… and I say “meh.”
I’ve gotten several e-mails from readers in the past few days who have had their Citibank credit card accounts shut down.
Mostly this involves people who had signed up for Citibank credit cards that would earn 5 Thank You points per dollar on specific categories of spending, who then did large dollar volume purchases of gift cards and other financial instruments that could be turned back into cash.
Certainly I get that this wasn’t what Citi intended in offering the card with this benefit. And I wouldn’t have a problem with them ending the promotion early, or even ending it early for specific cardholders they feel are abusing the benefit.
They’re going too far, in my view, in that they seem to be (1) confiscating previously-earned points, and (2) even shutting down other credit cards held by the same individual. In some sense they’re firing the customers retroactively.
I’ve been vaguely aware of this, but hadn’t followed it closely. I hadn’t trumpeted the opportunity to earn 5 Thank You points per dollar on specific spend. Thank You points lost their luster for me in 2009 when they devalued (for the second time).
I’ve mentioned them a couple of times as a decent cash back card option, particularly when paired with the ability to double earning through flight miles — though only a handful of times as that’s not really my focus. I far prefer to spend and earn non-Citi Thank You points.
I’ve considered the Hilton card decent for Gold status, and the American card good for signup bonus (until they killed the 50,000 mile bonus a few days ago, at least, although a 40,000 mile bonus remains available).
So while I think Citi is behaving badly that’s also the Citi I know — and have known — for years.
- They’ve devalued their Thank You points in the past with no notice. And when they’ve given notice of devaluation they’ve gone ahead and implemented changes a month early than they had said they would.
- They’ve treated all sorts of things as cash advances that other issuers consider to be purchases, much to the surprise (and expense) of cardholders.
- They’ve shut down checking accounts and banned customers for use of features (fund via credit card) offered by the program.
So I kind of shrug my shoulders and say of course Citi did this. But then I’ve been around long enough to have a memory for these things.
When readers have asked how to handle this, what they should do, all I’ve been able to offer is “do business with another bank.” Does anyone have a better strategy?
All that said, the way they seem to be doing this does appear to go quite a bit overboard. As I say, shut down the 5x earning they object to. Even decide that cardholders pursuing benefits from their card that way aren’t great customers to have in the future. But taking away earned benefits that were accrued in accordance with the program rules seems dishonest to me.
What is your experience as a Citi accountholder?
I’m glad Citi is finally reigning in the scammers.
They should be banned – you can’t cheat the system indefinitely
@jason and bunny: How is it a scam or cheat to work within the rules of the marketing promo that Citi themselves had the full latitude to write with or without caveats?
There is a reason why people call them Shitibank
@Jason + @Bunny- I don’t want to resort to name calling, but do you know how to use a credit card?
What I want to know is – how does Citi know what specific items customers are buying at retail outlets? Are people just admitting that they are buying gift cards, VR, or similar, or are they somehow getting itemized receipts? The understanding has always been that banks can’t get itemized purchase lists from retailers such as CVS. If this proves not to be true, then the implication is much greater, affecting not just the people exploiting TY points but rather anyone buying VR, green dot, etc.
Jason and Bunny,
Who says these people were cheating the system or scamming? Go read the FlyerTalk thread and you’ll see that some people were shut down and had ALL of their cards cancelled for buying TWO gift cards – even after having been loyal Citi customers for over a decade.
Citi offered the promo and incentivized these kinds of purchases. And its the consumers’ fault for taking them up on it?
I am with Gary, however, in that it doesn’t surprise me a bit, despite me thinking it’s wrong of Citi. I’m too busy to do much manufactured spend anymore, but I got shut down by Amex many years ago for manufactured spend, so ever since, even in times that I did a ton of manufactured spend, I was very, very careful in the way that I did it. I made sure that the spend mimicked normal spending patterns so that the banks wouldn’t get nervous. I also made sure to not abuse bonus categories. Some people have gotten shut down for spending $50k at Office Supply stores with Ink and nothing else. I’ve spent $50k at Office Supply stores with Ink in two months time, but I had no fear at all of getting shut down. Why? Because I had a strong history of non-bonused spend on that card and I kept spending similar monthly amounts long after the 5x was maxed. So I’ve actually been very profitable to Chase.
