Special report into Citi Cards in the US
Citi introduces thank you credit cards
Customer feedback shapes offering
Two button smart card in Citi pilot
Default lowest falls to its lowest rate in 22 months
US Fed cap causes the beginning of the end for debit card rewards
Citi Cards says it has taken note of customer feedback on what they want in a rewards card, and is launching a range of products with new ways to earn points, no limit on points earned, and no foreign exchange fees on two new cards. An additional 2G Thankyou card (pictured right) will be added to its US smart card pilot.
The cards will be offered to existing cardmembers of Citi’s award-winning ThankYou Rewards program and some exisiting cards will be moved into the ThankYou scheme so cardholders can take advantage of the benefits. They will then have the ability to choose the card level that best suits their needs—whether it means a card that provides additional point earning opportunities in select categories, no expiration of points at all, no fee for foreign purchase transactions and even complimentary companion travel.
No matter which card a customer prefers, each card level offers ways for customers to earn bonus points and there is no limit to the number of points customers can earn.
The new Citi ThankYou Cards are: Citi ThankYou Card, Citi ThankYou Preferred Card (right), Citi ThankYou Premier Card and Citi ThankYou Prestige Card.
“Citi is continually speaking with existing and prospective customers to better understand what they are seeking in a rewards card. What we’ve heard is that consumers want more flexibility, control and convenience,” said Terry O’Neil, executive VP of Citi’s North America Credit Card division. “With this in mind, and with our steadfast commitment to investing in our customers, we developed the new Citi ThankYou Card product suite which offers more opportunities to earn points faster, and in more meaningful ways. Now, the connection between their credit card and the award-winning Citi ThankYou Rewards program will be even more clear to card members every time they use their card.”
Citi ThankYou/Citi ThankYou Preferred Card:
No limit to the points earned
No expiration on points, with a purchase made every 12 months
Earn 1 ThankYou Point for every dollar spent on purchases
Earn a bonus for each year of card membership up to a maximum of 3%
Earn 100 bonus points for enrolling in Paperless Statements
Earn 100 bonus points for registering for Account Online
Earn extra bonus points for shopping through the ThankYou Bonus Center, a network of 400+ retailers
No annual fee
No pre-set spending limit on the Citi ThankYou Preferred Card
Citi ThankYou Premier Card, all the benefits above, plus:
Points do not expire
Earn 1 point per 1 mile flown on any airline
20% bonus points (1.2) ThankYou Points per $1 spent at supermarkets, drug stores, gas stations, commuter transportation and parking merchants
Earn a bonus for each year of card membership up to a maximum of 5%
Earn 200 bonus points for enrolling in Paperless Statements
Earn 200 bonus points for registering for Account Online
Access to a dedicated concierge unit
Pay no foreign exchange fees on purchases
Receive 15% discount on all air travel through Citi’s travel benefits provider, Spirit Incentives
Receive a complimentary domestic companion airline ticket each year
$125 annual fee
Citi ThankYou Prestige, all the benefits of the Citi ThankYou Premier Card, plus:
30% bonus points (1.3) ThankYou Points per $1 spent at supermarkets, drug stores and gas stations
Earn 300 points for enrolling in Paperless Statements
Earn 300 bonus points for registering for Account Online
Receive a complimentary domestic or international companion airline ticket each year
Enjoy airport lounge access with a complimentary Priority Pass membership for cardmember plus 2 guests
Automatic Gold Status in the Hilton HHonors program
$500 annual fee
Cardmembers can redeem their points at thankyou.com where new items are added every month, from electronics to rock climbing lessons
Reward options start from 100 points. If members don’t find what they are looking for in the ThankYou Rewards collection, they can create their own reward through the exclusive Your Wish Fulfilled service.
Terry O’Neil adds, “As part of the launch, some of our existing rewards cards will be re-named into the ThankYou Card suite to make the enhanced features and benefits of the new cards available to existing customers too. The cards are a great addition to Citi’s suite of rewards-based credit cards.
Rewards at the push of a button
Citibank is adding its ThankYou Prestige 2G card, which features two buttons on the front (right), to its smart card pilot. The buttons enable the cardholder to choose between “Regular Credit” for normal purchasing and “Request Rewards to make redemptions of either points or a cash reward. Each time a button is pressed, the card is activated and a corresponding light will turn on to confirm the option selected.
The Citi ThankYou Prestige 2G pilot card will be launched later this year. Each 2G credit card will come with a battery, an embedded chip, a card-programmable magnetic stripe as well as the two buttons on the front.
Using technology from Dynamics Inc, the 2G cards are the same size and shape as other credit cards, but feature an electronic magnetic stripe that programs itself with the corresponding data once a payment option is selected.
Lowest defaults for 22 months
Citibank this month said its defaults on credit card accounts, where it could no longer collect, fell in December to their lowest point in 22 months. Late payments also fell which was promising for future defaults.
The credit card division of Citigroup said in a regulatory filing its charge-off rate fell to 8.34% of balances for December, down from 9.4% in November.
That was the largest drop among the top six US credit card issuers for November, and the lowest charge-off rate Citi has reported since February 2009.
Banks typically write off credit card balances as uncollectable after payments reach 180 days past due. Citi’s charge-off rate peaked in August 2009 at 12.14%
Federal Reserve statistics show credit card debt has been dropping throughout the last two years, reflecting a combination of factors, including individuals paying down balances and credit card companies cutting the amount of available credit and writing off what they can’t collect. In November, total revolving debt held by US consumers — which is mostly credit cards — fell to US$796.5bn. That is about 18.5% below the record high reached in the third quarter of 2008, and the lowest point since September 2004.
Across the board
Industry wide, the charge-off rate peaked in the second quarter of last year at 10.37% of balances, according to the latest Fed data. In the two years prior to the recession, it averaged 3.82 percent, Fed records show.
Citi said payments that were late by 35 days or more fell during the month to 4.44% from 4.71% in November. That is the lowest the level of delinquency Citi has reported in more than two years, and is a sign that the positive trend will continue. This is because late payments are usually a precursor to default.
At the same time, Citigroup posted fourth-quarter results last week that came in below Wall Street expectations. The bank’s stock fell 33 cents, or 6.4%, to close trading at $4.80.
US Fed cap causes beginning of the end for debit rewards
As a product, debit has always had to play second fiddle to its richer sibling, the credit card.
The merchant charges for debit are usually lower for debit, but in the US there has been an additional fee difference, with signature debit costing considerably more than PIN debit.
This has made it possible for debit rewards to operate, but moves are afoot for UK issuers to close their debit programmes due to Federal Reserve limits on how much they can earn from checking accounts.
As from February 8, Chase says it will close off enrollment for its debit rewards. The program will only continue for those who are already enrolled as of that date.
As part of the sweeping financial overhaul last year, the Federal Reserve has proposed a cap that could slash the billions of dollars in fee income for banks by as much as 70 percent. The Fed is still accepting comments, but a cap on the fees is expected to go into effect by this summer.
Analysts say the reduced profits will prompt banks to end or curb their debit rewards programs. Now Chase is doing just that.
Bank of America, Citi and Wells Fargo, which are the other major card issuers in the US, say they haven’t yet decided on any changes to their programmes.
How the Chase programme works
The rewards programme is free and open to anyone with a checking account.
Cardholders get 1 point for every $5 spent, but there’s no cap on earnings.
A redemption of 5,000 points would t herefore earn a $50 Macy’s gift card, requiring a spend $25,000 for that particular reward.
Those who want to rack up points at a faster rate can pay a $25 annual fee; that enables you to earn 4 points for every $5 spent. At that rate, you would need to spend $6,250 to get the same gift card.