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New Citibank Card Offers Many Rewards

Citibank is to credit cards what Campbell’s is to soup. So when Citibank issues a new card, it’s big news in the banking and finance community. And when the company issues a new travel-rewards card, it should turn heads in the frequent flyer and frequent buyer communities.

Citibank already issues the Citi AAdvantage Mastercards, the Citi Hilton HHonors Visa card, the Diners Club cards, and a host of other credit and debit cards, from the plain vanilla to the exotic. And in late 2004, the company launched the Citi PremierPass cards.

If you missed the initial buzz, it’s not too late to consider swapping the awards card currently in your wallet for PremierPass plastic. But depending on whether you’re a frequent flyer or a frequent buyer, this card may or may not be effective in maximizing your mileage earnings.

Introducing the PremierPass

The Citi PremierPass card comes in two versions: the entry-level PremierPass Card and the PremierPass Elite Level Card. Cardholders earn what Citibank calls ThankYou points for every purchase charged to the cards. The earning rate varies, depending on whether the regular or Elite card is used. And points may be redeemed through the ThankYou Redemptions Network, Citibank’s extensive catalog of awards.

The following chart outlines the differences between the two cards:

PremierPass PremierPass Elite
Bonus 5,000 points 15,000 points
Points per $1 charged 1 1
Points per $1 charged at select retailers* 1 2
Points per mile flown 1/3 1
Maximum points per year 100,000 200,000
Annual fee $0 $75

* Select retailers include supermarkets, drug stores, gas stations, commuter transportation, and parking merchants.

In a nutshell, the Elite card is more expensive to own, but allows the cardholder to earn more points per transaction. In addition, the Elite card also includes free unlimited companion tickets when the cardholder uses the card to purchase a round-trip domestic coach ticket for $359 or more for travel in low season (September 16 to January 14) and $379 or more for travel in high season (January 15 to September 15).

Earning ThankYou Flight Points

The biggest difference between the PremierPass cards and other bank points-earning cards is that customers can earn points for flying (called ThankYou Flight Points). These points are awarded according to the distance in miles flown using airline tickets charged to the card. But while the points are based on miles flown on any airline, these points are not airline miles and cannot be converted into miles in airline programs. To be clear, they can only be earned and redeemed in Citibank’s program.

The idea behind flight points, of course, is to preempt predictable objections from true frequent travelers, who typically use a credit card affiliated with their preferred airline program and want miles earned for travel and miles for charges to accumulate in the same account. In theory, with ThankYou Flight Points, the PremierPass cards give users the benefits of both worlds with flight miles and credit card miles credited to one account. But savvy frequent flyers will be quick to point out that they can’t earn points for hotel stays and car rentals in a PremierPass account. And one third of a point for every flown mile is hardly competitive with the earning rates of airline programs.

Redeeming PremierPass points

On the award side, PremierPass boasts an extensive list of redemption options, from travel to merchandise and gift certificates. Because PremierPass is both modeled after airline programs and must compete with them, the points required for travel awards are comparable to those in an airline mileage program:

  • 25,000 points for a round-trip coach seat within the continental U.S.
  • 35,000 points for a round-trip coach seat to Hawaii
  • 50,000 points for a round-trip coach seat to Europe

And because Citibank purchases award tickets on behalf of PremierPass cardholders, award travelers can fly on almost any airline, without the onerous capacity controls associated with airline-specific programs.

The card for everyone?

Citibank has combined features of bank cards, airline-affiliated cards, and multi-program cards to create a rewards program that aspires to be all things to all consumers, or at least most things to many people. Whether this combination will work out depends on one’s travel and purchasing behavior.

The ability to earn both points (and in some cases, double points) for charges and for flights certainly gives PremierPass a competitive advantage over traditional bank cards (CapitalOne GoMiles, Discover Miles Card, Chase Travel Rewards, etc.). So frequent buyers—those who earn the bulk of their miles from credit card purchases—may find the PremierPass the superior offering.

Consumers in the middle—those whose mileage earning is divided roughly equally between travel and credit card use—may find good value in the PremierPass cards as well. The combination of earning and redemption options is impressive. And since these occasional travelers don’t fly enough to earn elite status anyway, they won’t be sacrificing those benefits by participating in a bank program.

When we get to the road warrior end of the spectrum—business travelers and other very frequent travelers who earn the bulk of their miles by flying, staying in hotels, and renting cars—PremierPass falls short. Notwithstanding Citibank’s best efforts to woo them, true frequent travelers will want to hold onto their airline cards and continue concentrating their earnings in an airline program. In this way, their loyalty will earn them both free trips and the upgrades and other extra perks that come with achieving elite status.

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