Five Things to Consider when Debating Between Renewing CSR vs. Citi Prestige

A few days ago Citibank made an announcement on upcoming changes to Citi Prestige, which is their premium credit card product. You can see full details on DoC blog, but let me quickly summarize them for you:

1) The card will earn 5 points on dining and air travel, 3 points on cruises. Goes into effect on January 2019.

2) The $250 yearly airline credit will be valid on all travel purchases. Possibly goes into effect on January 2019.

3) You will be able to get 4th night free only twice per year. Goes into effect on September 2019.

4) Your will no longer get 1.25 cents per point towards flights. Goes into effect on September 2019.

5) The fee will go up to $495 from the current $450. Goes into effect on January 2019.

I actually happen to think that these changes are a positive development for most normal people. Sure, if one tends to  use “4th night free” perk on a monthly basis, this announcement really stings. Otherwise, I really doubt that most folks took advantage of that benefit more than two times per year anyway.

I think it’s terrific that Citi will copy Chase Sapphire Reserve and make $250 credit valid towards all travel purchases. This is a huge improvement in my opinion. Back when I had Citi Prestige, I bought a Southwest airline gift card in order to use up my credit. That’s nice and all, but I usually burn miles and points on airfare. So, the gift card ended up gathering dust for few years before I was finally able to utilize it.

Due to this overhaul, most people will be able to use up the $250 credit without thinking about it a whole lot. Anyone who travels even few times per year will have $250 in various travel expenses, whether it’s taxes on award tickets, hotel dining, car rental or other incidentals.

Higher earning rates on dining, air travel and cruises will be somewhat useful for regular people, but you would have to spend quite a bit in order to accumulate a sizable stash of points. If you put $20k-30k  on credit cards each year, your energy will be better spent on new sign-up bonuses. Still, it’s an improvement nonetheless.

Due to this new development, I’ve seen a lot of discussions on whether Citi Prestige will kill Chase Sapphire Reserve, the current reigning king of premium cards. I know some of my readers currently hold both cards and are wondering which one they should keep long-term. My take: CSR isn’t going anywhere, but most (normal) people should choose one or the other.

Things to consider when debating between the two cards

1) Can you make do without Ultimate Rewards program? 

This is the most important thing to determine. Citi Thank You program does have valuable transfer partners (Singapore KrisFlyer, Avianca, Air France and Jet Blue), but let’s be real, it’s a poor man’s Ultimate Rewards. Mainly this is due to absence of  Hyatt, Southwest or any American-based traditional frequent flyer program.

Since Citi will kill the 1.25 cents uplift on flights, it will mean that you will have to be somewhat well-versed in foreign frequent flyer programs in order to derive value from Thank You points. One exception is Jet Blue, which is similar to Southwest. So, if you frequently find yourself flying  Jet Blue, you might as well migrate to Citi Thank You program. Citi recently  changed Jet Blue transfer ratio to 1:1.

If you know someone with a Citi Thank You Premier card, you can transfer your points to his/her account for free and let them book a revenue flight with 1.25 cents uplift. But most people won’t do it, of course.

On Chase Hyatt transfer. I think there is a lot of value to be had in Category 1 and 2 hotels (cost 5,000 and 8,000 Hyatt points, respectively). Otherwise,  you can usually do better by using other hotel currency or simply paying cash. There are exceptions, of course, but I don’t find a Category 5 Hyatt hotel (20,000 points per night) to be that much of a bargain.

I would argue that getting a Chase Hyatt credit card (X2 if you have a spouse/partner) that comes with Cat.1-4 renewal certificate will suffice for most people.

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p style=”text-align: center;”>Enjoying private island beach with my husband (at Hyatt Regency Coconut Point Resort and Spa)  thanks to renewal certificate

Redeeming UR points at 1.5 cents apiece towards travel is an extremely attractive option for most regular folks. This loss will be somewhat mitigated by higher Citi Prestige earning rates on dining and air travel. Of course, Citi doesn’t have  Chase Freedom (5% rotating categories) or Chase Freedom Unlimited (1.5 points on everything) equivalents, so there is that.

