Why the Citi Premier Is a Surprisingly Good Cash Back Card

For years, the $95-annual-fee Citi Premier® Card has been overshadowed by other mid-tier travel cards like the Chase Sapphire Preferred® Card. That's despite the Citi Premier® Card offering 3 points per dollar spent in many categories, including supermarkets, and newer Citi Premier® Card benefits like a $100 hotel credit.

However, Citi recently tweaked what you can do with Citi ThankYou Points. Without any fanfare, Citi improved the redemption rate for cashing out ThankYou Points. Instead of a 0.5 cent per point rate, Citi Premier® Card holders can now redeem ThankYou Points for cash back at 1 cent per point.

With this change, the Citi Premier® Card becomes a solid cash-back card. Cardholders can now effectively earn 3% cash back at restaurants, gas stations, supermarkets, airlines and hotels.

Let's take a look at how the Citi Premier® Card earns and redeems points — and the other Citi Premier® Card benefits that make it worth considering.

How the Citi Premier® Card earns points

The Citi Premier® Card earns 3 points per dollar spent at restaurants, gas stations, supermarkets, airlines and hotels. Cardholders earn a base of 1 point per dollar spent in all other categories. Citi specifies that cafes, fast-food restaurants, bars, lounges and travel agencies are included in the 3x earning rate as well.

These bonus categories make the Citi Premier® Card a solid choice for travelers, commuters and foodies. Few cards offer a bonus on both travel and on gas. Add in the fact that you also earn bonus points on restaurants and supermarkets and the Citi Premier® Card has only one peer: U.S. Bank Altitude® Connect Visa Signature® Card.

Longtime cardholders may remember that the Citi Premier® Card previously earned 3 points per dollar on all travel and 2 points per dollar on entertainment. However, as of April 2021, the new Citi Premier® Card earning rates now apply to all cardholders.

Citi Premier® Card sign-up bonus

New Citi Premier® Card holders will get an added bonus: Earn 60,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening. Plus, for a limited time, earn a total of 10 ThankYou® Points per $1 spend on hotel, car rentals, and attractions (excluding air travel) booked on the Citi Travel℠ portal through June 30, 2024.

You can cash out points at 1 cent per point.

» Learn more: The best travel credit card welcome bonuses right now

Ways to redeem Citi ThankYou Points

The most valuable way to redeem ThankYou Points is through the program's 18 airline and hotel transfer partners. By transferring your points, you’ll find a range of jaw-dropping sweet spots — including low redemption rates for business class award flights to Europe.

For an easy and reliable value, you can transfer points to JetBlue TrueBlue to get an average redemption rate of 1.5 cents per point.

For those focused on earning cash back, you have five options for cashing out ThankYou Points at 1 cent per point. The three primary ways to cash out ThankYou points are through a statement credit, a direct deposit or a check in the mail.

The only cash-back option that has a minimum redemption value is the check-by-mail option — and that minimum is only 500 points. Other than that, you can redeem as few or as many points as you want.

That means you can get cash back to zero-out the point balance in your account or to round down your balance to a certain amount. For example, I could redeem 6,958 points for $69.58 and then transfer the remaining 50,000 points to Virgin Atlantic for a business class award ticket from Europe to the U.S. flying on Delta.

You can also opt to redeem ThankYou Points to pay your student loans or mortgage payment. However, those options are limited to specific denominations and have no advantages over redeeming points for one of the cash-out options.

Citi Premier® Card holders can also redeem ThankYou Points at 1 cent each for charitable donations. Keep in mind that these redemptions do have a minimum requirement of 2,500 points.

» Learn more: Are cash-back cards or travel rewards cards better in 2022?

Other valuable Citi Premier® Card benefits

If you're looking for a simple cash-back card, you have a choice between several no-annual-fee options, including the Citi Double Cash® Card. However, the Citi Premier® Card also offers several benefits that cardholders can use to easily justify the $95 annual fee while earning cash back.

» Learn more: Is the Citi Premier® card worth its annual fee?

Annual hotel savings benefit

One Citi Premier® Card benefit alone can more than offset the card's $95 annual fee. Each year, Citi Premier® Card holders will get $100 off a single hotel stay costing $500 or more (before taxes and fees) that's booked through the ThankYou travel portal.

To use this benefit, all you need to do is search for a hotel through the ThankYou travel portal. Then, prepay for your hotel stay using your Citi Premier® Card, ThankYou Points or a combination of the two. At checkout, Citi will give you the option to apply the $100 annual hotel savings.

No foreign transaction fees

True to its travel card roots, the Citi Premier® Card doesn't charge foreign transaction fees. Most cash-back cards — especially those with low- to no-annual fees — charge up to a 3% foreign transaction fee. This sets the Citi Premier® Card apart from other cash-back credit cards, particularly for those who travel overseas.

» Learn more: The best travel credit cards right now

If you're considering earning cash back through the Citi Premier® Card

Although best known as a travel card, the Citi Premier® Card can also moonlight as a cash-back card. You'll effectively earn 3% cash back at restaurants, gas stations, supermarkets, airlines and hotels. Plus, the sign-up bonus adds a way to earn even more cash back to start off your journey. And with ongoing Citi Premier® Card benefits like a $100 annual hotel savings, you can more than offset the card's annual fee year after year.