Posted by Chuck on July 25, 2019
Credit Cards

Published on July 25th, 2019 | by Chuck

59

Citi Double Adds Terms To Exclude Gift Cards From Earning Points

Citi Double Cash released an update on the terms of the cards. The new terms exclude gift card loads from earning cashback. It also excludes person-to-person payments, as well as lottery tickets and gambling.

Double Cash Terms Update

Old Terms:

Eligible purchases do not include balance transfers, cash advances, convenience checks, disputed or unauthorized purchases/fraudulent transactions, Card Account fees and finance charges and fees for services or programs you elect to receive through us.

New Terms (will go into effect on November 1, 2019):

The following transactions are not purchases and will not earn cash rewards: balance transfers, cash advances, checks that access your Card Account, items returned for credit, disputed or unauthorized purchases, fraudulent transactions, traveler’s checks, foreign currency purchases, money orders, wire transfers (and similar cash-like transactions), lottery tickets and gaming chips (and similar betting transactions), loads or reloads of balances on gift cards or prepaid cards or cash equivalents, person-to-person payments, Citi Flex Loans, the creation of Citi Flex Pays, Card Account fees and charges (such as late fees and finance charges), and fees for services or programs you elect to receive through us.

Checking the terms on the Prestige card, for example, I don’t see the gift card exclusion (though it does show some of the other additions like lottery tickets and gaming chips). They’ll likely roll this out to other cards slowly, and it may already be showing on some others or in other updates.

I just want to stress something here, similar to what we wrote recently regarding the Amex terms: I don’t think anything is changing now in practice. This is just an updated terms which means that they have their backs covered in case they decide to enforce such a thing for a given person or decide to start enforcing it in the future.

The terms may imply that even third party gift cards, such as Amazon gift cards, won’t earn points. Again, in practice I expect all these things to earn rewards.

There are also some other updates noted in the upcoming Double Cash changes regarding account reinstatement and in scenarios where minimum payment was not met, read the details here.

Hat tip to reader Chong786



59
Leave a Reply

avatar
 

  Subscribe  
newest oldest most voted
Notify of
Dan - Legal Bank Robber
Dan - Legal Bank Robber

Lol I will still be buying GC’s online. Good on them if they claw me back.

AKJohnny
AKJohnny

why not use BOA card for 3% back online… sure limit $2500 per quarter but better than 2%

Dan - Legal Bank Robber
Dan - Legal Bank Robber

A.) I am doing much more than 2.5k a Q
B.) BoA won’t approve me for shit

Nick
Nick

Basically you’re saying even Starbucks card reloads won’t earn rewards. Yeah, good luck with that.

Jeff
Jeff

Well, crap. Just bought $2k thru GCM yesterday and $4k last week. Will have to see if I get CB for it. Otherwise CFPB since I was never notified of these changes personally from Citi yet via email nor snail mail.

Parkerthon
Parkerthon

I would be shocked if they enforced this in any manner. I think they’re just looking to cover themselves going after hardcore MSers. What I don’t understand is how a 2% card is costing them anything even at volume with swipe fees and all. 3% and up I get.

Jeff
Jeff

I’ve already ran $40k MS thru DC so far this year, so on pace for $75k this year. Better slow it down a bit to cover my butt.

Mike B
Mike B

What exactly is worth MS’ing with DC, if you don’t mind me asking?

AKJohnny
AKJohnny

upgraded status! duh!
honestly, ms with 2% is NOT worth it.. let’s look at a $500 transaction. 2% of $500 is $10. a typical $500 VGC has $5.95 fee and money order is .69… let’s look at gas and time and you profit maybe $2 per transaction. a complete waste of time IMHO…

now if you were doing the same for a 5x category then, this makes complete sense as 5% of $500 is $25 and after the $5.95 fee and .69 money order then you still net $19… a much more worthy use of time.

Barbara
Barbara

When I purchase a vgc thru a shopping portal I earn $9.17 after paying the 5.95 on a $500 VGCs I can do volume and I don’t have to leave my house for the purchase. 5x categories have caps and are not always MSable.

havai
havai

Interesting. (and matches what I experienced over a year ago) Mind sharing which portal is currently working for you to get 2% of vgc’s – and via which market? Or point us to a source which tracks such results? thanx in advance.

rick b
rick b

Speak for yourself. If you’re buying cards at GCM then the cost is 0.2%, and Simon 1K cards, it’s 0.4%. With enough volume and efficiency, I’ll take a 1.5%+ profit margin.

Jack thompson
Jack thompson

They get 1.4-1.6% in swipe fees so they are losing money. People who do ms are the type of people who rarely carry a balance

Chong786
Chong786

New t&c will take effect from the beginning of November 2019 so you should be ok

Staradmiral
Staradmiral

Is this seriously worth your time? 2% back minus the purchase fee and cost of liquidation, and time spent driving.

