What to do with your ThankYou card

The Citibank 5X drama continues.  More and more reports surface everyday of people who have had their Citibank credit card accounts suddenly terminated.  The common thread seems to be ownership of a Citi ThankYou Preferred card that earns 5 points per dollar at gas stations, grocery stores, and drug stores for a limited time.  People who have had their accounts terminated had used those cards to buy gift cards or reload cards.  Citi has been closing all Citi cards held by those individuals, not just the ThankYou Preferred card; and Citi has been confiscating all ThankYou points, including those earned by other means.

One Flyertalker who goes by the handle “Happy” reported that when her Citi cards were closed and her ThankYou points confiscated, a Citi rep told her that buying gift cards was “fraud” (you can read Happy’s post here).  If this is really Citibank’s position (vs. an ill-informed phone rep), then it is an extremely strange position to take.  After all, gift cards are sold almost everywhere and often by banks themselves. If buying gift cards is fraud, then pretty much the whole world is committing it.

image

In reaction to this mess, soon to be attorney Paul Cook has setup a petition on change.org to try to force Citi to relent.  I doubt the petition by itself will have its desired effect, but it will be very interesting to see what happens if news of these events and the petition reach national media outlets.  What will Citi do then?

The downsides of being shut down

There are several negative aspects of getting shut down:

  • Losing ThankYou points.  If Citibank shuts down your accounts, they will confiscate all of your ThankYou points.  They cannot take away miles earned on American Airlines cards or points earned on Hilton cards.
  • Losing card benefits.  Citi’s American Airlines cards have several great benefits such as free checked bags, priority boarding, and 10% rebates on awards.  And, the Citi Hilton Reserve card offers automatic Hilton Gold status.  As a cardholder, I wouldn’t want to lose any of those benefits (but losing them wouldn’t be the end of the world either).
  • Missing out on sign up bonuses.  After Citibank shuts you down, you probably won’t be eligible for new Citibank cards (at least, not for a long time).  I don’t see this as a huge loss, though, since most great offers these days come from Chase, American Express, and Barclaycard.
  • Credit report consequences.  If Citibank closes your accounts, your credit report will show that your cards were closed by the issuer.  This may or may not be a problem, but it may be something you would have to explain some day when applying for a mortgage, for example.

ThankYou card options

Many readers who have the now seemingly toxic ThankYou Preferred card have asked me what they should do.  I don’t know what the right approach is for you (or for anyone), but here are some options:

Buy and pray: Some have said that they’ll continue buying gift cards and saving up ThankYou points for when they’re most needed.  This is the riskiest approach.

Buy and burn: Another approach is to keep buying gift cards, but to also spend your ThankYou points as soon as you get them.  That way your total loss will be minimized if you get shut down.  One challenge here is that cashing out ThankYou points by using them to make mortgage or student loan payments seems to be one of the triggers that cause shut downs.  So, use the points to pay for flights or to get gift cards instead.  A good option, for example, is to redeem for Sunoco gift cards at 1 cent value per point.

Buy cautiously: Another approach is to keep using the ThankYou card for regular purchases, but to stop buying gift cards altogether.  With this option, you can play it safe and cash out your points each month or you could take a chance and keep your points for someday.

Burn, cut and run: Some people don’t want to risk having Citi cancel their accounts so have chosen to close their own accounts first.  So, the approach here is to cash out all of your ThankYou points and then cancel your cards before Citi does it for you.  If you go with this approach and you have more than one Citi card, its an open question as to whether you should cancel all of your cards or just the ThankYou card.

Cut and run: Another option is to cancel your card(s) without first cashing out your ThankYou points.  This way there is far less risk of Citi cancelling your account before you do.

What to do?

Personally, I plan to buy cautiously (i.e. I will stop buying gift cards) and I’ll use my ThankYou points only when I need them to pay for flights (which I do frequently).  If I get shut down, I’ll write about and no-doubt I’ll be upset, but I’ll get over it.  Citibank needs customers, but I don’t need Citibank.

How about you, what will you do?

See also:

Last updated on November 13th, 2015

Regarding comments: Comments posted at the bottom of Frequent Miler pages and posts are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

About Greg The Frequent Miler

Greg is the owner, founder, and primary author of the Frequent Miler. He earns millions of points and miles each year, mostly without flying, and dedicates this blog to teaching others how to do the same.

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Joe
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Joe

The agent handling my AmEx FR told me buying gift cards is against AmEx policy.

