of the air but I bet it would be something like 70% by value.

I'm still waiting for you to provide evidence of a benefit to consumers from the RBA's changes.

 

[Nutcase]

In 2015 53% of payments were by card, and the figure is growing every year. Cash payments would on average be smaller than card payments. Obviously I pulled the 90% figure out of the air but I bet it would be something like 70% by value.

I'm still waiting for you to provide evidence of a benefit to consumers from the RBA's changes.

So thats a "No"?

As someone with an economics background, I struggle with the idea of "pulling figures out of the air" as you have done and "I bet it would be..." as a premise. Numbers don't lie.

 

[trippin_the_rift]

Clearly you have not participated in the Prestige 'Stay 4 Pay 3' promotion.

Citibank does not fund this. In this sense, it's not something Citibank directly provides as value to cardholders. It just appears that Citibank provides the benefit, so they get the street-cred!
If it's abuse too much you'll see the benefit removed - or at least, restricted to specific properties.

Citibank is clearly NOT being creative with the devaluation and it must be the same short-sighted people who failed to pass legal OK with the Nov-2015 changes.
Personally, I'd fire these folks immediately. It's practically corporate espionage by not exploring the more profitable and more consumer friendly options available. ALL of the affected loyalty programs would have suggested alternatives to Citibank which would have put everyone in a more profitable position without eroding customer value.