Update October 25th, 2011: The Citi ThankYou Preferred’s 50,000-point bonus offer has now expired, but you can still get those points with the Citi ThankYou Premier, where they’ll be worth $665 more if you redeem for airfare.
Citi has revamped their reward credit card offerings by rolling out two new cards – the Citi ThankYou Premier and the Citi ThankYou Preferred - and eliminating two existing cards from their lineup. But how do these two cards compare? Like many rewards credit cards, the Citi Thank You comes in a standard no-fee version (in this case, the Preferred) and a premium version that has a higher rewards rate but comes with an annual fee (the Premier). A number of people will reject a card with an annual fee out of hand, but it’s best to give the higher rewards rate some consideration before you strike it off your list. We’ll break down the cards and help you decide which of the Citi ThankYou cards is right for you.
ThankYou Premier: better rewards and better bonus
The ThankYou Premier makes up for its annual fee in rewards- sort of. You get 20,000 bonus points if you spend $1k in the first 3 months, which we’d value at anywhere between $126 and the advertised $200. The base rewards rate is 1 ThankYou point per dollar spent, but you get 1.2 TY Points per dollar spent at gas stations, drugstores, supermarkets, commuter transportation and parking merchants. We value a ThankYou point at 0.83 cents, so that’s a rewards rate of (on average) 0.993% on the bonus categories and 0.83% elsewhere. It does some unique features that should appeal to the globe trotters among us:
- The card earns FlightPoints: For airline tickets purchased with the card, you get 1 Flight Point per mile flown in additional to the ThankYou Points. This means you can really rack up points with international trips or cross country flights. The issue with FlightPoints is that you can only redeem them in equal increments to ThankYou Points. Therefore, you may accrue a gajillion FlightPoints but never be able to spend enough money, and therefore earning enough ThankYou Points, to use them.
- You receive one free domestic companion plane ticket a year (thanks to one of our users to pointing this one out!)
- There’s no foreign transaction fee, a plus if you’re traveling abroad often.
- The card comes with one free domestic companion ticket a year, as long as you book your ticket through Citi’s travel partner, Spirit Incentives.
The card has a steep $125 annual fee (waived the first year). For a base rewards rate of <1%, this seems pretty mediocre. The Citi ThankYou Premier has a lot going for it, except that it earns ThankYou points. That kills the rewards rate and bonus, and sours us on the card as a whole. Let's compare the Premier with another highly popular travel credit card, the Capital One Venture Rewards. The Capital One Venture Rewards has a $59 annual fee (waived the first year) but has a signup bonus of 20k No Hassle Miles, which are valued at $200 (rather than the Premier's averaged $166). Plus, it has a rewards rate of 2%, and is a LOT easier to redeem. You can use your No Hassle Miles to offset any travel expense, be it airline tickets, hotel stays, gas or food from the minibar. You'll earn a better rewards rate and pay a lower annual fee. That said, you don't get the extra companion ticket - a pretty substantial perk. So which one is the best choice?
| Capital One® Venture℠ Rewards Credit Card | Citi ThankYou℠ Premier Rewards Card - enough for $500 in Gift Cards | ||||||||
|---|---|---|---|---|---|---|---|---|---|
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| Signing Promo | |||||||||
| 10,000 Capital One No Hassle Miles Bonus after spending $1,000 - in the first 90 days | 50,000 Citi ThankYou Points Bonus after spending $2,500 - in the first 3 months | ||||||||
| Intro APR Promo | |||||||||
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| Annual fee | |||||||||
| $0 intro for first year; $59 after that | $0 the first year, then $125 | ||||||||
| Details | |||||||||
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Taking into account the annual fee, rewards rate, one-time signup bonus and companion fare (which we value at around $200), here’s a breakdown of the best card for you based on different spending scenarios. The dollar value is the amount you’d save with the Venture as compared to the Premier. We assumed that you spend half your money in the Premier bonus categories: gas, drugstores, groceries, transportation and parking.
| Card held for | Your annual spending | |||
|---|---|---|---|---|
| $5,000 | $15,000 | $25000 | $35000 | |
| 1 year | -$96 | $12 | $120 | $228 |
| 2 years | $-55 | $53 | $161 | $269 |
| 3 years | $3 | $111 | $219 | $327 |
| 4 years | $65 | $73 | $281 | $389 |
| 5 years | $128 | $236 | $344 | $452 |
As you can see, the Premier is a better decision only if you’re a) a low spender and b) not holding the card for a very long time. The break-even point is right around $5k spent each year and keeping the card for three years. Think of it this way: counting the companion ticket perk, the net guaranteed rewards less the annual fee is +$75, while the Venture has no guaranteed rewards, so its net is -$59 a year. That’s a difference of $134, while the Venture’s rewards rate is somewhere between 1% and 1.15% better than the Premier. If you spend $13,400+, then the Venture beats the Premier on rewards vs. annual fee alone.
ThankYou Preferred: low risk, low rewards
The ThankYou Preferred’s base rewards rate is one ThankYou Point per dollar spent, but given that we value Citi ThankYou Points at an average of 0.83 cents apiece, you’re getting a <1% rewards rate. You do earn 5 points at gas stations, supermarkets and drugstores for the first 12 months of holding the card, though. Since the points are unlimited, this is a better offer than most 5% rotating bonus cards like the Citi Dividend, which maxes out on bonus rewards at $300 a quarter. However, once you’re out of the 12-month intro period, the (at most) 1% rewards rate sounds less than thrilling. And the bonus got a lot worse after the 20,000-point offer expired: you only get 6,000 points for spending $300 in the first 3 months, redeemable for a $50 gift card. You also get an anniversary bonus that compounds your points: in your first year, you get 1% of your points, in your second, you get 2%, and thereafter you get 3%. However, this raises your rewards rate to at most 1.03%, which is not at all exciting
The Fidelity American Express is a no-fee rewards card that lets you earn a full 2% back. The only caveat is that you need to have a Fidelity investment, retirement or 529 account, because your rewards are deposited straight into that account. However, this is actually a plus for some of us (myself included) who need an extra nudge to get saving. Alternatively, the Chase Freedom also has no fee, actually gives a 1% rewards rate, and has 4x the ThankYou Preferred’s signup bonus at $200.