April 5th, 2010
Review: Citi Diamond Preferred Rewards Card
Citi Diamond Preferred Rewards Card is the only credit card that shows its appreciation every time you charge a purchase—by showering you with ThankYou points to redeem for excellent rewards. If you are looking for a good rewards card, go-to spending card, and a balance transfer card rolled in one, you’re in luck: the Citi Diamond is also offering 0% APR for up to 12 months on balance transfers and 0% APR for 7 months on purchases. With rewards and 0% APR offers becoming a rarity in the credit card market, the Citi Diamond is one to put on your credit card wish list.
November 23rd, 2009
Citi’s Offer: Ditch Interest Rate Hike If You Spend More
Citibank is offering a “catch-22” for credit cardholders: dodge the bank’s impending interest rate hikes if you meet a monthly spending requirement. Citi customers who meet the spending minimum, and pay on time, qualify for a rebate on their total interest rate charges for that month. Citi reports that the rebates will be based on interest charges for the entire balance and not just on monthly charges.
Full details on what the qualifying spending minimum is remains vague, as Citi will only comment that both the spending requirement for the rebate and the impending interest rate hike varies according to the cardholder’s credit history. Citi cardholders are already receiving notices about both changes they will be subjected to; MyBankTracker reports that one Citibank cardholder notice’s stated a $1,000 spending minimum a month to qualify for the rebate.
These card changes are fueled by a perceived need from issuers to create more revenue-generating strategies before the reforms take place next February. This seems like a predatory practice, encouraging cardholders to spend more through the promise of rebates, but it can also be seen as one of the more helpful offers to come our way since the relentless wave of credit card term changes from issuers. Of all the issuers who have been upping interest rates—some as high as 30%– Citi so far is the only issuer to offer some concessions; however, it’s debatable about how much cardholders will really benefit in the long-run.
This “compromise,” between the industry problem of trying to remain profitable despite reforms and the consumer problem of added financial burden due to changing credit card terms, is extremely problematic. This offer will most benefit cardholders who own a Citi credit card and charge most of their transactions on it already; they will likely not need to change their spending habits drastically in order to qualify for the rebate. However, cardholders who have a balance on their Citi card they are trying to pay down are stuck between a rock and a hard place: either they spend more in order to qualify for the rebate which will add to their existing debt, or they are subject to the interest rate hike which still adds to their existing debt. For these customers, the best thing to do might just be to pay off the debt as quickly as possible to refrain from paying interest charges for too long.
Citi is also offering another “opt out” option, in which cardholders can pay down their current balance with current interest rates until the end of their current membership year or the expiration date on their card, whichever is later. However, if you choose this and your card is closed afterwards, it will impact your credit score (read more about impact on your credit score when closing your credit card).
Overall, the real winner here is Citi, who will profit from cardholders regardless—whether through increased spending or interest charges. “Customers who do more business with us will have the most opportunity to reduce their rates,” the bank stated. Is this really the best way for the credit card industry and consumers to meet eye to eye—to spend more in order to avoid the threat of being charged more?
At Credit Karma Blog, what goes around comes around… So what do you think about this post? Agree, disagree, or have something more to say? We’d love to hear your reactions!
November 13th, 2009
Credit Card Issuers Cutting Back on Reward Programs
If you use a credit card for its rewards program, be prepared for new restrictions or even a complete shutout of your card’s ability to earn airline mileage, valuable points, and hotel stay freebies.
After hiking up interest rates and slamming new fees on cardholders, credit card companies are now going after popular rewards programs. Citi is one of the first big issuers to begin making changes to some of its rewards programs. Consumers with the Citi Hilton HHonors credit card need to earn at least 12,500 points, up from 10,000, in order to get a free hotel stay. The Citi mtvU Visa card, popular amongst college students and the younger crowd, now have to earn 12,700 points, up from 10,000 points, in order to earn $100 reward back. One of the biggest blows is to the Citi Home Depot Rewards MasterCard, which has been made inactive since Oct 31 and cardholders are urged to redeem points by January 31, 2010 or they expire.
I wouldn’t be surprised if other issuers follow suit in rewards program cutbacks in order to take some pressure off expected losses. Credit card companies are stretched to maintain profitability and are further tightening credit access in anticipation of the coming credit card reforms.
Is there anything I can do?
Costly credit card changes have been pounding cardholders for the last few months now and now rewards programs are on the chopping block. There isn’t much you can do if the issuer decides to change the terms of your rewards credit card, but you can make the most of it. Its a good idea to start cashing in on your rewards card’s points and miles because your issuers may soon discontinue your rewards program or limit your earning ability, and you don’t want to lost out on potential flights, vacations, and redeemable points stashed in your credit card.
If you are planning to spend on credit, you might as well use your rewards card as often as you can so you can make the most of the current terms before the issuer cuts back on your earning power. Stick to earning points you can redeem that are especially useful to you, such as a particular hotel chain’s offers or gasoline rewards. Also, do the math on a rewards offer to ensure it is worth it. And you can always close down your rewards card if the program isn’t worth it, but keep in mind that it will take a blow to your credit score.
At Credit Karma Blog, what goes around comes around… So what do you think about this post? Agree, disagree, or have something more to say? We’d love to hear your reactions!
