I did warn you this was coming.
Almost exactly one year ago, I wrote a post entitled “Is the Citi Prestige Already Ripe For a Devaluation?” in which I strongly suggested it was time to grab a Citi Prestige card because the benefits on the card were way too good to last.
Well, if we were at Red Alert a year ago, today we’re at Crimson.
The last few days have seen multiple reports that the Citi Prestige as we know it is not long for this world. According to our good friend Shawn over at Miles To Memories, who has been leading the pack on reporting this one, the following Citi Prestige benefits are being changed or eliminated as of July 23, 2017:
- American Admirals Club access… GONE.
- 1.6 cents per point for buying American flights directly…. GONE.
- 1.33 cents per point for buying all other airline flights directly… GONE.
- The 3 free rounds of golf… GONE.
- The 4th Night Free hotel benefit… not gone but to be based on the average rate and no longer includes taxes.
- The $450 annual fee… sticking around in its entirety. Yes, really.
For more info on these changes, I strongly suggest heading over to Shawn’s latest post where you’ll find extensive details on how Citibank will be rolling out these changes for both new and existing cardmembers.
Since this slashing of benefits isn’t being accompanied by a corresponding reduction in the annual fee, the Conventional Wisdom has uniformly been that July 2017 will be an excellent time to dispose of your Citi Prestige cards.
But hang on a second…
Has anyone actually analyzed whether the remaining benefits are enough to justify that huge annual fee? Or is everyone just reacting emotionally to a brutal devaluation? For many it’s mostly the latter, but we can do the math right now on the former and find out if the Conventional Wisdom is correct.
And since that’s our job as the Devil’s Advocate, let’s get right to it, shall we?
First things first.
As I alluded to at the beginning of this post, if you don’t have a Citi Prestige card yet, now is the time. The current benefits – which are clearly too generous as far as Citibank is concerned – are still in place and will be in force through July 2017 for new cardmembers who sign up in the next few weeks.
There is also still an old 50,000 point bonus link floating around out there as of this writing – see this post at Frequent Miler for details. Using the redemption value of 1.6 cents per point for American Airlines airfare, that 50,000 point bonus is worth $800, plus you’ll get two calendar years worth of $250 airline credits. That’s $1,300 in value from just those two benefits for an annual fee of $450.
Hmmm, come to think of it, maybe Citibank has a point about the benefits being too generous?
Obviously there’s no question the devaluation doesn’t eliminate the value of the Citi Prestige for the next 12 months. But what about after that? What’s left after we search through the wreckage?
According to Miles to Memories, the following Prestige benefits will remain the same after July 23, 2017:
- 3x points on air and hotel purchases
- 2x points on dining and entertainment purchases
- 4th Night Free on bookings through Citi Concierge
- $250 airline credit each calendar year
- $100 global entry credit
- Priority Pass lounge access (I’m adding this one even though it’s not listed on Miles to Memories).
- No foreign transaction fees
We can immediately dispense with that last benefit since no foreign transaction fees are available on plenty of cards with much lower annual fees than the Prestige. It’s even available on no annual fee cards like the Capital One Quicksilver Cash Rewards card or Bank of America’s Travel Rewards card.
And even if it wasn’t and you paid a 3% foreign transaction fee on another card, you’d have to spend upwards of $15,000 a year in foreign transactions on that other card just to equal the Prestige’s $450 annual fee. That seems unlikely unless you have a fondness for buying super expensive souvenirs.
The $250 annual airline credit is useful, but only as a means of partially offsetting the $450 annual fee. In your first year you’ll get that credit twice since it’s based on a calendar year instead of a membership year, but in future years you’ll only get it once. So let’s assume if you keep the Prestige card, you’ll effectively pay a $200 annual fee after the airline credit benefit.
The $100 Global Entry credit is only useful once every 5 years unless you’re giving it to someone else, and if you do, you’re not getting any benefit from it other than some excellent karma. I can’t put a price tag on karma, so while some might argue it’s priceless, I’m not assigning any value to it.
That leaves us with just the 3x categories, the 2x categories, the Priority Pass lounges, and the 4th Night Free benefit. Yeah, slim pickings, isn’t it?
But are those benefits worth at least $200?
Honestly, if you use the 4th Night Free at even somewhat pricey hotels, that benefit used just once could alone be worth $200. Even if Citibank no longer includes the taxes, a 4-night stay that costs $800 pre-tax would only cost $600 pre-tax. Do that more than once and you’re already in the black.
Of course, that’s only useful if you routinely make hotel stays of 4 nights or more. Personally, I don’t usually stay in one place that long, so I don’t think I could count on using that benefit more than once or twice a year. But you may very well travel differently than I do.
The 3x and 2x categories are decent but not any better than most other cards available at lower annual fees. The Chase Sapphire Preferred is well-known to have a 2x dining and travel category, and both the Amex Premier Rewards Gold and the Business Rewards Gold offer 3x travel categories. All of those cards have much lower annual fees than the Prestige, so I don’t find much extra value in the remaining Prestige bonus categories.
That leaves only the Priority Pass lounge access, which is available on other credit cards as well and doesn’t offer access to any lounges of the Big 3 airlines (Delta, American, and United), so you’re getting mostly secondary lounges. Doesn’t seem like much of an enticement for such an expensive credit card, does it?
Except hold on a minute. All the other credit cards that offer a Priority Pass membership with unlimited visits are also high annual fee cards, such as the Amex Platinum or the City National Bank Visa Infinite. And while Priority Pass isn’t terrific domestically, they have a much larger network of lounges overseas.
Even in the United States, you can often find some sort of Priority Pass lounge in many major airports, though it might be a trek from the lounge to your gate.
Finally, the flavor of Priority Pass membership offered by the Citi Prestige is better than the one on the Amex Platinum since you can bring up to 2 guests at no extra cost. The Priority Pass that comes with the Amex charges $27 for each and every guest. So if you travel with family or colleagues and you’re in the habit of bringing them into the lounge with you, there’s some benefit there as well.
And what else? Well… that’s basically it. Those are the benefits you’ll get on the Citi Prestige for $200 per year after July 2017.
The Devil’s Advocate conclusion? Ehhhh.
I’ve been a longtime fan of the Citi Prestige, and I certainly like challenging Conventional Wisdom. But I’m afraid Citibank hasn’t left a whole lot of meat on this bone.
I did say that Citibank would be forced to cut back on the overly generous Prestige benefits, but it seems to me they’ve gone way too far in the opposite direction and are about to cut off their nose to spite their face. We’ll see how it goes, but I wouldn’t be surprised if Citibank finds itself having to roll out new benefits or re-instituting some of the old benefits on the Prestige when they see the stream of customers heading for the exits.
In the meantime, there are a few people who will still find value in the Prestige after the devaluation is in effect, such as those who take aggressive advantage of the 4th Night Free benefit or those who rely on using Priority Pass lounges with guests.
But most folks, including myself, won’t fall into those two categories. So for the rest of us, enjoy the next year while it lasts, and then be ready to dump the Prestige card a year from now. As they say in France, c’est la vie, and as they say in the points and miles world, what’s the next deal?Devil’s Advocate is a bi-weekly series that deliberately argues a contrarian view on travel and loyalty programs. Sometimes the Devil’s Advocate truly believes in the counterargument. Other times he takes the opposing position just to see if the original argument holds water. But his main objective is to engage in friendly debate with the miles and points community to determine if today’s conventional wisdom is valid. You can suggest future topics by following him on Twitter @dvlsadvcate or sending an e-mail to firstname.lastname@example.org.
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