Saturday, May 30, 2015

Citi American Airlines Mastercard Retention

My father was reviewing our credit card spreadsheet when he saw that my mother's $95 annual fee was going to come due in June for her Citi American Airlines Mastercard.

They applied for the card mid-May 2014 and quickly spent $3,000 in the first month to receive the 50,000 American Airlines AAdvantage miles. These miles were ultimately used to give my grandmother a first class flight to Korea on Japan Airlines.

For the first year of the card, the $95 annual fee was waived. But now we were going to have to pay the fee just to have the card another 12 months.

As any cheap good spouse would do, he called into Citi to let them know that they didn't "plan the use the card enough for the next year to pay the annual fee." The representative then asked, "So you'd like to cancel because of the annual fee?" which my father knew was the magic confirmation she needed to transfer them to a Retention Specialist.

We were immediately reminded about the American Airline card benefits (10% mileage rebates on AA award redemptions, priority boarding, etc.). But when we stuck to our guns, she said she would like to retain us and gave us an offer to do so.

We were told that if we spent $95 in eligible purchases, then we would receive a $95 statement credit. This meant that we'd get a free $95 to spend - which coincidentally is the same exact amount as the annual fee. I suppose there's some legal rationale why they do it this way (vs. just waiving the annual fee directly), but it ends up almost the same to my parents. More on that later.

Then my father pushed the envelope and said, "this offer is very generous and makes me want to keep the card another year, but are there any promotions that would actually encourage me to use it more often? Other cards are offering a lot of bonus spend categories (2x-5x)."

She said there was another mutually exclusive offer instead of the $95 statement credit. This other offer was 7,500 extra American Airline miles if we spent $1,000 in the next three months. If you value the AA miles at about 2 cents/pt, then that would be $150 for the bonus 7,500 miles (plus the $20 for the 1,000 miles on the actual spend).

While those values seemed to be worth more than the $95 annual fee, we decided to stick with the original offer as we prioritize cash in hand over padding our already large piles of AA miles.

So we took the first offer and will wait a few days for the promotion to be activated on our account. Then after the statement credit hits, I suppose we can still have time decide if we want to pay the annual fee or not...

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