Lucky me, I’m among the 1% of Citi credit card accounts that were hacked!

I discovered the news about 36 hours ago, when I logged into my Thank You Points account and was prompted with this screen:

I called the number on the screen and was connected to a foreigner (sounded to be Filipino) whom I could barely understand and she was unable to give me any kind of clear answers as to what was going on. In fact, at first the way she responded inferred that this was not a wide scale problem, but rather only my account that was hacked which would have been even more alarming.

After speaking with her a few minutes I requested to be transferred to the security department directly. It was around 11 pm and closed, so she instructed me to call back later.

I am a huge fan of the travel rewards on the Citi ThankYou Premier card but am not exactly enthusiastic with how this problem has been handled so far. They never called or emailed to notify me of the problem and I only became aware of it by happenstance.

Reportedly around 200,000 accounts were breached, which equals out to be around 1% of Citi’s credit card accounts in North America. How unlucky can I be?

Written June 2011

When the Citi Thank You network was first launched it was hailed as being the future of banking: relationship-based rewards for having multiple accounts. Yet now, nearly a decade later (it was launched in ’04) we have seen very few major banks come out with similar programs. Why not? And what are the pros and cons? Just because I advertise their cards doesn’t mean I’m going to hold back on telling you both the good and bad that comes with this rewards program…

Pros

• If you have a qualified Citibank checking account and Citi credit card, the points you earn from them go into one Thank You account. Obviously, this makes it easier to rack up rewards fast.
• The Citi Thank You rewards program continues to grow larger and I expect the variety of redemption options to keep getting bigger. Why? Because Citi seems to be transitioning more of their cards to the Thank You points network (as evidenced by the launch of the new Citi Thank You Premier, Preferred and Prestige cards during the end of 2010).
• Like many card issuers, Citi has a bonus points “mall” that allows you to earn extra Thank You Points for online shopping. What’s nice about the Citi program is that it’s the largest with over 600 merchants participating.

I wouldn’t recommend every Citi card that uses Thank You Points, but there is one in particular that is extremely generous with its 5x points on restaurants, fast food, and entertainment categories, which is the no annual fee Forward card.

Cons

• The biggest drawback in my opinion is that your redemption options are not always 1 point = 1 cent. For example, a $25 Starbucks gift cards cost 35,000 points (that’s about 0.71 cents per point). However if you go with gift cards in higher increments of $100+ you can usually get a full 1 cent per point conversion.
• The Citi Thank You Bonus Points Center for online shopping does indeed have the biggest selection of merchants, but the rewards you earn tend to usually be quite a bit lower than ShopDiscover (for Discover credit cards). For example, Citi gives 3 pts/dollar at Target.com while Discover gives 5% cash back.
• The bulk of your Thank You points will likely come from your Citi credit card spending, not your checking account. While it is generous for Citi to reward you for things like debit card purchases, online bill payments, etc. the truth of the matter is these are lower-margin areas of Citi’s business (especially with the debit card fee crackdown) so don’t expect to get huge rewards on them. My guess is that’s the reason other banks haven’t adapted similar programs – not because customers don’t like them, but simply because it’s less profitable to pay rewards on checking account activity.

Best ways to spend your Thank You points?

When it comes time to redeem, how can you get the highest Citi Thank You point value possible? Well I touched on a couple pointers above but here’s closer look at what is and isn’t the best value:

Bad ideas…

• Avoid gas cards. Yes, you can buy a Sunoco $100 gift card for 10,000 points (1 cent per point value) but when you do that, you’re missing out on the 3-5% in rewards you would be earning by paying with a good gas rebate credit card. Same applies to department stores and restaurants, if you have a credit card that gives higher rewards for those categories.
• Avoid cash and equivalents. A $100 cash reward will cost you 16,000 points (0.625 cents per point). The statement credit options for higher amounts do give you a slightly better conversion, but still fall far short of getting a penny per point (35,000 points = $250 statement credit = 0.714 cents/point).
• Avoid most merchandise. Not to single out the Citi Thank You network, because this holds true for most credit card rewards programs. More often than not the merchandise doesn’t give you the best bang for your buck. Here’s an example…

Good ideas…

• Music downloads. For all increments – even as little as $1.00 worth of music – you get 1 cent value per point. If you only have a few points and are itching to spend them, this is a good deal. You can get downloads from artists on Sony and Universal labels (hint: Although these aren’t through iTunes you can still put them on your iPod/iPhone).
• Charitable donations. On donations of 5,000 points and up, you get 1 cent/point for donations to Red Cross. The drawback though is this will not count as a tax-deductible donation (but that only matters if you itemize your deductions, anyway).
• $100+ gift cards. In my opinion, the best way to use Citi Thank You points (how I usually spend mine) is the $100 gift cards from partners. But as mentioned, it’s best to choose retailers that wouldn’t take away from high reward earning opportunities you get through credit card spending (i.e. the gas card example).

