Citibank backs down on changes to credit card frequent flyer rates

Citibank backs down on changes to credit card frequent flyer rates

UPDATE | Citibank has abandoned controversial changes to the frequent flyer 'conversion rates' under the Citibank Rewards program.

A Citibank spokesperson has confirmed to Australian Business Traveller that the revised rates at which Citi Rewards Points could be swapped for Virgin Australia and Singapore Airlines points as of November 1st – a move the bank took without prior notice to customers – would now be wound back.

Those changes resulted in an immediate effective 'devaluation' of Citi Rewards Points as high as 25% and was also to be applied to customers' existing Citibank points balances as well as future transactions.

Citibank cardholders will once again be able to swap the bank's own points for airline frequent flyer miles at the previous, more generous rates.

The Citibank spokesperson said "we expect the changes to be made as soon as possible, but (it) will likely be a couple of days (before these take effect)."

Card Services customers – a division of Citigroup that includes Suncorp Bank Rewards, CUA and QT Mutual – will too have their conversion rates restored from 2.5 Suncorp/Card Services points = one frequent flyer point to the preferred 2=1 rate following similar cuts, the spokesperson confirmed.

PREVIOUS | Citibank credit card customers will earn fewer frequent flyer points on their everyday transactions, due to changes to the bank's 'exchange rate' for converting Citi Rewards Points to Virgin Australia Velocity points or Singapore Airlines KrisFlyer miles.

Effective immediately, you’ll need two Citi Rewards Points for every Velocity Point or KrisFlyer mile earned via the Citibank Signature, Prestige and CitiBusiness Gold credit cards, compared to the previous rate of 1.5 Citi Rewards points.

For Citibank’s Gold and Platinum customers, one Velocity Point or KrisFlyer mile will now require 2.5 Citi Rewards points, up from 2.0 points previously.

These new conversion rates are now live on the Citibank Rewards website...

Existing Citi Rewards balances also hit

The unexpected and unannounced devaluation of Citi Rewards points also applies to your existing Citibank points balance, rather than future transactions – a move which has in effect reduced the value of Citibank Rewards Points by 20-25% overnight.

Controversially, Citibank credit card customers received no prior notice of the new conversion rates until they took effect from November 1.

This is at odds with a '90 day' notice clause in the Citibank Rewards Terms & Conditions, concerning changes to the way in which points are earned or converted.

In response to questions posed by Australian Business Traveller, a Citibank spokesperson said "The 90 days’ notice is based on if we remove the program in whole or change the way points are earned in the rewards program, or in the case of Citi Prestige Qantas and Signature Qantas, the way points are converted ie $1 spend = 1 QFF Point."

"Under this same general clause (Section 6), (when) the cost of individual rewards available in the program for redemption (varies)... we will notify you on the website at the time of your redemption – consistent with the below highlighted terms:"

However, the bank did not reply to additional questions asked by Australian Business Traveller – including whether Citibank partners Virgin Australia and Singapore Airlines have increased the cost of purchasing each frequent flyer point, and why the bank elected to provide no notice even if permitted by its own T&Cs.

Citibank: what you’ll now earn per dollar spent

As most Citi customers first accrue Citibank Rewards Points (or CitiBusiness Rewards Points) and later convert these into frequent flyer points with the airline of their choosing, here’s how the new conversion rates change what you’ll effectively earn with Velocity or KrisFlyer on every dollar spent:

  • Citi Prestige: $1 spent in Australia = 1 VA/KF point, down from 1.33. A$1 spent abroad = 2.5 VA/KF points, cut from 3.33.
  • Citibank Signature: $1 spent on home soil = 0.75 VA/KF points, reduced from 1. A$1 spent overseas = 2 VA/KF points, dropped from 2.66.
  • Citi Platinum: $1 spent locally = 0.5 VA/KF points, down from 0.625. A$1 charged at foreign merchants = 1.2 VA/KF points, lowered from 1.5.
  • CitiBusiness Gold: $1 spent = 0.625 VA/KF points at any merchant, a decrease from 0.83.
  • Citibank Gold: $1 spent = 0.4 VA/KF points on all transactions, down from 0.5 previously.