If someone doesn’t like juggling cards, having to deal only with Citi Prestige will be a welcome change. Otherwise, foregoing 1.5 cents uplift on travel purchases will be a big loss for many regular families.

As a general rule, I don’t renew premium cards. I know I’m a bit of an anomaly in this hobby, but as a middle-class person, I simply can’t justify plucking down $450-$550 each year, regardless of perks. That said, in a few months I plan to upgrade my Chase Freedom Unlimited to Chase Sapphire Preferred and pay $95 fee.

I need access to United program in order to top off my parents’ frequent flyer accounts, and this is the only way  for me to get it. I’ll absolutely downgrade the card back to Chase Freedom before the next fee hits. Hopefully, I’ll accumulate some points via 5% categories so I can also replenish my Hyatt account, but if not, it’s cool. So, if you have a few non-premium Chase cards, there is always an option to go that route as long as you don’t need access to UR program on a daily basis.

But let’s be honest, some will absolutely refuse to live without having Hyatt and Southwest programs at their fingertips. It won’t matter if the math doesn’t add up.

2) Do you see yourself utilizing “4th night free” perk at least once per year?

If your Citi Prestige is coming up for renewal soon, you can lock in the $450 annual fee. The fee on Chase Sapphire Reserve is also $450, but the travel credit is $300. So, essentially, you have a net difference of $50 (for now). If you plan to book a paid stay of 4 nights, chances are, you will recoup that $50 without an issue if you have Citi Prestige. Once the fee goes up to $495, it will be a difference of $95.

I imagine that most will still come out ahead as long as they take advantage of this perk at least once each year. I almost never book stays of four nights and usually burn hotel points anyway. So to me, this would not be a swaying factor.

3) Do you have a family of four (or more) and like to have airport lounge access?

Chase Sapphire Reserve allows you to bring two companions for free. Citi Prestige allows two free companions or immediate family. This is an important distinction and a big argument in favor of Citi Prestige for those who usually travel with their families.

4) Is having partial travel coverage important to you? 

Citi Prestige has weaker travel protection compared to CSR. You have to either book revenue fare or use Citi Thank You points in order to have full coverage.

With CSR, you are only required to pay for a portion of the trip in order for coverage to kick in. This applies to award tickets where you pay taxes. Do keep in mind that according to terms, miles have to be earned from Chase-issued credit cards.

As a general rule, I try not to rely on travel insurance offered by credit cards and mentioned my reasons in this post. However, this is an important benefit for many, and CSR travel coverage is superior to Citi Prestige. If you usually buy revenue fares, it’s essentially a wash. Don’t forget that certain products, like Chase Hyatt credit card, also come with travel insurance.

5) Is having primary car rental insurance in US important to you?

CSR offers it in United States, while Citi Prestige does not. If you rent cars often, this is an important consideration. In the event of an accident, you won’t have to file a claim with your insurance if you use CSR.

My take: personally, I would not renew either card. But given the choice, if I had definite plans to pay cash  for a 4-night hotel stay, I would be inclined to go with Citi Prestige. I would also be tempted to pick Prestige if I had lots of family trips coming up in a near future, where airport lounge access would be useful. Those two factors would seal the deal.

Otherwise, I would pick Chase Sapphire Reserve because the combination of Chase Freedom+Freedom Unlimited+CSR is tough to beat. Ultimate Rewards program is my favorite and many middle-class families will agree. CSR  is a more well-rounded premium card compared to Citi Prestige.

No premium card is best for everyone, and some should skip it altogether

Right now I don’t have any premium credit cards. And you know what? I don’t feel like I’m missing anything. I’m not under pressure to book a 4-night stay with CASH in order to justify the annual fee on Citi Prestige. We are not flying anywhere for awhile, so no need for airline lounge access. And even then, there are cheaper ways to get it, like Amex Hilton Ascend. That’s what I used for my recent trip to South Pacific. though I didn’t renew the card for that specific reason.

I keep on doing what I’ve always been doing: work on meeting minimum spending requirements on new credit cards. Paying $450 renewal  fee for future benefits I may not even take advantage of? No thanks.

P.S. If you are a person of limited means, take a look at my post on best 2-card combinations for Average Joe.

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