Credit Card Question

What motives may Citi-Bank have for badly wanting to herd me into changing my run-of-the-mill Citi Platinum Select Card into some kind of super duper Rewards card with a new account number?

It seems like every time that I talk with a credit card customer service representative, they want me to change over to this new card with all sorts of supposed advantages to me. I wasn't really paying attention to the details until I noticed that they had raised the APR on my existing card from about 13.5% to 15.74% in the last few months and now will offer me the new Rewards card at an APR of 13.15%.

These actual rates are not currently material to me with a modest balance on this card, but the mystery is just what current or future fine print advantage will acrue to Citi-Bank by switching me to the new card which supposedly has only benefits to me.

Why are they so eager for me to switch? Any ideas?

Share this

I can imagine that people

I can imagine that people with "rewards" cards use them more often rather than paying cash or debit. This could lead to higher average balances, and more money for the lender.

This is just a completely

This is just a completely wild guess, based on no facts whatsoever, but maybe they make money on offering the rewards. For example, if one of the rewards is a gift certificate from Appleby's, then I figure Appleby's is paying CitiBank money for the promotion. Especially if you're not the type to run up a large balance & pay a lot of interest & late fees, then this could be the only way you could make money for them.

Maybe the old card has a

Maybe the old card has a terms of service that is not easy for them to change. If they can entice you to switch to a new card, with a brand-spanking-new terms of service, they can add all kinds of nifty stuff, like jacking up your APR to 24% on a whim, and including a clause that lets them make changes in the future.

Look at the difference in

Look at the difference in fees between the cards.

BTW, 13.15% is a high APR

BTW, 13.15% is a high APR (from my POV). And make sure the "rewards" are something you can use. You not want a giant fondue pot. :)

I've stopped using my MBNA

I've stopped using my MBNA visa card because I'm just pissed off at the high fees if you are a day late paying a $15 balance.

My Fidelity account comes with a Visa "check card" that I never have to worry about paying or being late on, and I can look up my statements on the interent as part of my regular Fidelity stuff.

Of course, Fidelity is overpriced compared to Ameritrade. But they have more non-stock trading features on the website.

Evan, The reason for getting


The reason for getting two identical card offers might be that they're not paying attention to their own data. I got a 0% card late last year (plain vanilla, no rewards program) and got another offer for the very same card about two months later.

The second offer was a telephone call, so I was able to explain to them that I already had one. They did seem a little surprised, and understood I had no use for two of them.

Since credit card companies

Since credit card companies make money from the vendor every time a purchase is made, maybe they're trying to give you a rewards card to entice you to make more of your purchases with a credit card (or with their credit card in particular), so they make money on that end. Especially since, if you're paying your balance off on time, they aren't making any money off of interest anyway.

Increasingly, all kinds of

Increasingly, all kinds of cards -- gift cards, credit cards, debit cards, supermarket cards -- allow much more tracking of the carrier and his/her activities with the card. Not knowing how old your existing card is, I can't say if gaining this ability to track and link your purchases is why they want you to switch, but it seems likely. What's touted as a reward for you is much more of a reward for them, as consumer information becomes increasingly valuable.

Everyone makes good points.

Everyone makes good points. I am a case in point for many of these things. I used to use my bank check card for everything. Then I got an offer from Citibank for this Diamond rewards card. Hell, just for signing up, you get 10,000 rewards points, which amounts to a $100 gift card at home depot for me. Couple that with the fact that I don't carry a balance most of the time (it's 0% apr anyway), and I see a couple things:

1) One way they might be making money off of me right now is through the merchant fees, which are modest.

2) The only other way is that Home Depot must pay them to carry their gift cards exclusively, and when I redeemed my free gift card, Citibank got a cut.

3) Since my 0% APR is introductory, they are obviously investing in future returns; iow, they get me in the routine of using my citibank card for a year with no interest, then apply interest and make some money.

The odd part about the citi diamond is that you get 1 point/dollar for most purchases, but 5 points/dollar at gas stations, grocery stores and pharmacies. I don't understand what Citibank gets out of this, or why they would incentivize those particular three places, considering that it's impossible to have a contract with any one company since it applies to ANY gas stations, pharmacies or grocery stores. It seems weird to me.

The other crazy aspect is that I recently got an offer for (and accepted) another diamond rewards card. Same card type, different account number, same free 10,000 points. Yes, I have perfect credit, but it's just odd to have 2 identical cards offered to me from the same company...especially since they know I don't carry a balance.