Although no longer available to new customers, Citibank Gold now ties with the Commonwealth Bank’s Awards and Gold Awards MasterCards as offering the lowest number of airline frequent flyer points per dollar spent of any points-earning credit card in the Australian market.

Citibank credit cards that automatically sweep each month’s frequent flyer earnings across to your airline account – such as the Emirates Citibank World MasterCard – aren’t affected by these changes, nor are members of the Citibank Qantas Rewards program who retain the same earning rates.

The conversion rate from Citibank Rewards Points to Emirates Skywards miles is also unaffected, while it's believed that conversion rates with Citi Prestige's longer raft of airline partners including Air France, Cathay Pacific and Etihad too remain unchanged.

Also read: ANZ boosts Virgin Australia Velocity credit card points

Follow Australian Business Traveller on Twitter: we're @AusBT

Chris Chamberlin
Chris Chamberlin is a senior journalist with Australian Business Traveller and lives by the motto that a journey of a thousand miles begins with a single step, a great latte, a theatre ticket and a glass of wine!
 

35 comments

  • Yohy

    Yohy

    4 Nov, 2015 02:01 pm

    NAB tried a similar devalution of points which the ACCC put a stop to in 2002.

    Anyone affected may wish to lodge a consumer complaint with them over Citi restrospectively devaluing their points.

    http://www.accc.gov.au/media-release/accc-ends-investigation-of-proposed-retrospective-point-value-changes-to-the-nab

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  • dscorpcom10

    dscorpcom10

    4 Nov, 2015 04:05 pm

    Hope this doesnt happen to their cards linking points to QF!

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  • Dean

    deanr

    4 Nov, 2015 04:16 pm

    By their own admission above, they'd have to provide 90 days notice for that:

    "The 90 days’ notice is based on if we remove the program in whole or change the way points are earned in the rewards program, or in the case of Citi Prestige Qantas and Signature Qantas, the way points are converted ie $1 spend = 1 QFF Point."

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  • Nguyen

    Nguyen

    4 Nov, 2015 09:38 pm

    Not sure if you all notice....Qantas has recently devalued the QFF point. Back in late August 2015, you only needed 74,700 points for a $500 Woolworths giftcard. I looked at the rate again on Monday 2 November 2015, now you need 87,650 QFF points...Yes, you lose 17% in value of QFF...a lot more than the inflation rate. They did not inform us of the devaluation at all.  I wrote emails to them and did not get any replies. Anyway, the next thing you know is that QFF is becoming worthless as days go by. 

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  • undertheradar

    undertheradar
    Banned

    4 Nov, 2015 02:39 pm

    'effective immediately'...geee, some financial institutions in this country really treat their customers like 's**t'...and sadly will continue to do so...because they can...thankfully I have NO TIES with any such institutions, and I hope others take the time to 'shop around'. Often, bigger isn't always better ;) 

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  • Dean

    deanr

    4 Nov, 2015 03:17 pm

    So basically, Citibank is happy to fundamentally change its products and the value of points that have already been earned without so much as a moment's notice?

    Citi is clearly defending what it believes to be an 'out' buried within its T&Cs. What's to say that after a month or year passes, this mob won't 'immediately' cut the conversion rates again, screwing over its customers a second time around?

    I'll be complaining to Citi and demaning the points back that they've basically stolen from me by a few clicks of the keyboard, and to the ACCC and the FOS if necessary.

    Oh, and I'll be cancelling all of my Citi cards once that's sorted – the bank clearly can't be trusted to act in consumers' interests and obviously doesn't mind pulling the carpet out from underneath its customer base.

