Citi Tests Pricing Change on Strata Premier: Will Mid-Tier Cardholders Pay Premium Prices?

Citi is conducting an experiment to see how well cardholders would absorb a big price increase on one of its most popular “middle-of-the-road” cards.

Details came first from Doctor of Credit and were later discussed in a developing Reddit thread. According to the thread, Citi surveyed some cardholders with regard to the potential launch of a revised Strata Premier card with a proposed $195 annual fee — more than twice the $95 annual fee associated with today’s version of the Strata Premier card.

The survey describes potential changes, but it does not describe definitive changes to be made to the card.

Raising the Strata Premier annual fee from $95 to $195 would represent a departure from the way annual fees have increased over time. Annual fee increases have been primarily limited to high-end, or premium, cards.

Citi now seems to be trying to determine whether the ability to charge higher prices for premium services can be extended into the mid-range of the market.

What makes Citi’s approach interesting is that it asked customers to provide feedback on how different levels of service would affect them. This suggests Citi wants to know how consumers will react to certain combinations of services and pricing before making a final decision regarding the types of services to offer and how much they want to charge.

It therefore allows the bank to assess how much further up-market it can go before mid-range cardholders lose interest.

As described above, the survey discusses possible ways the consumer experience would differ based on additional benefits offered by the card. According to the survey, cardholders could potentially earn higher amounts of rewards through the Citi Travel Portal. 

For example, Citi could award 10X rewards for reservations made through the portal for hotels, and 4X rewards for reservations made through the portal for flights. Rewards earned for reservations booked directly with airlines or hotels would be awarded at significantly lower rates.

In addition, time-sensitive categories such as “Citi Nights” would allow for additional rewards for restaurant purchases during weekend evenings. These categories would also be capped.

Possible additional benefits that might be included with the card could include:

• A credit toward a TSA Precheck or Global Entry program
• Two free airport lounge visits
• A credit toward a hotel reservation booked through Citi Travel
• A semiannual ($50) dining credit
• A “Splurge Credit” worth $100 per year
• Incentives through a mobile wallet used for monthly expenses

While the additional perks may make a case for why a customer should pay a higher fee, they also add complexity to both the card itself and the customer’s experience using the card.

Many perks are divided by categories or booking methods; while this could encourage cardholders to engage more actively with their accounts, there is a greater likelihood that some value will go unclaimed.

Furthermore, the highest earning rate depends on how often you book travel through Citi Travel or spend within specific time frames. As mentioned earlier, this represents a broader trend toward layered benefit structures that require more proactive management.

With the introduction of a $195 price-point for the Strata Premier, Citi is attempting to find out whether mid-tier customers are willing to pay more for premium-style benefits despite added complexity.

If so, other banks may follow suit, creating a tiered system in which mid-tier cards are priced similarly to premium cards. In so doing, they create a mid-tier product space that resembles nothing more than a smaller version of the premium product space instead of something unique.