Yesterday I wrote about how Citi will kill nearly all of their card benefits, from price drop protection to return protection and from rental car insurance to travel insurance, and much more.
Citi’s bet is that people won’t care about the lost benefits and won’t switch to other cards because of them. The problem is that if they’re correct, other banks may follow as well.
The news is gaining some mainstream coverage, but I was left flabbergasted after reading this Bloomberg article.
First of all, they quote Citi as saying,
“Citi continuously evaluates our products to ensure that associated benefits best meet the needs of our customers,” the New York-based company said in an emailed statement, citing “sustained low usage” of the rewards being discontinued.”
The whole point of insurance is that you don’t want to have to use it, but it’s good to know that it’s there when you do. Obviously there’s going to be a low uptake on that, but I’ve saved a fortune in Israel by just having credit card car rental insurance, which means I don’t have to pay for overpriced rental car insurance there. I’ve also successfully won disputes against rental car agencies thanks to having that coverage.
If Citibank was paying too much to insure protections that were underutilized, maybe they should have brought the benefits in house and self-insured them?
Other benefits, like price drop protection, were more likely killed by apps that automated the process, making it much costlier for credit card companies. Other banks have cracked down on that benefit as well, but they haven’t axed their other benefits.
Things get worse from there.
Bloomberg writes about Citi’s new offering (timed to launch with the announcement of the death of their card benefits so that news coverage would focus on that) that it will,
“alert customers any time they make purchases eligible to be paid using ThankYou points. Card holders will be able to select what purchases they would like to redeem for points using the bank’s mobile app. Each point will be valued at 0.8 cents when redeemed using Pay With Points, so an $8 purchase would require 1,000 points.”
That is one terrible use of points! With my Citi Premier card I can redeem points for gift cards at a value of 1 cent each, redeem points for airfare at a value of 1.25 cents each, or transfer points to miles where they can be worth 2 cents each or more.
Why in the world would I ever redeem my points for 0.8 cents each?
And yet they quote Mary Hines, the head of customer engagement and innovation (I guess the innovation is for how to get customers to redeem their points for less costly rewards?) for Citigroup’s branded cards business as saying,
“Our customers work hard to earn these points and we want to make these points as rewarding as possible…A recent Citigroup survey of 1,000 cardholders found that customers were 86% more likely to redeem rewards points if they could be used in real time.”
As rewarding as possible?
I’m going to go out on a limb and guess that they didn’t actually tell those 1,000 customers how poor of a value the real time rewards program would be.
Me, after reading the article:
What do you think of this program “enhancement?”