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  • Propofol88

    Propofol88

    4 Nov, 2015 03:55 pm

    I called and complained about it, and they fell back on their T&Cs. I doubt they'll reinstate the points we all rightfully deserve. Instead I took as much compensation I could get. I got offered 5000 pts initially, then $350 fee refund, then $350 + 2500 pts, then settled at 10000 pts. I heard others getting similar compensation. Better than nothing but still lost out over this fiasco...

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  • Satoshi Takayama

    Michael Kao

    4 Nov, 2015 04:09 pm

    Hey propofol: I assume you are a fellow anaesthetist with your name? Anyway, someone in AFF has offered to write an official letter and needs more people to join and show how disgusted we are. Last year QLD health tried to screw us up and it was the doctors all got together that forced them to come back to the negotiation table. So if we get together, we can make Citi willing to talk. 

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  • Propofol88

    Propofol88

    4 Nov, 2015 04:31 pm

    Yes, I am an anaesthetist practising in SA :)  Please include me in the letter. It's absolutely disgusting the disdain Citibank has shown its premium customers... 

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  • Phillip Quang

    Penguin

    5 Nov, 2015 11:25 am

    count me in on the letter as well, i have 200k points with citi prestige and am really annoyed that i received no notification about this

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  • Roger Benson

    sharrkey

    5 Nov, 2015 10:59 am

    Propofol88,   how   did    you   pull  off   that  10000   pts   compensation?  When  I  called   to   complain,  they    couldn't  care  less   and  declined   any    kind   of    compensation. In  Australia   we   have   no   choice ,  the  banks  are   too  arrogant ,  they   don't  care    for    customers    evn  at  the   high   end.  I  will   use  the   citi  prestige  card  as  little  as  possible   now  and  I   encourage    everyone   else   to   do  the  same . What  else  can  we   do?

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  • Propofol88

    Propofol88

    5 Nov, 2015 11:06 pm

    I sounded like a valued customer who they really ticked off and waned the blood of the floor supervisor's first born... Dunno. Haha. :p

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  • Wazza23

    Wazza23

    4 Nov, 2015 11:49 pm

    I called and got put on to the 'floor supervisor'. She offered me 10,000 points which I took seeing as I wasn't affected as much as others and only had 45,000 points anyway!

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  • Propofol88

    Propofol88

    5 Nov, 2015 09:30 am

    We both have been relatively lucky. I had 90k points. I know someone who was gutted having hundreds of thousands of points with Citibank. Evil bank scammed away several tens of thousands of dollars worth in points! 

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  • Phillip Quang

    Penguin

    5 Nov, 2015 11:28 am

    i have 200k......i guess it's time to look for another card

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  • bcworld

    bcworld

    5 Nov, 2015 12:06 pm

    Citibank has just started to reply to Facebook posts that points conversion rate will be returned to 31 Oct levels!

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  • Satoshi Takayama

    Michael Kao

    5 Nov, 2015 12:15 pm

    According to Krisflyer T&C clause B 1&2, G.7: "Miles are the base units of measurement in the Krisflyer Programme....Miles may not be exchanged for cash or vouchers". "The sale or barter of Krisflyer miles.....is prohibited..."

    According to Velocity's T&C clause 9.1.b,c&d: "Points..are solely a unit of measurement adopted by VRPL and NOT any form of contractual right, PROERTY or currency...are not subject to member's direction, control or other entitlement... cannot be purchased"

    Both specifically said its only a unit of measurement, not goods or service, and are not owned by the member. Citibank is referring to KF and VA points as a goods to be redeemed by us. They themselves have violated the terms and conditions of KF and VA.

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  • Dean

    deanr

    5 Nov, 2015 12:46 pm

    WOW! Amazing to see what media exposure and pressure from customers can do.

    The issue for me wasn't so much that the conversion rate changed – these things happen all the time – it's that Citibank never told anybody it was happening, so overnight, practically every cardholder lost a decent chunk of value from their points balance.

