Citi credit cards are losing valuable travel and purchase protections

Citi will eliminate return protection, Price Rewind, lost baggage protection, extended warranty, and more from most of its credit cards — even its premium Citi Prestige card — on September 22, 2019.

The issuer's Costco credit cards will continue to offer some benefits like extended warranty protection, but they will also lose trip cancellation/interruption insurance.

If a Citi card has been your go-to pick for booking travel or making large purchases, you may want to follow my lead and switch to another credit card that will continue to offer the coverage you need.

Due to some major impending cutbacks, Citi is going “first to worst” in my book in terms of the protections it offer card holders.

This is unfortunate, as Citi really stepped up its game by adding a Price Rewind feature to help you save money when an item's price drops after you purchase it. It also stood out for offering a full slate of travel protections that were often only available with American Express and other premium credit cards.

All of that is changing on September 22, when Citi takes a buzz saw its to credit card benefits. Along with cutting some of the more unusual perks (such as Price Rewind and missed event ticket protection), Citi is eliminating virtually all travel benefits from nearly all of its cards. When Citi gets done, even its most premium credit card, the Citi Prestige (with a $495 annual fee), won't have secondary car rental insurance.

What's changing

Starting on September 22, 2019, the majority of Citi credit cards will lose their shopping and travel benefits, though Citi's Costco cards will retain the majority of their existing perks.

Here are the benefits that will be eliminated from non-Costco Citi cards:

• Return protection — If a merchant won't accept a return of an item within 90 days, you can return it to Citi for a refund.• Extended warranty — In most cases, adds one year to the manufacturer's warranty (with some exclusions, such as essentially anything with an engine).• Missed event ticket protection — Covers concert, show, and event tickets that you couldn't use due to a covered reason (such as illness, injury, or jury duty).• Medical evacuation• Lost baggage protection• Baggage delay protection• Worldwide travel accident insurance• Worldwide car rental coverage• Purchase protection against damage and theft• Trip delay protection• Roadside assistance

Meanwhile, the Costco Anywhere Visa and Costco Anywhere Visa Business Card will lose Citi Price Rewind and trip cancellation/interruption insurance, while retaining other existing benefits like extended warranty protection.

Citi probably isn't eliminating more benefits from these cards because its contract with Costco likely requires these benefits to be maintained. My bet is that this contract probably won't be renewed. It's one thing to raise prices; it's quite another to cut benefits on the card that millions of Costco members carry.

An aggressive move

Apart from the Costco portfolio, much of Citi's credit card lineup consists of American Airlines cobranded cards and travel rewards cards. Citi may be hoping that people who carry travel rewards cards won't notice that they lost trip protections such as car rental insurance and Price Rewind. In any case, Citi will continue to reap the benefits of heavy marketing around these card benefits — many card holders will only figure out that these travel and purchase protections are gone when they need to file a claim.

How Amex, Chase, and others are (or aren't) responding

So far, no other issuers have matched Citi's cuts to benefits. It's fair to expect that benefits will be cut if Citi gets away with it, given the high costs associated with offering travel rewards and other cardholder benefits.

Will every card issuer do it in lockstep, though？ I'm guessing not. Car rental insurance has a high perceived value, for example, because collision damage waivers from rental car companies are so expensive. However, it doesn't cost card issuers much to provide this perk. In fact, Chase has primary car rental insurance on both its Chase Sapphire Preferred Card and Chase Sapphire Reserve — and I don't see it dropping this anytime soon.

How this changes my credit card strategy

There's no question that Citi cards will become a lot less valuable with the removal of these perks. Earning points or cash back is pretty much the only surviving benefit. Can there still be value in Citi cards？ Yes, but only in limited circumstances.

Here's how I'll be adapting to these benefit cuts:

• I'm keeping my Costco Anywhere Visa, but I'll only be using it for gasoline going forward (the 4% category bonus is unbeatable). • I'll use my Alaska Airlines Visa Signature credit card for my Costco warehouse purchases. I can typically get more than than 2 cents per Alaska mile when I book award flights, and this card has extended warranty protection.• I closed my Citi AAdvantage Platinum World Elite Mastercard, because I already carry a Barclaycard Aviator Mastercard, which has better benefits (I was planning to close one of them when the annual fee came due, but Citi made the decision for me). • I still have my Citi Prestige card and will decide what I'm doing when the annual fee comes due again. I probably get enough value out of the 4th Night Free benefit to justify keeping the card, but I wouldn't use it for other purchases.• I don't plan to open any further Citi cards unless something changes.