Ultimately, the Citi Thank You rewards program is what you make of it. If you redeem your points in a strategic manner, you can get a great rebate on your spending (especially with the Citi Forward and its 5x points). On the other hand, if you redeem for whatever your heart desires, your Thank You points value may be up to 50% less than what the “good ideas” above will give you.

What do you like best (and least) about this rewards program?

At the end of 2010 Citi launched their line of ThankYou credit cards: the Preferred (no fee), Premier ($125 fee) and the granddaddy of them all… the Prestige card.

I don’t think it’s any coincidence that Citi set the annual fee for the Prestige card at $500, which is priced above other similar cards. It’s $50 more than the AmEx Platinum and $205 more than the Merrill Accolades. My guess is that Citi is trying to make a statement that the ThankYou Prestige card is better than the other two, but does it live up to that?

A look at the rewards…

As you can guess by the name, the card uses Citi ThankYou Points for its reward program. A number of other Citi products – credit cards, checking accounts, and debit cards – also participate in the ThankYou points network. This is a big plus if you do your banking with them, because you have the ability to combine points earned across all your accounts.

When it comes to the value of each point, generally your best bet is to cash them out for $100 gift cards from participating merchants. Why? Because they typically cost 10,000 points each so you are getting a 1 cent value per point. For lower gift card denominations, your point value diminishes.

• 1 point per dollar on regular purchases
• 1.3 points per dollar on gas stations, grocery stores, drugstores, parking, and commuter transportation
• 1 point per mile flown for airfare paid for with the card. For example, if you flew from Detroit to Seattle (about 1,938 miles) you would get that many ThankYou Points. The only catch is that points earned on other purchases must be equal or greater than your flight points. So in order to earn those 1,938 miles, make sure you spend another $1,938 that month on other purchases.

Verdict? The 30% bump on those categories is a plus but being that the max value of each points is probably 1 penny, that’s the equivalent of getting up to 1.3%… certainly nothing to sneeze at, but for $500 I think most people would expect more like 2% or 3% for those categories. The real stand out here is the 1 point per mile flown, which can definitely add up if you are a frequent traveler.

The benefits it offers…

Obviously the reason anyone would pay $500 for the Citi ThankYou Prestige card is for benefits, right? Well here’s what they give you…

• Priority Pass – Airport lounge access for the cardholder and up to 2 travel companions.
• No Foreign Transaction Fees
• Companion Ticket – This is a once per year benefit and can be used both domestically as well as internationally.
• Spirit Incentives Discount – When you use Spirit Incentives to book your flights you get a 15% discount.
• Status Levels – Gold Status for the Hilton HHonors program and I don’t see any others. The AmEx Platinum offers upgraded status at various hotels and car rental companies, so it’s disappointing to see that the Prestige credit card falls short in this area.
• Insurance + similar benefits – lost luggage, travel accident, extended warranty, price protection, trip delay/cancellation, auto rental coverage (secondary coverage)
• Miscellaneous – phone concierge, Citi Private Pass

Conclusion?

I applaud Citi for coming out with a new premium-tier card but as it stands now, I think they really need to work on bolstering its benefits. Simply put, the AmEx Platinum which is $50 less offers a lot more bang for your buck.

Ironically, the Citi ThankYou Premier which is only $125 offers many of the same benefits as the Prestige card, including the flight points, annual companion ticket (domestic), no foreign transaction fee, 15% Spirit Incentives discount, and a much better signup bonus. I actually have the Premier version myself and would definitely recommend it over the Prestige. You should read my review of the Citi ThankYou Premier.

Written April 2011

Many are asking why Citi raised their APR – often for no reason – to a higher interest rate. Well, you are not alone. They have raised rates on up to 15,000,000 US accounts. After the Financial Times broke this story, Citi responded claiming they are the rate hikes were part of their “regular account reviews.” Well, I suppose that makes sense if you consider it’s “regular” to raise an APR by nearly 24%, which is the average increase seen on their co-branded cards (such as the Sears card) from the first of the year through April, for customers who carried a balance.

It is true that credit card defaults are occurring at a record rate right now, but it appears Citi is being more aggressive than its competitors in raising rates. The other important point they should remember is that we, the American taxpayers, bailed them out big time. In fact, we took on over $300,000,000,000 in liability to keep their company afloat… and this is how we are repaid?

[We reported in May about B of A is doing pulling similar shenanigans. Check out the letter they sent out as their crazy justification for Bank of America cutting credit limits.]

Written July 2009

This week Myspace, in conjunction with Citi (whose stock is below $1 may I add) issued their very own credit card. The rewards on the Myspace Citi Forward credit card are nothing to jump up and down about – on regular purchases you receive 1 point for every 1 dollar you spend. These points can be redeemed through Myspace for rather unexciting prizes, such as downloads of music on the site. With such a lousy 1% reward structure on regular purchases, and a high 14.25% APR (at time of issue) it makes one wonder why anyone would even bother with the Myspace credit card?

What’s next, the Facebook credit card? Perhaps the Twitter Credit Card where you can redeem points for premium tweets? Hopefully it doesn’t come to this, but only time will tell…