I previously mentioned that Citibank’s Thank You Rewards program was eliminating “fixed point redemption” which allowed members to derive up to 3 cents per point in value, leaving “variable point redemption” — which caps value at 1 cent — as the only travel rewards option. (Other redemptions such as for gift cards generally provide less than 1 cent a point in value.)

The Wall Street Journal picks up the story and notes that other proprietary bank rewards programs are cutting benefits — for example, American Express ending the domestic companion program for Platinum and Centurion members, and ending the Mandarin Oriental two nights-for-one program for Centurion members; banks generally reducing bonus opportunities on spend such as on gas and groceries; and requiring meeting spending thresholds before bonus point opportunities kick in.

The dramatic example of devaluation in Citibank’s Thank You Rewards program is the elimination of the domestic business class fixed point redemption option:

For example, eligible members in Citi’s ThankYou program can redeem 90,000 points for a business-class ticket worth up to $2,700. As of March, however, they’ll need 270,000 points for a $2,700 ticket.

Citi spins this by suggesting the ‘new’ variable point redemption option includes payment of taxes on tickets, while fixed point redemption did not. But (a) the variable point redemption is not new, it existed all along, Citi isn’t providing any new benefit to members and (b) while true, it doesn’t change that the potential reward value is cut by two-thirds in eliminating fixed point redemptions; while those did require paying taxes on the ticket that just meant that fixed point redemption didn’t allow a member to redeem for more than 3 cents a point in value (3 cents plus the value of the taxes), truly a red herring.

Changes to the Citi program in particular make it no longer compelling compared to competitor options. Holding the number of points earned per dollar constant, certainly a 2% cash back rewards card (on all spending) is superior to a 1% rebate option on travel a la Thank You Network. Now, those with cards that still earn more than 2 Citi points per dollar can still come out ahead relative to those cashback cards.

But the value proposition of Citi’s program (where up until the change you might earn 5 or more points per dollar and redeem those at 3 cents a point, yield a 15% return) is no longer competitive under their new rules — which cut redemption values by two-thirds — with traditional frequent flyer programs, at least with programs like Air Canada Aeroplan, bmi, US Airways, and American.