My hat is off to those with the guts to max out the bonused spend categories (i.e. AARP in the past) and I agree that the banks should go with upfront rules (their lack of caveats are self-serving marketing lies) rather than under the table punitive action, however, it never comes as a surprise. The extreme stuff–the stuff that is unprofitable for credit card banks and airlines and hotels–is not for me anymore, though I enjoy hearing people’s stories.
The economic tide has turned and the banks now have absolutely no interest in indulging the wonderlust that is manufactured spend.
US Bank’s FlexPerks program is also booting people- yeah, that double FlexPoints at grocery and gas stations promotion means… don’t earn too many double points.
Load up your Wells Fargo prepaid card then cash it out? You’ll get a letter accusing you of fraud. The letter doesn’t specify what you did, they don’t offer an opportunity to explain… because whatcha gonna do about it?
Load up your My Vanilla Debit and spend it down? Same thing.
Bottom line- unless you’re good for the bottom line (of the bank/company/etc) you. are. gone.
Chase even shut down cards and all accounts including long standing checking accounts for “use which was not intended for this product”
Citi can do it, but we have got enough out of Citi for now.
Have 2 banks at all times
1 for minor use that you can fall back upon in an emergency
If there nervous about manuf. spend then don’t give 20K + credit lines to people. I blame the bank you are okay giving me a huge credit line then I spend money in places you don;t like so you close everything. Then give me a 2k line so your not nervous that I can run away with that 20 k and never come back. does anybody know a island I can buy for 20 K???
@CW,
Card issuers do have the ability to see the line items for some retailers.
Visa, for example, has an option called Level III, described thus:
“Level III-Line Item Detail is detail information about individual line items, such as product code, description, quantity, and unit cost.”
http://visa.via.infonow.net/locator/usa/supplier/ListLoadAction.do
You can see which merchants appear with that ability (though I am sure merchants have that but are not necessarily listed having such)
If you think Citibank is aggressive, you should be aware that Chase is far worse and in many ways. And I don’t buy gift cards or financial instruments as noted. However those that lost points I believe can get them back with aggressive fighting. Contact the Consumer Financial Protection Bureau http://www.consumerfinance.gov/
Contact the NY State Atty Generals office, (even if you are not a NY resident0 That is Citi headquarters, file as many formal complaints as possible. Even your state atty general. Those who are aggressive will more than likely get the points back. Maybe not the card reopened. I tell everyone at the various meetups that these things can be risky. The earlier post that mentioned US bank etc. I once argues with Chase Exec offices that I got a letter that said earn unlimited points. At one point I was disputing something with her. She said it is in the fine print. I read the fine print to her (it wasn’t there) She said it is (If I say it is) Needless to say they didn’t want further issues with regulatory bodies so they settled with me. Every point I earned and paid was honest real charges for real things, (not gift cards) by the way. These shutdowns are based on computer models. Therefore they have little care if you are a 1 yr customer or a 20 yr customer. You could have a million in the bank with Citi and if you call customer no service they will tell you that they can do nothing and get lost (this is my opinion) I have active cards with all of these issuers by the way. In the complaints fight for the points, not to reopen the cards. Six months later reapply and you can get the same cards again and maybe some bonuses as well.
I think even with small credit lines, one can prepay the credit card with $3000 and then spend the limit PLUS the amount of the pre-pay
Citi could have just capped the 5x spend bonus like AMEX did with a while back grocery spend. I think this sets a very disturbing precedent. I get 3x offers every quarter on my Citi AA card. I buy 2-3 gift cards at grocery to maximize, then put the card back in the drawer. Citi apparently considers this to be “fraud”. Wow, if milking a category bonus is fraud, you’d think people who used the 2 broswer trick to get more than one citi AA sign up bonus would be on the chopping block too. That’s probably closer to fraud since the terms say you can’t get more than 1 lifetime AA bonus, at least they did on the personal cards. Similarly for those who churn the personal Citi AA every 2 years to exploit.
Gary, thanks for pointing this out. I’m glad that I have generally abstained from using Citi cards for buying VRs and gift cards.
