Shelbyman said:Just spoke to a *Citi* CSR and she had said the Dividend card will be 2% for supermarkets, drugstores and gas stations. But they are adding 2% for Utilities and cable bill. She also stated that they will be sending (mailing?) notices next month.

Great, so I can get 50 cents Cash Back on my utility bill and I only need to pay my utility company a $4.95 processing fee for it. Thanks Citi, for being about to screw up a good thing.

Keyboard said:I think this is partially a result of high gas prices.

I wouldn't think so, since Citi's cut is a percentage transaction fee, which goes up with the gas prices.

websquirrel said:
I wouldn't think so, since Citi's cut is a percentage transaction fee, which goes up with the gas prices.
Uh huh, and Citi's cut is < 2%. 2% - 5% Cash Back = -3%. This means the higher gas prices are, the more Citi loses on those transactions.

why is every other poster calling citi? things like this piss me off.

AyresFan said:websquirrel said:
I wouldn't think so, since Citi's cut is a percentage transaction fee, which goes up with the gas prices.
Uh huh, and Citi's cut is < 2%. 2% - 5% Cash Back = -3%. This means the higher gas prices are, the more Citi loses on those transactions.

By that theory, they wouldn't want us to use it at all. (Which is probably right, in the sense that they are losing money on FWers.) But with the average CC user, higher gas prices probably mean a lot more finance charge $$$ to Citi. If a credit card company had their product set up to where it didn't want people to spend with it, I don't think they'd have the right business model.

mountainview said:5% on gas, grocery, drugstore from HSBC

Where did you find this? I can already feel the new found love toward HSBC.

From the HSBC card:

"You will earn 5.0% Cash Back on purchases made at supermarkets, drugstores and gas stations. For all other purchases, you will earn 0.50% Cash Back on the first $3,000 in net purchases and 1.0% Cash Back on net purchases greater than $3,000 made in each successive 12 month period after your Account is opened."

"Rewards will be awarded up to a maximum of $500 per Account year."

I would suggest everyone her just wait and see. Remember days ago AMEX drops the double rewards points for gas, supermarket and pharmacy purchase? Citi is just following this trend. These banks use more rewards to push people use their card for every day purchase and now they feel either they have achieved their goal (people are used to use credit card instead of cash or check at grocery stores) or they simply feel this goal is too ambitious. Either way, they want to cut their cost. AMEX did that, citi is going to do that... I believe every bank will follow this trend since the competition is fading away. The conclusion? don't rush to apply other credit card. I believe all of them will drop the extra reward program within a year or even sooner.

quiznut1 said:There is similar discussion for this topic at Card Ratings and Credit Card Goodies. I want to point out a particular post in both these threads I feel will deem helpful. And I quote:

"I just found out the exact terms of the "new" Dividend card. I called a friend
who works at Citibank, and he knows someone in the Credit Dept.

Here are the new terms:

1) NO INCREASE in the $300 cap.

2) The 5% on EDP will go DOWN to 3% (the normal 1% plus a 2% 'bonus')

3) EDP will now include convenience stores, cable, and utilities (big deal).

4) 1% on all non-EDP remains the same.

5) Notices are already in the mail to some cardholders. Everyone who has this card will be notified by September 1. Date when these changes take place will be in October (he could not get the exact date)."

I'll post when I get my letter(s). Because CSR said 2% today not three, they don't even know as another poster pointed out. Also, I have 4 citi dividend cards but only one chase. I am making $70 a month BT money off my chase right now, not worth nuking it to get the 2 or 3% CB over citi. Maybe I'll apply for HSBC, but people have said in the past the credit limits tend to be very low.

By that theory, they wouldn't want us to use it at all. (Which is probably right, in the sense that they are losing money on FWers.) But with the average CC user, higher gas prices probably mean a lot more finance charge $$$ to Citi. If a credit card company had their product set up to where it didn't want people to spend with it, I don't think they'd have the right business model.

Yes, but with higher gas prices the balance of the equation tips towards the consumer-since they pay 5% back on it (yes, I'm sure they are still making buckets of money on the card-just not as much as they want to/planned to). When they introduced the card, I'm sure they planned on a higher % of spending in the foreseeable future being on items other than gas- that get the 1% back- where they still make money on merchant fees on top of later financing charges to the consumer- than the % currently being spent with the high gas prices.

In addition, the higher prices has likely attracted a higher % of FW-type users to the gas card (people they lose money on), than planned when introducing the card. I for one didn't take note of this card, until gas prices shot up.

Finally, the higher prices of gas makes the $50 min balance for reaching a reward easier for Joe six pack to reach, thus leaving less rewards un-redeemed. While on the other hand, I venture to guess a high percentage of the minority of consumers who actually reach over $300 in rewards in a year (as a result of high gas prices), are smart enough to shift spending to another card.

The only upside I can see for high gas prices for Citi is that people will spend more, thus leading to more financing charges. But because some disposable income spending is shifted away from other items to pay for gas and for the reasons listed above, I don't think it's enough to offset the increased cost associated with the higher price of gas.

So in a nutshell, IMHO higher gas prices has made this card less profitable, thus possibly influencing an upcoming decision on this card by Citi..