FrequentMiler
Guest

Joe: Amex’s T&C claim that you won’t earn points when you purchase gift cards, but… 1) That doesn’t mean that you are not supposed to buy gift cards (in fact, they let you use their own cards to buy gift cards on their web site); and 2) In practice, buying gift cards does earn points.
Frequent churner: Yikes, that’s a lot of spend!

Frequent churner
Guest
Frequent churner

Maybe it’s my purchases of reloadit packs in $2500-3000 blocks in grocery stores, but my account is alive and well. I burned all my point during a two week trip. Ill try to generate more points at the same $20k/month pace and partially cash out for bestbuy gift cards. I happen to need a new laptop and tv 🙂

Tri
Guest
Tri

sub

Jamie
Guest
Jamie

I think what I’d be more annoyed about is having my other cards shut down. So, I’d probably go with “buy cautiously”. If they shut down anyone just doing normal spend, then they are crazy. But I also think it is unfair for them to shut people down for doing even a fairly hefty about of gift card buying. You can’t just lure people in with a deal and then cut them out if they take advantage of it.
I think I’ll skip the thank you card. Citi doesn’t seem like the kind of bank I’d like to deal with. I’m surprised AA and Hilton wouldn’t be annoyed with Citi canceling their customers’ cards along with the thank yous, though. Maybe they will be if people make a big deal out of it.

Corky
Guest
Corky

If anyone wants their points back, sue in small claims court for the cash equivalent. At least in Minnesota, there are two factors in the consumer’s favor: (1) small claims court referees hate credit card companies and rule against them all the time regardless of what the contract says; (2) corporations have to be represented by counsel, so the bank has to pay for a lawyer, so it might be cheaper for them to settle. Expect a phone call right before the hearing dte. You also get your filing fee back. Represent yourself: corporations hate dealing with pro se plaintiffs.

Once you file, send a copy of the complaint to citi and odds are decent they will settle before court.

J.C.
Guest
J.C.

I’m going to continue using my card for my normal everyday transactions. I never have used it for manufactured spending and have no intention of starting.

I have a relative in Citi legal who claims that Citi looks at those with monthly spend for reloads in multiples of their credit limit at 5% merchants and subsequently cashing out at 1% as parasitic leeches. Whether that definition is correct or not, Citi has every right to shut down any account for any reason or for no reason.

Corky
Guest
Corky

Once I represented Citi to “get back” an unpaid credit card balance that was 95 percent compounded interest from a recent Russian emigre with very limited English who had no idea what was going on. So there’s plenty of parasitic leech candidates in this world.

Dennis
Guest
Dennis

Hey FM, I know redeeming TYP for points is the most valuable at 1.33x. What makes me curious is people claiming a lot more value than that, up to 2.66x per point. Am I missing something here? Thanks

FrequentMiler
Guest

Dennis: There’s a difference between the earning rate (X) and the value of points earned. The value of points earned tops out at 1.33% when using points to buy airfare (and if you have a premium travel card such as the ThankYou Premier). The base earning rate on most cards is 1X, but with the Premier card, you can goose it up to 2X by using the card to purchase flights whereupon you get “flight points” that can be converted to ThankYou points in a convoluted manor. The net result is that you can increase your base earnings of ThankYou points from 1X to 2X. Then, if you redeem for flights, you get 2.66% value (not 2.66X).

MileageUpdate
Guest

JC, I agree that they have the right to shut down any acct but they dont have the right to shut you down and confiscate your already earned pts.

J.C.
Guest
J.C.

MileageUpdate, from the looks of their T&C it looks like they can nuke your TY points any time, too. At least that is how I read it. I wonder what would come about if everybody complained to the CFPB.

SamOH
Guest
SamOH

I was planning to get this card as part of my churn last month but the link was pulled before I pulled the trigger…feeling much better now with all this nonsense and extreme measures by Citi…
On another note ….there will be major collateral damage to the idea of buying gift cards/reloads with credit cards if this nonsense (buying gift card by a credit card=Fraud/confiscating TYP) hits the national media as other banks will follow suit…

FrequentMiler
Guest

SamOH: Gift cards are a huge business. Even with intense media coverage there is no way the other banks would want to lose out on their fraction of that business.
Maury: As far as I know, Citi has only shut down accounts where people have a Citi ThankYou Preferred card that earns 5X at some locations for a limited time.

Maury
Guest
Maury

Does this only apply to the Thank You cards? Or does it apply to buying giftcards with other Citi cards? Thank you

J.C.
Guest
J.C.

Novel idea, Corky, to blame Citi because some clown applies for credit without the slightest ability to understand, much less comply, with the contract he signed.

jim
Guest
jim

I HAVE TY premier card with 71k points. They don’t have amazon gift card. I don’t need walmart or home depot gift cards. They don’t have gas cards. sunoco is not in our state. I don’t have travels. it sucks cos i cant redeem for anything now

jim
Guest
jim

anyone one who tells card company agents that they are buying gift card is dumb.

