About a year ago I wrote about how I had opened up a credit card with an annual fee of $495. This was, by far, the most expensive credit card fee I had ever paid and something unimaginable a few years ago. I had all intentions of keeping the card open for a year and then closing it prior to when the second year’s annual fee posted. However, when examining the pros and cons of keeping the card open I realized it made much more sense to keep using it. In this post I’ll break down how I’ve made my $495 credit card work for me.
The card I opened is the Citi Prestige, which is no longer accepting new applications at the time of this writing. The Citi Prestige currently has the following benefits:
- Five points per dollar spent at restaurants, airlines and travel agencies
- Three points per dollar spent at hotels and cruise lines
- Two fourth-night-free hotel rewards per year
- An annual travel credit of up to $250 (can be used for groceries and at restaurants through the end of 2022)
- Priority Pass Select membership
- Global Entry or TSA PreCheck enrollment fee credit every five years
I opened my Citi Prestige in November of 2020. As mentioned above, the $250 annual credit reimbursement for travel purchases was expanded to grocery stores and restaurants due to the expectation that less people would be travelling from 2020-2022. The $250 credit posts each calendar year, so I received a $250 credit for 2020 in December of 2020, as well as another $250 credit for 2021 in February of 2021. In other words, a few months into owning the card I was already in the black by $1.
|$250 travel/grocery/restaurant credit for 2020||$250 posted Dec 2020|
|$250 travel/grocery/restaurant credit for 2021||$250 posted Feb 2021|
|Total travel/grocery/restaurant credits for first year of ownership (Nov 2020 – Oct 2021)||$500|
|Subtract $495 annual fee||$1|
Earning points & other benefits
I used the card throughout 2021 to earn 5x points on restaurants, and was able to add these points to the sign-up bonus of 50,000 bonus points (this bonus was obtained after spending $4,000 in the first three months of ownership). I also briefly used the included Priority Pass membership to enter an airport lounge once in 2021, but this wasn’t a benefit I would have explicitly gone out of my way to attain if it hadn’t been a perk of the card, so I don’t count it as an important card asset.
To close or not to close?
When November 2021 rolled around I had roughly $60,000 Thank You points (Citi Prestige’s point system) from the $50,000 sign-up bonus plus $10,000 in earnings from everyday usage. I needed to decide whether or not to close the card before the $495 yearly fee posted for the second year of ownership. I knew that these points had a rough cash estimate of $600 and if I closed the card I’d lose that value; since $600 worth of value exceeded the $495 annual fee I decided to keep the card open.
Second year of Citi Prestige ownership (Nov 2021-Oct 2022)
When a distant family member unexpectedly passed away in winter of 2021 I decided to use 24,977 points to purchase a hotel stay for two nights to attend the out-of-state memorial service; the cash value on this redemption was roughly $424.
Once the 2022 calendar year started I was able to once again redeem the $250 annual credit for travel, restaurants, or groceries; this was my third redemption of this credit (once for 2020, once for 2021, and once for 2022).
I also visited my sister in February 2022. My hotel reservation was five nights in duration, meaning I was able to use the first of two fourth-night-free hotel stays, saving myself $103.93.
Next, a friend of mine got married in March 2022. At that point I still had about 35,000 Thank You points left, and was able use those points + $147.89 in cash to cover the cost of the hotel stay. I was also able to use the second of the two annual fourth-night-free hotel benefits of the Citi Prestige, as I wound up booking a hotel stay of four nights’ duration. Per Citi, I saved approximately $134.52 using the fourth-night-free benefit, and the 35,547 Thank You points I used saved me roughly an additional $255. Total savings for this trip was therefore $389.52 thanks to the Citi Prestige.
Lifetime savings overview
|Nov 2020- Oct 2021||Nov 2021 – Oct 2022|
|Value of two fourth-night free hotel rewards||Did not use||$238.45|
|Points used for hotel stays||Did not use||$679|
|Subtract $495 annual fee||$1||$672.45|
Another perk of the Citi Prestige is that I can combine points from no-annual-fee Citi cards, such as the Custom Cash or Double Cash cards, if I don’t have sufficient Thank You Points from my Citi Prestige. For example, I opened a Citi Custom Cash card in August of 2021 and was able to earn the $20,000 Thank You point sign-up bonus after spending $750 with my Citi Custom Cash card in the first three months. I then took these $20,00 Thank You points and combined them with the points I had from my Citi Prestige card to cover the cost of the rest of my five-night stay during my February 2022 visit to my sister. Further, I was able to use the Citi Custom Cash points to cover a small part of my March 2022 hotel stay for my friend’s wedding; between these points and my fourth-night-free I only paid $147.89 out-of-pocket for the four-night Hilton stay.
Third year of ownership?
Come November 2022 I’ll be examining how I plan to use my Citi Prestige card going into my third year of ownership. While I’d be tempted to close the card if I feel it’s duplicative of the other credit cards I own, or if I feel I won’t break even on the $495 annual fee, there is one more factor to consider – Citi’s 24-month rule – which states that if I close my Citi Prestige card I have to wait 24-months before I can obtain the sign-up bonus on its sister card, the Citi Premier. For that reason only I might just keep my Citi Prestige open for a third year (Nov 2022-Oct 2023) to be eligible to apply for and earn the Citi Premier sign-up bonus come Dec 2022.
Does anyone have any of the Citi cards mentioned above? What do you think of them?