Credit Cards

Citibank Offers Citi Forward Credit Card, Rewarding Users for Good Habits

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Last updated on July 28, 2019 Comments: 8

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Is it ironic that Citi, a bank on the brink of disaster, is now marketing a credit card that “rewards” card holders for good financial behavior? This new credit card marketed toward Generation Y and teenagers, Citi Forward® Card (and Citi Forward® Card for College Students), offers benefits such as 100 points for paying on time and staying within your credit limit each month, 5 points for each $1 spent in “responsible” categories such as books, movies, music, and restaurants, 1 point per $1 for all other purchases, and over 1,000 bonus points for signing up for paperless statements within 3 months of account opening.

The most attractive feature is a quarterly reduction of APR by 0.25 percentage points after 3 months of making a purchase and staying within your credit limit and paying on time. This reduction is limited to eight in total and will only be applied if you continue to make purchases using the card.

Why is Citi taking this approach? The company surveyed 1,000 consumers and found:

76% of said they would rather learn by being rewarded for the right things they do, rather than learning from their mistakes.

I seem to remember a college professor explaining that positive reinforcement is more effective over punishment when your goal is to change someone’s behavior. But don’t get the wrong idea, Citi card holders will certainly be punished if they make a mistake. The default interest rate — immediately charged if the card holder misses a payment — is 29.99% variable.

The points rewarded must be redeemed through Citi’s ThankYou network, which does not have a one-to-one relationship between points and cents, as the previous credit cards offering cash back rewards had. You would need to accumulate 16,000 points to qualify for a $100 cash reward. If you want a better “exchange rate,” you need to spend or donate your points.

It’s clear that the “responsible” categories for which Citi would like to “reward” its customers are not those that encourage good behavior. If Citi wanted to encourage financial responsibility, they would be promoting the use of libraries rather than purchasing books and buying groceries and cooking implements rather than dining at restaurants. I happen to be a fan of movies and music, but these are two categories where strapped consumers may wish to cut back spending in this recessionary economy. Furthermore, Citi claims that rewarding customers for choosing paperless statements is based on the idea that saving the environment is good, but I think even the targeted teenagers understand that it costs Citi a significant sum to send paper statements in the mail.

The 0.25 percentage point reduction in APR is a good start, but if Citi wanted to encourage true financial competence, they would reward customers for paying bills in full each month.

What do you think about Citibank’s latest credit card?

Article comments

Anonymous says:

These comments are right. TYN only gives 100% as retail gift cards. But the cashback citation, while correct, is too low since if it the rebate is applied to the card’s monthly bill it pays $175 for 25,000 points (3.5%), a good complement to 5% grocery-pharma-gas cards and 2% across-the-board cards, for anyone with significant restaurant, cinema, book, music expenses.

Anonymous says:

Leave it to NCN to suck the joy out of CCs! 😛

But the devaluation of TY points really puts this “initiative” to waste. Pass.

Anonymous says:

Honest to goodness, this might be the silliest thing I’ve heard of in my life. Seriously, are we at a point, in our society, where we need to base our purchases on whether we will or will not be “rewarded” by a credit card company. And, who decides which categories are “good” and which are “bad”? They do? Ridiculous. Live on a budget, but what you need, have a little fun, pay your bills, save for the future, and work hard. Ignore this fluff.
Luddites rule! 🙂

Anonymous says:

Sounds like a card I should get belonging to Citibank and being good with my credit card. Like you mention the points are basically meaningless because their value is so low. I agree that they should reward by paying in full, or the points should be worth more.

Anonymous says:

I agree with Steve, I just signed up for an AMEX Blue Cash card because Citi completely nerfed their reward system. No rewards on gas and groceries anymore.

Anonymous says:

“Responsible” categories is such a joke. They don’t even include the standard bonus categories, which actually would be responsible – gas stations, grocery stores, and drug stores. This is nothing but a gimmick. The problem is that responsible behavior has its own reward (in the form of less debt, less interest, less spending on frivolous music & restaurant purchases), and as such, it is unprofitable for the cc companies. So they can’t really afford to offer a product that truly rewards such behavior.

Anonymous says:

I think the 29.99% interest rate says it all there – OUCH!

Anonymous says:

The Thank You Network used to be much better. Points and cents used to be one-to-one, they used to have a fixed price flight option – 20,000 points for a ticket up to a $400 value.

They got rid of the fixed price flight option, and you have to spend point on a $100-$500 gift card in order to get the one-to-one relationship.