The party's over? Citi's new rewards card shifts focus to essential spending
Citi wants to attract credit card customers who use its card for staples such as groceries and gas — a pivot from its past of marketing to the social butterflies who would use its cards on dining and entertainment.
Observers have been warning for a few years that many credit card issuers’ rewards programs are too rich to sustain because of high costs and frequent turnover. Savvy consumers have become experts at cherry-picking the best rewards and shifting spending among multiple cards.
Citi appears to be trying to remedy the situation with the Citi Rewards+ Mastercard, which emphasizes the everyday purchases that could help move the card to the top of consumers’ wallets instead of competing to be the card of choice for nights on the town.
For new credit card customers, the no-fee Rewards+ card replaces Citi’s ThankYou Preferred rewards Mastercard, and it introduces incentives aimed at driving more frequent usage and longevity.
The Citi Rewards+ card gives consumers double points for every $1 spent on gas and grocery purchases, rounding up to the nearest 10 ThankYou points on every purchase. This bumps small purchases around $2 up to a full 10 points, which could encourage consumers to pull the card out more often.
Citi is also giving Rewards+ customers 10 percent back on the first 100,000 points redeemed each year, which may keep more consumers in the fold if they continue to earn and burn points, instead of accumulating points to cash out before moving on to another card program.
“We’re excited to introduce a new card that truly turns everyday purchases into something bigger,” said Chris Fred, head of proprietary products at Citi Cards, in a Thursday press release.
Citi is also offering a modest sign-up benefit of 15,000 ThankYou points for customers who spend at least $1,000 in the first three months, which amounts to about $250. That pales in comparison to free airline tickets and richer rewards from higher-fee luxury rewards cards, but it fits the mainstream consumer target.
The Rewards+ card builds on the existing center-market appeal of Citi’s ThankYou points system, which touts flexibility. Users may redeem ThankYou points for gift cards, travel rewards, cash back and statement credits; they also may use ThankYou points to pay for purchases through Amazon, Expedia and LiveNation.com.
The new card becomes available Jan. 10. Although Citi is no longer offering its ThankYou Preferred rewards credit card to new customers, existing customers may keep earning points for dining and entertainment under the same structure, according to the terms Citi posts on its website.