FrequentMiler
Guest

jim: I believe that Citibank is inferring that people have bought gift cards when they see high dollar (and very specific) charges at stores like CVS. I don’t think that people are calling up and saying “hey, I bought a bunch of gift cards, OK?”
Grant: You’re right!

romsdeals
Guest

I need Citicard.. for its AA credit cards. Getting banned is not worth the risk. Glad I didn’t join the TYP bandwagon. I’ve been using Barclay Arrival for short flights and paying all in points for short flights.

Grant
Guest

You forgot about the option to keep the card open and never use it again.

Dave
Guest
Dave

@Dennis – the 2.66x is for folks who earned “flight points” on the premier card, then redeeming for travel. Its convoluted, so google it or search flyertalk.

I am debating redeeming my 130K for gift cards, but holding steady for now. My TY Pref was the old 5X on everything for 6 months from 2012. I am now earning with the Forward.

Ben
Guest
Ben

@Maury @FM
Same question. I don’t have TYP, but I do have other airline/hotel Citi cards. Have there been reports of people getting these cards shut down for GC/VR purchases?
Also, I would suggest people download a “Phone Call Recording” app on their cellphones. That way if you have to talk to any cc company, you have the ability to record the conversation just like they do.

FrequentMiler
Guest

Ben: I haven’t heard any reports of this from other cards.
Jeremy: Yes, that’s true that Citi loses money when people use the cards for nothing but 5X purchases, but there are many other (much better) ways they could have handled the situation. Amex, for example, has simply capped earnings on cards like the Blue Cash Preferred (that earns 6% cash back at grocery stores). That way, they minimize their losses and keep otherwise valuable customers.

Jeremy
Guest
Jeremy

Greg, seems like citi cares so much because ppl who used this card that way were getting five cents per dollar while at the same time generating Citi just 2-3% in merchant fees. On the average consumer with normal spend of say 10k per year the 2% difference of $200 a year is a marketing expense. When someone does $200k in volume a year that 2% difference to citi of $4K is a real cost and significant loss to the company, hence they pull the plug. Given the fact that most cards are 1-2% back in rewards which is less than the merchant fees received they are still making money resulting in them IMO being unlikely to shut cardholders down.

Bikeguy
Guest
Bikeguy

Part of Citi’s closing may stem from a post mortum on the original TYP program. People literally were getting back more than one dollar for every dollar spent, over $100,000 in at least one case.

So, people start getting shut down last month, Citi notices all applications were from an obscure link, and their “targeted account” list is probably people that applied through that link.

Time to lay low and let others establish what the ceiling for spend is…..

And I would argue getting banned from Citi would be a really bad thing, based on AA card churn alone over several years. You are talking really large amounts of miles.

Curtis
Guest
Curtis

@Bikeguy – if you can only churn ONE AA card at a time now, every 18mo, that is actually not that big of a loss (40-50k every 1.5 years). There i no telling how long those that have been shut down will be banned from Citi, but at worst I would say they lose out on one/two AA card churns due to this.

Jack
Guest
Jack

If a person is told they are banned from getting Citi cards, how long would the ban be? I’ve heard of people who have had charge-offs of like 10k that they were able to get another Citi card after about 7 years, so I doubt if a person would be banned forever. If they say that, forever is probably 7 years at the most.

MrWho
Guest
MrWho

“After all, gift cards are sold almost everywhere and often by banks themselves. If buying gift cards is fraud, then pretty much the whole world is committing it.”

Really? Up until last year, I never bought gift cards using CCs. Regular people do not buy GCs and do not manufacture spending.

I got so tired of good CCs getting killed using just for everyday regular spends because people like you encourage to ‘abuse’ the perks instead of ‘taking advantage of’.

JakePB
Guest
JakePB

Was hoping to gather some Thank You pts for air travel w/Thai Airways for BKK to Koh Samui, but have been holding off on my App-o-rama due to a refi that closes this week. Now, I’ll just skip it altogether – why do business w/Citi? There are too many issuers that actually want our business, and I’ll be happy to oblige!