Would not just taking extra hours at work gain you more money?

ssss
ssss

you can check the blog-“pointschaser” , the blogger wrote down her weekly spending on MS, her gift cards almost cost nothing after portal cashback and only cost will be her time (and gas?), as they do it in volume, I think the value of her time could be $100/h, which is quite high compared to normal job.But if you have other profitable skills, like coding, definitely try hard at your own job.

Michael
Michael

The CFPB does not care about cash back on your credit card.

slowbrake
slowbrake

It’s a contract with a financial services company for an unsecured line of credit. Squarely in their purview.

What makes you say they don’t care?

mjonis
mjonis

All the more reason to use eBates (Rakuten, LOL) and their eBates 3% visa card. Although it’s been a while since I’ve used it with Raise.com

JJ
JJ

Ebates will shutdown much faster. I’m proof of that.

Mike
Mike

What kind of volume were you doing to get shutdown by Ebates?

Scott
Scott

Why do the credit card companies care? They are still getting their money on the transaction.

Stephen
Stephen

Because, taking Amex for easy example, when you buy a gift card to target on your gold card at Safeway, you get 4x points. Meaning you’re now effectively getting 4x the rewards at target, which was not the intent from Amex. They bonus certain categories (like grocery, travel, bills, etc.) for specific reasons. Gift cards blur those reasons. In the end it costs amex more money.

Now, I’m not defending the practice, but i can certainly see how 5 years ago it was a thing, but not widely known. Now with TPG, the NYT times article in 2016 on the CSR, and all news on “travel hacking”, this is so much prevalent that amex (and other companies) are setting up their terms to reign what they consider to be not the intent of the reward product (earning 4x points at most places, when they intended “just for groceries”).

TL;DR it costs amex more when you can get 4x nearly everywhere on the gold card when they only want restaurants and groceries.

Evan
Evan

Why does it matter for the doublecash card though? Because take Target for example. You could either buy a Target gc and get 2% cash back, or go to Target and swipe your doublecash card and get 2% cash back. I don’t see any advantage to buying gcs with doublecash. What am I missing here?

Stephen
Stephen

In my opinion, it has to do with a way to cut costs. This is just another * in the T&C that doesn’t change their advertising, but has the ability to cut potentially significant costs from a small segment of their card population.

MZ
MZ

I have the same question and I don’t follow your answer. How is someone MSing (moderately) at a grocery store much different from someone who simply shops a lot for groceries (say with a big family) in terms of “cost”?

Jack rogers
Jack rogers

The average family is spending 6-12K a year on groceries. People who do MS may exceed that by 5 times. Their rewards program is designed for legitimate card use because a certain amount of people will carry a balance. None of the MSers are going to carry a balance and citi makes no profit from this.

Tom
Tom

LOL. Seriously? You’re trying to tell me that AMEX doesn’t make at least 5% interchange fees on the AMEX Gold card at grocery stores??? No way!!! /sarcasm

Clearly he was referring to the 2% cash back on the DC card…

Stephen
Stephen

Apologies I thought the cutting costs would be an obvious extension to the citi cards from an easy to understand example. Clearly not.

So let me put it this way: Citi can now reduce their costs, potentially significantly, while only impacting a small portion of their card population. It also requires them to make no other changes. Just like how companies remove price protection, insurance, whatnot: Small population affected, potentially significant savings for them.

Tom
Tom

Apples and oranges. AMEX grocery spend at 4 MR is way above the interchange rate and is under a special bonus category. Citi DC spend at a flat 2% is BELOW the interchange rate and is NOT a special bonus category. The point of the previous person’s post was to ask why they care if someone is putting organic spend on their DC card or MS’ing on the DC card, since it still earns 2% and they profit regardless.

Stephen
Stephen

I disagree, but that’s fine. Was just trying to help, esp since the same question was asked so much in the Amex thread.

Here are more reasons Citi might do this for others interested:
Money left on the table. If the discount rate is 2.5% at safeway, but 3.5% at bath and body works, citi loses out on 1%. This way, they are forcing the spend in their interest.

Additionally, I would add that gift card fraud is rampant and removing rewards reduces fraud risk as less MS’ing will happen.

I could also very well see it as external market forces. If enough merchants complain that what used to be direct spend is now coming in on gift cards (which they pay commission on) – they would lobby to get that changed. Or the grocery stores lobbying due to fraud chargebacks.

With the rollout of pricing by card product in recent years to merchants in the us (i.e. different pricing depending on which card product is actually used like freedom is less than CSR), it could be Citi is pushing people to more premium cards, which earn high DR.