I’m looking forward to Frequent Miler’s post on this subject!
Until I had my problem with Chase I never heard of a company shutting down and keeping the points. The truth of the matter is more than likely a small percentage of users generate the bulk of points earned. It is not easy for them to go after this and more if they choose to.
Anyone else get the e-mail last quarter from Chase freedom that encouraged purchase of Starbucks gift cards in order to meet the freedom quarterly bonus? I know this is a different issuer, but I remember seeing that and thinking about how ridiculous it was – to encourage purchase of gift cards in one instance then close accounts for “perk abuse” (like AARP) in another. I always figured if Chase ever called me about this type of thing I could say I got the idea from them.
My wife would only be all to happy for this to happen to us. I have to take her out to a nice dinner each time I tell her I have got a new Citi card 😉
@DeltaPoints: She wants the dinners to stop? 😛
Thoughts on Citi being this aggressive with manufactured spend on their other cards (ie Hilton/AA/etc)? Seems to me that its the 5X that they care most about as they probably make money on all other points.
I closed my remaining Citi accounts two months ago and haven’t looked back. There are more rewarding options for me, I don’t need to play Citi’s games anymore.
@HansGolden – HA! Nah, just love’s the simplicity of the Chase & AMEX web sites! The Citi site is so bad.
I try to do everything in moderation with every card. I wish the credit cards would specify limits so you know what is okay and what can get you shut down, but they generally don’t. People who go overboard and manufacture massive amounts of spend ruin the deals for everyone. I’m glad in this case Citibank shut them down rather than pull the offer from people who do things in moderation.
The true colors of Citi came out when they sent a 1099 to all their new bank account holders who got bonus miles. A company that does business like that sends a very clear signal that “hey our management has sphincter muscle issues” ……….but I just got my 2 night certificate for Versailles Hilton so never say never…..
I think the card holders are as much to blame as Citi is, along with the Bloggers of cause who push everyone to get the CCs via thier links to score the big $$. They then detail how to get the Spend w/o having any real spend
How many people do you know that spend even $500 a month on reg everyday items at say CVS,Im sure some folks have been spending $1000s on the GCs. As Ye Ole saying goes, The Bulls make money, The Bears make money, and the Pigs will always get slaughtered
You cant have a monthly statement of $1000s and $59 of that is legit.
Problem is its probably not too long before the other banks follow suit. I suggest anyone doing the Manufacted Spend to make sure its not the vast majority of their monthly charges , unless you dont mind being shut down and having your pts lost.
Sorry Gary, I think what Citi is doing is correct
Citi is closing account that have purcahsed a few gift cards ( not VR or that type but like Amazon, Itunes or Kohls). One customer complains he bought two cards and was shutdown, ALL cards closed and TYP confiscated. There is petition going around.
( another Jason here )
There are reports of people spending many many thousands of dollars per month on GC, VR etc. This is probably what killed it for the more casual users.
Seems like Citi took up the two main weapons of The Spanish Inquisition – surprise and fear, fear and surprise. Folks are lucky that Citi did not drag out the comfy cushions or the disk rack.
Shame on those of you heretics trying to excuse committing the sin of glutony! You should have known that you can run but you cannot hide from The Spanish Inquisition.
In a word, Horrible. Used them once, briefly, about 5 years ago. Horrible and never again.
My friend used her Citi AA card for a car repair. She was charged a case advance fee and denied her sign up bonus because citi said it was a financial institution and did not qualify for minimal spend. Since it was a local auto body store, she went to inquire about whether they have any financial services. They said no and they have no idea why Citi has them labeled as a financial institution. Ridiculous.
“But taking away earned benefits that were accrued in accordance with the program rules seems dishonest to me”
Really? You buy VISA/MC/AMEX GCs, which is an empty vehicle other than $3.95 – $5.95 fees for the card holder. But, you come out on top because of the 5x that Citi is giving you at the expense of Citi & most likely Citi losing money from the churn. This behavior is “dishonest”. Instead of blaming yourself pushing too far, it’s bank’s fault? You are a good Republican, Sir.
