August 22, 2006 8:38 AM
Citigroup Reduces Cashback Incentive
Following Amex’s lead to cut back reward card incentives, Citibank is moving away from the lavish 5% cashback on grocery, gas station and drugstore purchases. Will the other players like Chase and Discover follow the suit?
(Citibank’s Driver’s Edge card is still an attractive option … it currently offers 6% rebate on gas station, drugstore and supermarket purchases for full 12 months and the reward is redeemable for car maintenance as well as car purchases.)
In another sign of the rising popularity and cost of credit-card rewards programs, Citigroup Inc. is cutting back on the amount of cash some cardholders can earn on purchases made at supermarkets, gasoline stations and drugstores.
Holders of Citigroup’s Citi Dividend MasterCard have begun receiving 30-day notices that as soon as October they will receive 2% cash back, rather than the current 5%, on purchases they make at those locations using their credit card.
The change comes following a similar move by American Express Co., which recently announced it would no longer offer double rewards when customers use their card for “everyday spending” at locations similar to those covered by the Citigroup move.
Citigroup, however, while cutting back the amount of its cash-back rewards, is offering Citi Dividend MasterCard cardholders more types of businesses where they can receive cash back. Purchases made at convenience stores and utilities, including cable operators, will be eligible for 2% cash-back rewards when the card is used. Cardholders are eligible to receive an annual maximum of $300 cash back.
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