Citibank is significantly reducing their cash back rebate

 I got "the letter" from Citibank stating they are going to
substantially reduce their cash back rebate program from 5% for gas,
grocery and drugstore down to 2%.

My question is, is there another card that has a 5% cash back rebate?

 
Yes, the Chase Freedom Mastercard.

 
slugbug wrote:


On all purchases or just on gas?  And for how long? Ceiling on rebated
amount?  Applied monthly or only on anniversary?  Do tell, plz.

 Logan Shaw wrote:

I'm not sure I see the logic there.  At least, I don't see why it
doesn't apply to the big oil companies too.  Competition should have
kept their contribution to gas prices constant as crude oil prices rose.
  Instead, they just raised their own prices proportionally, sat back,
and enjoyed the windfall profits.  Taxi drivers don't get to raise their
prices proportionally, even gas station owners don't get to raise their
prices proportionally (I heard on the radio high prices were actually
putting a pinch on them), yet for some reason the big oil companies not
only pass along their extra costs for crude oil, but mark up rates for
their own services proportionally.

 timeOday wrote:

The logic was just that Citibank was giving customers a freebie worth
a certain dollar amount on average.  Since it was based on a percentage
of a number that changed, the dollar amount of the freebie changed.
By changing the percentage, Citi was able to restore, roughly, the
original dollar amount.

Let's say, for example, that 2 years ago, you typically bought
100 gallons of gas per month.  You'd have spent, say, $125,
and since Citibank was giving a 5% rebate on that, that would
be $6.25 a month.  Now you're spending, say, $300 for that same
100 gallons of gas.  Citibank will now give you 2% instead of
5%.  If they give you 2%, that adds up to $6.00 a month.  Very
close to the $6.25 it would've been before gas prices changed.


It's called Price Elasticity of Demand.

Pricing seems simple at first, but it's not.  Actually, it's quite
complicated, or at least convoluted due to the market forces at work
and the amount of effort people are willing to put into setting the
best price for things (where "best price" means "overall highest
profits").

For example, here's an unexpected complication of pricing:  if
someone told you a reputable manufacturer sold two different types
of AA battery, and one type was $4 for a pack but the other was
$5 for a pack (with the same number of batteries in it), which one
would you say is the better battery if you had no other information
to base your opinion on other than price?  You'd probably conclude
that the $5 set of batteries is likely superior in some way to the
$4 set; otherwise, they probably wouldn't get away with charging
more.  Of course, that could be wrong.  The more expensive one might
be a ripoff.  But as a general trend, you get what you pay for.
People who set prices take into account this (somewhat rational,
actually) tendency to judge quality based on price.  If you have
a product that is superior to the competition, you pretty much
*have* to price it higher than the average of your competitors'
products.  Otherwise, nobody will believe it's really as good as
you say it is!  Or at least not enough people.

The point is, pricing is just not as simple as adding a reasonably
markup to your costs.  It rarely works that way in the real world.
There are too many factors.  And yeah, too much greed.

Anyway, Price Elasticity of Demand basically says that different
types of products in different types of markets behave differently.
With one product, you can raise the price a little, and the quantity
people will want to buy goes way down.  For example, if the price of
a certain cut of meat goes up, like say the price of a Porterhouse,
people will be a different cut of meat (maybe a T-Bone) instead.
But then with another product, you can raise the price a lot and
people will still keep buying it.  For example, cigarettes:  if you
raise the price of cigarettes, how many people are going to quit
smoking or reduce the amount they smoke?  Not many, not unless
you raise the price a LOT.


Well, as Guy Forsyth wrote, "We Americans are a freedom-loving
people, and nothing says freedom like getting away with it."

   - Logan