@MrWho – I am not a Republican, but that’s neither here nor there. I think in the post I’m pretty sympathetic to Citibank. I don’t have a problem with them ending the 5x promotion early, capping earnings on the 5x promotion, and even firing customers they don’t want. But I do think it went to far to forfeit the points folks may have accumulated for years long before recent charges.
I don’t have their cards any more. The last card was closed by them without any notice. I guess I didn’t have much activities on the card. But, if you close my card, at least you should let me know. I found out from my credit monitor service.
They shut down my account, I wrote a letter to the President’s office and received a personal apology over the phone. My card and benefits were reinstated so I feel they listened which is more than I can say for Amex.
Good for Citi. Everybody who is abusing the system is fully aware that they are doing so. Sure, you are free to maximize your points within the terms of the agreement, but Citi is also free to terminate your business relationship if you are abusing the promo in a manner in which it was not intended. Card churning is another scam. Again, if Citi lets you do it then good for you. But if you get shut down, don’t come crying to those of us who don’t abuse the system.
My experience with Citi has been great. I’ve had checking accounts on and off for the last two decades on both coasts – never an issue and much better than most about fund availability once you have established a good history. For a time their bill pay and website were the best out there, though sadly not so anymore due to too many revamps. For many years the Citi AA card was great for accumulating EQM towards lifetime Gold/Plat etc. – the only card that could do so. Now it is mostly useless except for the frequent 0% balance transfer offers.
So overall Citi has treated me well, but many here will be pleased to learn that I will probably be terminating them soon as their current products don’t meet my needs anymore. Was going to get the Citi Hilton card but don’t plan to stay at Hilton anymore since the great devaluation.
Gary, I’m glad that you have finally come out of the political closet here on your blog! Of course, you many not be a Democrat either. 🙂
What to me is missing from what you are saying is that citi did not restrict who it shut down merely to people who maximized a 5x bonus. They shut me down even though I was not even receiving such a bonus or buying gift cards with my cards.
It seems that citi will shut down anyone who uses the card in a way citi doesn’t like. And that alone wouldn’t bother me. But what does bother me is that they seize the points of people who have violated no term or condition, points they claim repeatedly and regularly that their customers “earn.”
@Andrew Chase will do the same thing and did it to me until I filed formal complaints to resolve it. And in my opinion this is the tip of the iceberg. Expect to see more of this with every issuer. And I feel for you guys. I also think you will get the points back or a settlement. Forget class actions. They are stupid and a waste of time. You don’t want to wait for years for the points.
Citibank, is one of the worst banks in the country. I never due business with them, unless it would be for quick points.
I agree with @boraxo. Citi is free to act in its best interest and prune unprofitable and “abusive” cardholders.
Citibank is generally horrible. They used to have a card called Drivers Edge, the points could be spent most efficiently on car repairs. I had a good half hour argument with the customer service people who insisted that brakes were not really part of the car and therefore didnt qualify as car repairs. through the years I have had many ridiculous issues with them.
Pigs get fat, hogs get slaughtered.
This story plays itself out over and over again and the same people crop up feigning indignance that they are good customers and couldn’t possibly have deserved what happened. I’m not buying what it is that you’re selling.
@Seth Miller – you’re not buy what who is selling? (If it’s mine, then I wonder what you think I’m selling in my post, as the very first line suggests I am shrugging my shoulders rather than being indignant.)
@TimL – actually Drivers Edge points were most efficiently combined into a ThankYou Points card and spent on domestic business class tickets which you would then cancel and retain value as credits. Gas/groceries yielded a 36% rebate that way… 🙂
@Dom – The people arguing citi can’t shut down their cards are idiots.
What is an issue is citi seizing points for things that don’t meet a legal standard of fraud. (Yes, I get that they wrote T&C to make that possible, but they also advertise the points as “earned” which a reasonable adult would infer means they are yours unless earned by fraud.) Cf. Amex. Amex CFRed me a couple years ago, but they still gave me my accrued points when they decided they did not want to continue doing business with me.
Seth, I’m curious as to who you would name as “the same people crop up feigning indignance that they are good customers”?
@HansGolden Were you able to sign up for Amex again?