Originally Posted by
writetorich
I guess Citi feels it's more cost effective to have an in house reward program.
These surprises me as I had heard that they pay 0.7 cents a mile and American AADVANTAGE gives them a break, i.e. subsidizes the new card sign up bonuses.
Think about it. If they award you AA miles they must pay AA right away for the miles. How many million of unredemed TYP are there currently? With Citi devaluating them all the time what is there real hard dollar cost for them?
It cost them $0 hard dollars to issue you points. Until you redem them it does not cost them any hard dollars either. What is the loss interest on paying AA even $0.005 assume average customer had 10K TYP banked for atleast 12 months? Currently they would save them $2.50 a year on recapture interest off there own money. How unredemed points do you think Citi currently has? 100 million? 1 billion? Now that is real money we are talking about. See my point on why it could be cheaper for Citi to run there own program.