    Being realistic, I'm sure Citi will eventually reduce its Velocity/KrisFlyer conversion rates to what we saw on November 1, but after this incident they would be silly to try doing so again without providing any notice.

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  • Satoshi Takayama

    Michael Kao

    5 Nov, 2015 02:36 pm

    They are not that silly. They will do it again, except this time they are covered. Please read my post below.

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  • Ozkid

    Ozkid

    5 Nov, 2015 02:31 pm

    Well done everyone who called/emailed/posted on social media to Citibank. People power can work.

    I rang them yesterday to lodge a complaint, got a case ID, mentioned that the ACCC has previous form, put on the hard hat for the long fight...rather surprised to get the phone call reversing their decision.

    Citi has come through this with less friends for zero gain. Zeroing my rewards balance after this weekend.

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  • Satoshi Takayama

    Michael Kao

    5 Nov, 2015 02:34 pm

    Guys, don't relax yet. the war ain't over yet. Citibank have just added new terms and condition. Go to your reward page and click on terms and condition. There is a new clause 3.6 specifically at POINT TRANSFER (this time, the wording is very specific), and I want you to pay attention to clause 3.6.4 which states:

    "We may change the POINT TRANSFER program rule......in whole or in part AT ANY TIME with or without notice."

    So if they decide to devalue again after 10 minutes of reverting to the old rate, they can do so according to this new T&C.

    Beware!

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  • sagidec

    sagidec

    5 Nov, 2015 03:55 pm

    Are they looking to lose customes? How hard is it to just have notification to the customers? With this attitude, they leave themselves as an entity that is less to be desired to do business with.

    When ANZ and CBA changed their points conversion from their respective reward programs to frequent flyer programs, they were kind enough to let everyone know ahead and when it will take place. So, customers could do something about it whether is redeemed them or let it sit there.

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  • Satoshi Takayama

    Michael Kao

    5 Nov, 2015 04:45 pm

    Some fellow frequent flyer member with law background has adviced that Citibank can't unilaterally alter the contract. The terms and condition we agreed to when we signed the card was the old one. Please keep a copy of the old T&C and if they devalue again without notice, the new T&C has no legal value as it was tempered by them unilaterally without our consent. 

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  • Daniel Nolan

    dan3r3

    5 Nov, 2015 06:02 pm

    Thanks very much for highlighting that change to the T&Cs.

    Card cancelled.

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  • Brian Williams

    evilbrian

    6 Nov, 2015 01:20 pm

    When Citi cut the earn rate of their Emirates Platinum Cards from 1.5 points per dollar to 1 point in the first half of 2014, they gave us quite a few months notice, so I'm surprised that they tried to pull this new stunt on this occasion, although they also replaced the actual card with a new one called the Emirates Citi World card and this card costs merchants way more in commission charges than the old one did.

    If the day ever comes that merchants are informed by their terminal at the time of transaction just what level of commision they're being charged, these cards are going to become worth a lot less to users like us.

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  • Marcoaaj

    Marcoaaj

    7 Nov, 2015 01:48 am

    This is unbelieveable! I have almost 200.000 citibank points and was about to use for a business ticket with Singapore Airlines. I'll call Citibank and cancel my card.

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  • Roger Benson

    sharrkey

    7 Nov, 2015 09:37 am

    Marcoaaj

    They  have   just  reversed   that  change,   so  your   Miles   are  safe   for   now,  just   go   ahead     and    transfer  them   to  Singapore  Airlines   ASAP   before   these   guys  change   the  transfer    rate   again,   and    don't  cancel   the  card   just  yet.

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  • Marcoaaj

    Marcoaaj

    7 Nov, 2015 11:01 pm

    Yes, I was so pissed off that I didn't read it properly :-)

    I checked yesterday night and the points were still reduced. Today Citi's website is under maintenance so tomorrow I'll check and claim my points if they are back to normal. 

    Such a bad luck, I was booking my ticket with Singapore airlines!