Anon
Anon

Their fees are typically 2-3%

Jackson hunter
Jackson hunter

Amex doesn’t get 5% interchange fees. It is more like 2.5% as big supermarket chains are able to get it down. The 4x points is unprofitable for Amex which is why they have an annual fee. MS at 4x completely skews that.

ben
ben

One way is for Citi to reduce the 4x rewards then instead of coming up with all the changes in the terms and conditions. After that, let the card holders decide if it will still be worth while to use the affected cards.

RobbTPC
RobbTPC

AMEX put a $25k cap on the Gold Card grocery category, so they have to be somewhat aware that people plan on using the Gold for gift cards at stores. While I’m sure they exist, I’m not sure of anyone who spends $2k a month on groceries.

(I know you were using it as an example, but just saying lol)

George
George

Childless couple here. $800/month is the norm for us, since with the rewards, sales, coupons, and gas and time savings, the grocery store beats Walmart most of the time. I also don’t trust their refrigerated or frozen sections for anything that can’t stay out for more than like 8 hours, and prefer the produce at the farmer’s market (which also codes as grocery).

I imagine that triples for a busy but well-to-do family with 2 kids that can barely squeeze in a grocery trip a week and doesn’t have the time to comparison shop, shop sales, clip coupons, etc. Some areas of the country also have very high grocery prices.

RobbTPC
RobbTPC

I can see that as me and my wife typically spend between $500-$700 at the store and we have no kids. Good point.

Ferris
Ferris

Because people that do things such as this are what JPM has called “super users”. It’s hard for CC companies to profit on these individuals because they generally are analytical, have higher wealth and don’t pay interest while generally not falling prey to marketing.

frogger
frogger

I doubt it is the higher wealth people they are targeting. If you are higher wealth you probably put a lot of money on your card besides gift cards. I doubt too many making a million plus a year are doing MS. More likely college kids without a dime to their name.

Ferris
Ferris

Let me rephrase that: Super users generally aren’t making millions a year, but have much higher wealth relative to their salary than a counterpart would. So if I make 60K a year and my friend Bob also makes 60K per year, but I am an “MSer”, I probably have lots of additional income from XYZ and am an expense on my FI’s Income Statement, whereas Bob is considered as Income on the FI’s Income Statement. College kids aren’t really doing much MS because they don’t have enough capital to do it. Banks are trying to target the MSing because they don’t make money when people run significant volume through their reward programs.

Frogger
Frogger

Your post doesnt make any sense

atrader4
atrader4

It’s written intentionally in such a way that only certain people will understand it.

JV
JV

This probably excludes funding of checking accounts that don’t code as CA

Sevillada
Sevillada

Uh oh, this may be wAAr

Hobbs
Hobbs

This is to prevent hardcore MS if needed. People who MS pay off their balance every month, which is not the type of user Citi is targeting. My guess is that citi would rather not deal with Msers for a net 1% swipe fee. I’m sure they crunched the numbers and found it not to be profitable enough compared to the risk / overhead costs.

I doubt this provision will ever be enforced unless you are loading thousands of dollars worth of prepaid Visa cards every month.

Anonn
Anonn

Wonder if this means that cardcash etc will no longer earn rewards.

George
George

MPX restaurant gift cards normally code as dining on both Citi and Chase cards, but not Amex. And Citi and Chase normally don’t restrict the SUB to organic spending AFAIK, but Amex does. So this is surprising… unless they’re referring to prepaid (non-merchant) cards only?

Jonathan S
Jonathan S

Question of the week (Amex, Simon malls, Citi all relevant):
What percent of gift card transactions are MS vs fraud/money laundering?

Eliminating rewards definitely hurts the MSers dozens of times more than fraudsters or money launderers since the illegal activities are unaffected by any change in rewards earning policy. If eliminating illegal transactions was the motivation, the banks would take a different approach that aims to curb illegal activity.

But seeing these terms on a 2% CB card seems ridiculous. 2% rewards on gift card purchases after any money order fees would not be worth it unless someone values their time well below minimum wage or if they could MS thousands of dollars in one shot.

bob
bob

“gift card LOADS” makes me think they’re talking about reloadable cards? Like how Amex doesn’t earn points for loading Serve.

still, i’ll be surprised if Simon card purchases don’t earn 2% on DC anymore.

86
86

“…loads or reloads of balances on gift cards or prepaid cards or cash equivalents…”

I’m not sure the above doesn’t cover a $100 fixed value, non-reloadable VGC.

86
86

“…loads or reloads of balances on gift cards or prepaid cards or cash equivalents…”

Looks to me as though they’ve simply acknowledged that gift cards can be converted to cash, and cash equivalents can be gamed to earn a lot more rewards than your income would normally allow.

F. Flinstone
F. Flinstone

delete

Rishabh
Rishabh

this is why i like paypal mastercard ffs citi stfu

Back to Top ↑