Jack
Guest
Jack

Citi doesn’t really have much for cards now anyway and they are tightening things up so much on being able to churn their cards (AA, Hilton) that I don’t think it is that big of a loss if a person gets banned. So one strategy is to keep hitting it really hard and redeeming the points as soon as you can. Weigh how much you can profit that way vs. the expected return from getting a couple Citi cards a year over the next five to seven years. Depending on the volume of spend you can manufacture and the length of time before you get shut down, you might come out ahead by putting the hammer down and going for the gold now. I remember similar FatWallet discussions about the Chase AARP card along those lines. Some thought they made enough that it was worth getting banned by Chase, plus how long will the ban be anyway? What are the odds that they will be able to keep good records of those who are “banned?”

JakePB
Guest
JakePB

Hey JC, Corky is at least 50% right regarding the recent Russian immigrant. Doesn’t Citi have a responsibility to their share holders to only extend credit to credit-worthy candidates? Predatory lending can happen in the credit card world too. Yes, we all need to be responsible for ourselves, but Citi shares that burden. Finally, Citi was a TARP $ recipient; money we all will be repaying – will you, me and the recent immigrant receive the same bailout?

Joe
Guest
Joe

FM: I’m just repeating what the AmEx FR handling my FR told me. He said, you should only buy GCs with cash or debit, not credit cards. It’s not too difficult to see what triggered my FR – my credit line was around $6k, yet I was spending $15k per month on my HH Amex by recycling VR cards.

silver springer
Guest
silver springer

So I have had my TYP card for a month; I planned to buy vanilla reloads at CVS and get 5points per dollar will doing so get my cities cards canceled?

trackback

[…] Citi’s Account Shutdowns Continue: What Should You Do With Your ThankYou Card? Submitted by Marcus • about 1 min ago Website: boardingarea.com […]

Jack
Guest
Jack

@silver springer – no one really knows at this point. Read the flyertalk thread and for the latest info.
http://www.flyertalk.com/forum/credit-card-programs/1465023-citi-cards-closed-typ-confiscated-reasons-not-disclosed-75.html

webazoid
Guest
webazoid

off topic but this was FM as a baby blogger…lol:
http://millionmilesecrets.com/2011/11/04/frequent-miler-interview/

A year and a half later, you’re one of the most prominent bloggers out there. Congrats!

Btw, didn’t realize your son had made your logo!

jason
Guest
jason

How much does Citi lose when you buy say a 500.00 Vanilla Reload?
These cards cost like $3.95 but have no purchase value for Citi, after all 500.00 is not like merchandise as it will be deposited into another account. So Citi gives you 500×5=2500 TYP which at 1c is like $25.00 but only make a fraction of that sale. ( unlike say you buy a stove for $500.00 and Citi gets say 2.50% fee which is $12.50 so it does not break even either)

Jose A
Guest
Jose A

Very informative, as usual

@webazoid – Thanks for the flashback. I came into the points/miles game after the FM interview on MMS.

Jesson
Guest
Jesson

Ha~~a relatively new blogger in late 2011. Epic~~

weevinweaver
Guest
weevinweaver

Haha I think this is hilarious!!!! Cant help but smile. I mean I guess in a way I am jealous of you people that have been doing 20k a month and earning massive points. Hopefully all the cc companies don’t follow Citi’s lead. I sure wouldn’t be surprised if they did. I just may cash out all my points to be on the safe side. I have so many UR points it would be a real shame to lose them.

J.C.
Guest
J.C.

@ JakePB: How would Citibank know that the applicant was a recent immigrant functionally illiterate in the English language? I mean, he was able to fill out the application. Does Citi give English tests to applicants these days? Also, federal law would seem to require that Citi consider all applicants equally regardless of whether they are immigrants or not. As long as they meet the credit criteria and are at least legal US residents, I doubt Citi would risk the massive lawsuit that could result from rejecting the person.

The TARP excuse is getting rather lame. First of all, the government earned money on that and last I saw Citi hasn’t defaulted. The money was lent to Citi et. al. and there was ample collateral. I fail to see any logic in how Citi being the recipient of a government loan means defrauding Citi is ok. It’s like saying that because you have federally insured student loans it’s ok for someone to burglarize your house. Lame. More than lame.

Frindle
Guest
Frindle

It’s also worth noting that while you said you wouldn’t mind losing access to the benefits of certain Citi cards if you were to get shut down, and that Chase does tend to have better sign up bonuses, Citi cards are some of the most easily churnable compared to Amex and Chase. Barclays is a whole other issue on that front, but I wouldn’t want to lose my access to Citi cards completely.

marathon man
Guest
marathon man

@Joe (comment #1) The agent handling my wife’s FR asked what we bought, we said GCs, she said OK, did the FR, and a week later we were up and running again, still buying FRs. Nothing has changed. There is nothing against buying GCs at any CC. Earning points on them may be a thing, but it is NOT against the rules even on citi! And so your agent was wrong/trying to scare you–like the one who told Happy it was GCs that were considered fraud. There is no fraud. It’s crap. Dont be scared out of using your Citi card. Instead, learn how to fight them. Say NO

