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Update: The Citi Prestige and Citi ThankYou® Premier now offer 1.25¢ per point towards travel on any airline, versus the previous enhanced redemption rate on American Airlines. The Citi Prestige no longer offers lounge access to American Admiral’s Clubs. Learn more about the current offers here.
Your first reaction to the headline of the post may be “wait a second, what do AAdvantage changes have to do with the value of Citi ThankYou points?” Let me explain.
The value of the Citi Prestige & Citi Premier Cards
As of last year, Citi has gotten really competitive with the value of their transferrable points currency cards, especially the Citi Prestige® Card and the Citi ThankYou® Premier Card. These cards offer the following sign-up bonuses:
- Earn 50,000 bonus ThankYou points after you spend $3,000 in purchases within three months of account opening
- $450 annual fee
- Earn 50,000 bonus ThankYou points after you spend $4,000 in purchases within three months of account opening
- $95 annual fee, waived the first year
The Citi Prestige® Card is an especially compelling “premium” card, as it offers a ton of perks which more than help offset the $450 annual fee, in my opinion. These include:
- A sign-up bonus of 50,000 ThankYou Rewards points after spending $3,000 on the card within the first three months — those points can be transferred to one of their airline transfer partners, or be redeemed for $625+ worth of flights
- A $250 annual airline credit
- A fourth night free hotel benefit
- The most comprehensive Priority Pass membership offered by any card
- A $100 Global Entry fee credit
The card also has a great points earning structure, which is rare for premium cards:
- 3x points on air travel and hotels
- 2x points on dining out and entertainment
- 1x point for all other purchases
The Citi ThankYou® Premier Card is more of a mid-range credit card, which offers a great rewards structure for everyday spend:
- 3x points on travel
- 3x points on gas
- 2x points on dining out and entertainment
- 1x point on all other purchases
What do Citi ThankYou points have to do with American?
Citi ThankYou points can be transferred to quite a few partner airlines at a 1:1 ratio, though American AAdvantage isn’t among them. I’ve speculated that American AAdvantage will be added as a Citi ThankYou transfer partner after the devaluation, though that’s baseless speculation on my part.
But Citi ThankYou points can also efficiently be redeemed for paid travel:
- Points earned on the Citi ThankYou® Premier Card and Citi Prestige® Card can be redeemed for 1.25 cents each towards travel on any airline
- If you have both the Citi Prestige® Card and Citi ThankYou® Premier Card, you can pool the points and redeem all of them at the rate of 1.25 cents each towards the cost of airfare
Impact of AAdvantage changes on these redemptions
American is making some major changes to the AAdvantage program in 2016. Perhaps the most significant changes are as follows:
- An award chart devaluation, which kicks in for bookings made as of March 22, 2016
- Starting in the second half of the year, American will award redeemable miles based on how much you spend rather than how much you fly
Over time, award chart devaluations impact the value of accruing miles rather than “cash back” towards travel. For example, if you have AAdvantage miles, your buying power for many types of awards will decrease significantly as of March 22, 2016. However, that’s not the case if you’re paying cash. Airfare was down in 2015 compared to 2014, and it’s not looking like it will increase in 2016 either.
So the relative “value” of 1.6 cents towards travel on American is actually increasing for the average consumer, rather than decreasing, at least based on the opportunity cost of those points.
This is rather specific to Citi ThankYou as opposed to Amex Membership Rewards or Chase Ultimate Rewards, since Citi ThankYou points are the only ones which can efficiently be redeemed for revenue travel, in my opinion. While Amex and Chase points can also be redeemed as cash towards the cost of an airline ticket, the redemption values aren’t nearly as good.
Also, as I said above, I suspect this devaluation will allow American AAdvantage to be added as a transfer partner of Citi ThankYou. It’s only speculation on my part, but Amex lets you transfer points to Delta, and Chase to United, so it’s only logical.
Maximizing your rewards is just as much about relative value as it is about absolute value. It can be tough to constantly change your behavior in order to maximize points, but I do think the upcoming AAdvantage changes have an impact on the value of Citi ThankYou points:
- As the number of miles required for an award increases but the cost of paid travel stays the same, the relative value of points which can efficiently be redeemed towards the cash value of airfare increases; I still plan on requalifying for Executive Platinum status, so I might as well use each point for 1.25 cents towards the cost of travel, rather than redeeming them for ever-increasing award costs
- I feel pretty comfortable speculating that this devaluation will make it possible for AAdvantage to be added as a Citi ThankYou partner, though that’s not based on any inside information
While I of course still love “aspirational” miles, the benefit of accruing points which can offset the cost of paid travel can’t be understated either. Between the Citi Prestige® Card and Citi ThankYou® Premier Card, I’m earning ~4.8% of value towards the cost of travel on American for all my travel and gas purchases, and ~3.2% of value for all my dining and entertainment purchases. That’s pretty tough to beat in an environment where the cost of revenue airfare isn’t up, while the cost of awards continues to be on the rise.
Do you see more value in accruing points towards the cost of revenue travel with the current trend of the cost of airfare staying the same/decreasing, and the cost of awards increasing?