Citi Is Inviting Folks to Convert Their Cards. But Should You?
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My friend recently received an email inviting him to switch his Citi Diamond Preferred card to the Citi ThankYou Preferred.
And he isn’t the only 1 who’s received an offer like this. Citi is contacting certain cardholders about converting their cards. For example, some folks who have the Citi Dividend card (no longer available) have been invited to switch to the Citi Double Cash Card.
I’ll help you decide if moving to a new card makes sense of you!
Should You Switch to a New Card?
A friend of my mind has the Citi Diamond Preferred card and Citi sent him an invitation to change to the Citi ThankYou Preferred.
The Citi Easy Deals points you get with Citi Diamond Preferred card are lackluster. You earn 10 Citi Easy Deals points for every $100 you spend on this card which can be redeemed for discounts at certain retailers. But there are NO bonus categories and you can NOT redeem for paid travel or transfer for airline and hotel partners.The best redemption he gets is 10% off at his favorite local Mexican restaurant. While that does allow him to order extra guacamole, it’s hardly the Big Travel with Small Money he can earn with a card like the Citi ThankYou Preferred.
But in a moment I’ll explain why he might NOT want to take Citi up on their offer!
Here are some things you should consider before making a “product change” to a different card.
1. The Bank Doesn’t Need a Credit Check
When you make a product change (convert a card to a different card), the bank moves your current line of credit over to the new card. So you won’t have to compete a new application. And the bank does NOT pull your credit report.
A hard credit pull can lower your score ~3 to ~5 points. The impact begins to drop off after ~6 months. But banks don’t like to see too many inquiries on your credit report because it could mean you’re less likely to pay your debt.
By switching to a new card instead of completing a new application, you can save the hard pull for another card with a sign-up bonus.
2. You Won’t Earn the Sign-Up Bonus
Because the bank will move your current account to the new card, you won’t be considered a new cardholder. And you will NOT be eligible to earn the sign-up bonus.
If you complete a new application for the Citi ThankYou Preferred, you’ll earn 20,000 Citi ThankYou points when you spend $1,500 on purchases within the 1st 3 months of opening your account.
You can redeem the 20,000 Citi ThankYou points you earn for:
- $200 in gift cards
- $250 in paid travel (1.25 cents per point) booked through the Citi Travel Center, if you also have the Citi ThankYou Premier
- $266 in paid travel (1.33 cents per point) booked through the Citi Travel portal, if you also have the Citi Prestige through July 23, 2017
- $320 in paid American Airlines flights (1.6 cents per point) booked through the Citi Travel portal, if you also have the Citi Prestige through July 23, 2017
- Big Travel when you transfer to travel partners like Singapore Airlines, Virgin Atlantic, or FlyingBlue if you also have the Citi ThankYou Premier or Prestige card
So my friend won’t convert his card to the Citi ThankYou Preferred, because he might want to earn the bonus some time down the road.
3. Would This Be an Upgrade?
Had your eye on another card that doesn’t offer a sign-up bonus, but has other interesting benefits? You can switch to a card that works better for you.
So instead, my friend might request a product change to the Citi Double Cash. With this card he can earn 1% cash back on all purchases and 1% cash back on all payments. There’s no annual fee and he won’t be missing out on a sign-up bonus, because it doesn’t offer one.
This is a good move, especially if the Citi Diamond Preferred card is 1 of his oldest cards. It’s important to hang onto your oldest cards because the length of your credit history makes up 15% of your credit score and it helps you build a long-term relationship with the bank.
So in this case, he gets to keep his credit history with Citi and upgrade to a card that will give him better rewards for his spending.
For folks who have the Citi Dividend card (no longer available) and received an offer to switch to the Citi Double Cash card, the best card for you depends on your spending habits.
With the Citi Dividend card, you can earn up to $300 in cash back per year in rotating 5% cash back categories. You’d have to spend ~$15,000 on your Citi Double Cash ($15,000 X ~2% cash back) to earn ~$300 in cash back.
If you are doing that much spending, you might want to consider using it to unlock sign-up bonuses on lucrative travel cards, like the Chase Sapphire Preferred, Citi Prestige, or the Barclaycard Arrival Plus World Elite Mastercard instead.
But if you don’t plan to spend too much in the Citi Dividend’s 5% categories, the Citi Double Cash card might be a more convenient option. That’s because you won’t have to worry about spending in specific categories to earn bonus cash back.
Have you received an offer from Citi or another bank to switch to a new card?
This could give you the ability to get a new card without another credit inquiry. But keep in mind, you will NOT be eligible to earn the sign-up bonus, which is the #1 way to earn Big Travel with Small Money.
So it may only be worth the change if it’s a card that doesn’t offer a sign-up bonus. Also, do the math to see if you’d earn more miles, points, or cash back with the new card based on your spending habits.
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