Rich
Guest
Rich

For those of you who want to redeem their TYP, know that Amazon gift cards are available over the phone! While you cannot get them online, you simply have to call them to redeem your points over the phone. I did that a couple of days ago to get rid of my 50k TYP.

trackback

[…] Miler expands on the recent negative developments of Citibank closing accounts and confiscating Thank You Points. Use them points and lay low. I am not too upset now for getting denied on getting this 5x promo […]

former newb
Guest
former newb

“Happy” had it coming for all the grief she has given to
newbies on FT. (eyeroll)

JakePB
Guest
JakePB

@JC – I have no idea how on earth you concluded from my statements that I’m saying it’s okay to defraud Citi. Did the immigrant defraud Citi and I missed it somehow? Whether someone is credit worthy or not is independent of their ability to speak English. Citi is responsible for making good loans – they didn’t leading up to the fiscal crisis and didn’t in the case of this recent immigrant, period. Citi is trying to have it both ways, whether you recognize it or denounce it as lame. Your burglary analogy is what’s beyond lame. Good day.

Paul Cook
Guest
Paul Cook

Please sign the petition if you believe that Citi is wrong. I ask you to take a stand because it is the right thing to do.

I’m at 77 signatures. If I can get 100, I believe I can ask for a meeting with the CEO.

trackback

[…] Citi is targeting the people who are using its ThankYou Network cards most heavily and shutting accounts down and confiscating earned points. FrequentMiler has some thoughts on that. […]

david
Guest
david

FM,

Can I cancel my Citi Thank you (don’t want to pay annual fee) and still keep the points or I have to ‘transfer’ them similar to Chase UR if you close the account (like transferring them to United, etc)

Thanks

FrequentMiler
Guest

david: The Citi thankyou Preferred card has no annual fee. Is yours the ThankYou Premier? If you have a ThankYou card with an annual fee, then I’d recommend that you call and ask to downgrade it to a no-fee ThankYou card. Best bet: Citi Forward card (5X at restaurants, movies, bookstores, etc.)

Skyhigh
Guest
Skyhigh

So what’s the best use for thank you points now? Have 200,000 accumulated over the years (TY Premier with flight points – no 5x, no manufactured spend). Do I blow them all on a couple domestic F tickets? Burn slowly on necessary personal flights in coach? Use them to fund some mileage running activity? Or just cash out with gift cards?

Have honeymoon trip to Europe coming spring 2014 that I always thought I’d use them for, but now realize that strategy doesn’t really play, as TY booking site shows international F to Europe would eat all points and still require many thousands of dollars in addition.

Any help is much appreciated!

FrequentMiler
Guest

Skyhigh: It doesn’t sound like you are at risk of getting shut down, so I’d recommend that you keep your points for their best use: cheap flights at 1.33 cents per point value. You’re right that they’re not good for premium international flights, but you can get really far domestically with 200K points!

Frequent churner
Guest
Frequent churner

Skyhigh — Ty points might come in handy booking hotels in Europe where there’s a lot of non-chain properties that are pretty decent and go for an equivalent of $100-200 a night through the TY portal.

Skyhigh
Guest
Skyhigh

@FM @FC – thanks for the advice. Much appreciated as always!

J.C.
Guest
J.C.

@ JakePB: I realize that deadbeat attitude you have was probably fostered in your kindergarten last year, but I’m wondering where Citi is at fault for not having ESP. You see, on this planet they use credit reports and FICO scores. Even if Citi requires the highest score there is still an approximately 2% chance of default. Are you going to give us the lame line that if someone is, say, Kansas is victim of a devastating tornado and can’t pay their bills it’s somehow Citi’s fault, too? Here is the prefect analogy for you: You are on food stamps. Your neighbor borrows your lawn mover and refuses to return it to you because he thinks you are a deadbeat anyhow. Good luck next year in first grade.

JakePB
Guest
JakePB

@JC – Clearly, your view of the world from your parents’ basement is one that is black & white. I say Citi shares the responsibility, and you retort with stories of fraud and food stamps…quite a leap. Heeding the advice of the adage that says, “the only fool bigger than the person who knows everything is the person who argues with him”, I will recuse myself from this silliness.
Mom! Where’s that meatloaf!

J.C.
Guest
J.C.

Does everybody in your trailer park think it’s the world shares the blame because you can’t afford a new double-wide? Good luck in first grade with that myopic sense of entitlement.