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  • Roger Benson

    sharrkey

    8 Nov, 2015 09:36 am

    Marco

    I  called   them   and  they  said   that  they    will   adjust   the   missing  Miles      in  the    next  few  days  ,  they   will  not   appear    in  the   krissflyer   acct   immediately,   they   will    have a  large   backlog   to  clear

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  • Satoshi Takayama

    Michael Kao

    7 Nov, 2015 11:37 am

    Just before everybody get too excited and start to convert all points to KF, please consider:

    1. Can you use up all the points in the next 3 years? KF points expires in 3 years. So if you have millions of points, it's probably best to put some into VA

    2. Before you transfer your points, you have to tick on the "I agree to the T&C" button. If you click on the T&C that's highlighted in blue, you will see the new clause 3.6, which you agree that Citi can change the rules in the future AT ANYTIME with or WITHOUT notice. This is legally where is gets tricky. Yes, legally they can't unilaterally change the contract without your consent. But as soon as you click on the "I agree" button you have given consent to the new T&C. So if this ever happen again, you are not protected! 

    Some of our legal friends have raised this concern in writing to Citibank and is awaiting for an answer. I wonder if Chris or David is reading this, if you can contact Citibank and see what they say. I contacted Citi over the phone, got the standard answer saying "we value our customers that's why we listened and reversed the transfer rate  and we will notify you next time for any change in the future". How much do you believe in that is up to you But I'll feel more comfortable if Citibank can make a public announcement.

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  • Roger Benson

    sharrkey

    7 Nov, 2015 11:54 am

    Michael,   you   are   right     ,   but   at   some   point  citibank    can rewrite   the   whole   thing   and    give    you  90  days   notice   so  then   if   decide   to   transfer   the   points  ,  you   would   have   to   consent   to  new the  terms    and   conditions   anyway   ,  even  if   you  are   transferring   to   Velocity.  Also    I   find   that   you   need  a   lot   more   velocity   points     to   get   the   same  SQ   flights  .  I   suppose  if    you  have   Millions   of   Citibank  reward   points  it's   not   a   bad  dilemma! It  was   because  of  the   3   yr  expiration  of   Krissflyer  Miles   that  I   was   hanging   on  to  my   citi  reward   points  anyway!

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  • Satoshi Takayama

    Michael Kao

    7 Nov, 2015 06:40 pm

    The devaluation will definitely come. It's to do with the reduced visa interchange rate so Citi isn't the only one reducing the point earn. HSBC and EDR have put a cap on their point earn as well. But HSBC had given it's customer plenty of warning, and were willing to compensate for customers. In my case, I got it annual fee free. 

    The problem with Citi is not the devaluation but the lack of warning. So I agree that T&C will change and customers may need to agree with the new T&C if willing to continue with Citi card. But I believe the customers should be given the warning and the option of whether to continue using it or not. IMO, Citiprestige is still good value given the perks that come with it. But for signature, at 0.75/$, an annual fee of $300 is a bit rich. I would look for something else on the market. 

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  • James Hill

    Jamesabt

    17 Feb, 2016 03:32 pm

    We have recently received notification of a reduction in our ANZ rewaards point. This change takes effect on the 17th March 2016. However ANZ are still advertising their "old" rates and points on their website and in their branches. It is quite a significant decrease in benefits eg ANZ Rewards are halved from 1.5 points to .75 points using visa.

    Does anyone know if other banks are reducing their points?

    What are the best value reward plans?

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  • Brian Williams

    evilbrian

    17 Feb, 2016 03:56 pm

    Almost every bank has either done this, or is about to do this James. It's a direct response to the Reserve Banks edict that Banks must reduce the commission they charge merchants on these cards to no more than about 0.8%. Currently, they're charging up to around 2% for the premium cards, which is what was funding the airline points you were earning.

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  • James Hill

    Jamesabt

    17 Feb, 2016 04:39 pm

    Many thanks Brian. At least the merchants are the winners so that is a good thing

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