Citi Prestige Downgrade Path: Costco, Dividend and Double Cash

By Gavin | October 19, 2018

Today we're going to talk about some downgrade options for a Citi prestige card, but first, we're all about how to maximize the value for credit cards, so how to get the most cash back and also how to travel for free, and that sounds interesting, but let's get started.

In the past, we did a post talking about how Citi is getting rid of a lot of its perks, and how it might make sense for certain people they either downgrade their card or against it, so I'm in the same boat, and I'm basically trying to figure out what to do, and I want to share my thought process.

Normally I'm telling you what cards make the most sense and what's the optimal strategy, but a situation like this, where there is no right answer, you can pretty much pick any option and also workout, so instead of me telling you what makes the most sense. today I'm actually going to flip the script, so you are going to tell me what you think.

The first thing we need to figure out is whether it makes sense to keep this card, so the annual fee is four hundred and fifty dollars, and there's a 250 dollar travel credit making it two hundred dollars, but the really interesting thing for me at least in my situation is that I signed up for the card about $350 annual fee, so I basically just went into a branch and asked for the 350 offer, and they did it again, the way I got the lower annual fee was I basically just went to a branch at Chinatown and asked for it, so I guess they're more flexible or they're more willing to give you the lower rate, I tried the same thing initially at a financial district 1. and they basically said, no, it's $450, but I read online that you can basically try to hang up and call again to get the lower rate for me, there are 3 major perks, so the first one is 4 9 3, so here when you book a trip, that is at least four nights long, you get a statement credit worth one of the nights, the average price of the nights so it used to be a lot better because it used to be based off only the last night's rate, so you could kind of do some tricky stuff in order to basically optimize it to make sure that the fourth night was a really expensive night, and now it's going to be the average price.

The next benefit is 3 hour trip delay insurance, so here it's really great, because again if your flight is delayed by 3 hours, you get $500 to work signing this works out, if you live in a place that has a lot of delays or you like to travel during busy times, like Thanksgiving, the reason why this is a really great perk is because it's a lot better than its' competitors, so the tree sapphire reserve has a six-hour trip delay insurance, and the American Express Platinum Card has no Helene's earn, the final benefit is that if I don't do a product change our counselor card, I'm not resetting the slot for Thank You points. so Citi is very particular in how their work bonuses.

If you have gotten a card within the same product group in the last two years, they will not give you the bonus, again you have to wait at least two years, and the thing is it's not just based off getting cards, it's also based on cancellations and also product changes.

Since I got the Citi prestige in September of 2016, I'm going to be eligible for another thank you card bonus, so again they have a lot of different cards that fit this category, in September of 2018 by doing your product teams right now it means that I'm going to reset the clock, meaning that I won't be eligible for another bonus until 2019, whether again where's the card it really depends on? What annual fee I have and also whether I have any retention offers? So if I am who basically do a prior change, and they offer me points that make sense, then it might make sense for me to keep the card, because again if I'm paying an effective annual fee of $0, there's no reason to do anything as $100 effective annual fee, I think I'm going to keep this card as $200, it really depends on if I do all these two trips, so if I do two of these for nitrix for the fortnight for you, then I can kind of at least break even up the card, so that kind of makes sense for me, but even then I typically don't do that many long trips, and even if I do one, and I typically travel to different cities, I don't stay in one specific hotel for the whole duration, the trip to my insurance is really nice, because again you can just go get lobster and steak for free, but it's really hard to quantify that, it really depends on if you end up getting a delay.

In terms of downgrades just three cards I'm really considering, it's a double cash card, the dividend card, the Costco card, and we're going to run through different pros and cons of each one.

With the double cash card, the major benefit is that you get two percent bags on all of your purchases, but that's about it, you get all the same other benefits that you get with other Citi cards, like rewind, since you get that of all these other cards, you can't really consider it, because again it's consistent, the major disadvantage is that it doesn't really pin to my flow of cards, so most of the cards I have do earn me at least 5% or more in value, so again since it's only 2% here, it's a lot less, and I'm either using something like the freedom card or Discover Card for topics packed, and since I value those points at a higher rate, Arthur's cash back match, it's typically around 10% return on spending for non categories spend, either using a travel credit card using the Chase Sapphire reserved for dining, or I'm using other credit to hit minimum spend, where I'm getting 10 to 50 percent return on spending another major, consideration is that I can just turn one of my freedom cards into a freedom unlimited card to get 1.5, expect on all my transactions, and given how I value chase points, that's actually between 2.25 to 3% per turn on my spend.

The next option is a dividend card, and this one's a bit interesting, because it's actually no longer available for applications, so the only way to get it is to do a product change, it's a 5 X category card, and I really like this card, because I like optimizing, and the cool thing is that it's unlike the discovered card, in the freedom card because the cap is based off the whole year and not based off specific quarters, those two cards are capped off at $1500 per quarter, so again it's only two of these quarters applied to you, then you're not going to get as much value what's the dividend card, there is an annual cap but there is no quarter cap, so you're still getting $6,000 of spending at the 5x, but if there is one specific order that is really beneficial for you, you could do all your spend towards that one, the major disadvantage is that the rest of the quarters for this year don't really look that great, so if I could have gotten the card in q2, that would have been really great, since there is Walgreens well, for our greens I could have gone gift cards to Amazon or Chipotle or anywhere else.

I want the final option is the Costco card, and you get 4% back on gas, 3% back on dining, and travel 2% back at Costco, and 1% are for where else, it already has a Costco membership, there is no annual fee, so a lot of people like to think that this has an annual fee, because technically you do need a Costco card to get it, but since I'm already paying for a Costco membership, I would have, otherwise, already done that, that's what some cost for me, so again zero annual fees, the final benefit is that you get two years of extending a warranty, whenever you shop at Costco, the major disadvantage of these ones apply for me more than you probably is that since I don't have a card, I don't have the paper get the 3% back from dining, in trouble is nice.

But since I have a chase fee reserved, I'm getting 3x points back, and for me again the points that we're four point five to six percent return on spent the 1% back everywhere is pretty normal for most cards. So I'm not considering that at all, so the big benefit is 2% back at Costco, 2% back at Costco is nice, but if you've had a discovery card, wholesale clubs have been a category on their 5x calendar for pretty much the last year, and again if you're in the first year of your discovery card, you're actually getting 10% back up cash back, match I loaded up on enough cost to a gift cards, I'm probably going to be fine next year, and again a lot of people like to say that, you get 2% back, what the executive membership and this makes it 4%, because you get 2% here with this credit card, but that 2% from the executive membership is independent of you getting this card, if you have the executive membership, you're getting 2% back anyway, so the sunk benefit, so it's separate from this card.

Again if the Discover card you're getting 5% or 10% back, plus 2% from the executive membership with a Citi cost to a card, you're doing 2 percent plus 2%, another it's disadvantaged, and this one relates a bit more to the benefit I mentioned is that Costco already has really great return policies, an extended warranty, so an extra year doesn't really make a difference, especially when they're willing to take a lot of different things back already.

Again a few people return use camping equipment, I have seen them return ten-year-old vacuum cleaners, so I don't think that extra year extended warranty really makes a difference, given these options, I think I'm either going to keep the prestige card, or gone Greeks that dividend card, the double cash card that Costco card is really good, but for my spending purposes they don't really make sense, I think if I had a card, the Costco card will be higher up on the list, given that you get 4% back on gas, and that's pretty amazing, again to take away that there are no right options, there really depends on your circumstances, and which ones make more sense for you, so I hope that was helpful.