How to maximize card rewards with Citibank’s new BNPL service

Citibank's new BNPL offers installment payments and credit card rewards at the same time. Here's how to make it work for you.

Last week, I wrote about Citibank’s new BNPL service, also known as the Installment Payment Plan (IPP). This is currently invite-only, but it seems like only a matter of time before it’s rolled out to the public.

While installment payment plans are nothing new, what makes this one interesting is the fact that Citibank cardholders will earn rewards on their installments. In contrast, other banks’ installment payment plans are explicitly excluded from earning miles, points, or cashback. 

I’ve now received further information on how this works. 

Maximizing rewards with IPP

While you can use the IPP with any Citibank credit card, you’ll ideally want to use the Citi Rewards to maximize the points you earn. 

The IPP currently covers a “wide range of merchants in the electronics, beauty, healthcare, education, clothes and apparels categories.” Citibank has not provided a list, but chances are, quite a few of these merchants will be eligible for 10X points with the Citi Rewards Card. 

Citi has informed me that if the original transaction qualifies for 10X points on the Citi Rewards Card, this applies even if the customer converts the transaction into IPP. Points will be awarded upfront, while the payment is billed across three months. 

To illustrate, suppose you purchase something that costs S$300 from a 10X eligible merchant, and put it on an IPP. 

Month Payment Citi ThankYou Points
Time of purchase 3,000
End of M1 S$100
End of M2 S$100
End of M3 S$100
Total S$300 3,000

You’ll receive 3,000 ThankYou points upfront. That’s equivalent to 1,200 miles, or an earn rate of 4 mpd. 

While it’s nice to get your points upfront, this arrangement also means you won’t be able to use the IPP to spread out your 10X cap. To illustrate, suppose you purchase something that costs S$3,000 from a 10X eligible merchant, and put it on an IPP. 

Month Payment Citi ThankYou Points
Time of purchase 12,000
End of M1 S$1,000
End of M2 S$1,000
End of M3 S$1,000
Total S$3,000 12,000

Once again, you’ll receive your ThankYou points upfront, based on a transaction of S$3,000. Since the 10X points are capped at S$1,000 per statement month, the remaining S$2,000 will earn 1X points. Your total haul will be S$1,000 x 10 + S$2,000 x 1= 12,000 points, or 4,800 miles. The effective earn rate here is 1.6 mpd, because the first S$1,000 earns 4 mpd and the next S$2,000 earns 0.4 mpd. 

Contrast this to paying with a 3rd party BNPL platform, where your payment schedule and points will look like this:

Month Payment Citi ThankYou Points
Time of purchase
End of M1 S$1,000 10,000
End of M2 S$1,000 10,000
End of M3 S$1,000 10,000
Total S$3,000 30,000

Because of how the BNPL platform charges your card, you’re able to optimize your 10X cap much better. 

Now- a quick caveat. Based on MCC and online transaction status alone, I see no reason why they shouldn’t earn 4 mpd with the Citi Rewards Card. However, I’ve received a handful of real-world reports that atome and hoolah transactions did not earn 10X, so I’d strongly advise you to test a small amount before making any big ticket purchases.

BNPL Service MCC*
5999: Misc. and Specialty Retail
5399: Misc. General Merchandise
5999: Misc. and Specialty Retail
5999: Misc. and Specialty Retail
5399: Misc. General Merchandise
7399: Business Services Not Elsewhere Classified
*MCCs derived from Visa Supplier Locator. They may be different for Mastercard, but it’s unlikely.

If you’re just solving for cashflow and don’t exceed the 10X cap on your Citi Rewards Card anyway, then you might as well give yourself added peace of mind by using the IPP when offered. 

Conclusion

While Citibank’s IPP may not have been publicly launched yet, the initial signs look promising. You get all the cashflow benefits of installment payments, plus rewards points. Provided this doesn’t entice you to spend beyond your means, I see nothing wrong with using it if you’re targeted. 

Aaron Wong
Aaron founded The Milelion with the intention of helping people travel better for less and impressing chiobu. He was 50% successful.

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stacker

now, will there be a useful list of which merchants accept BNPL? thanks aaron!

Deconta

Say I want to pay school fees of 50K. How does this help me? I am looking around for a credit card or facility that can earn me points through paying the fees. Tks Aaron

D K

Wait – doesn’t the citi payall allow payment to educational institutions and buy miles at 0.8cpm? But if you factor in that one can get free 1.2 mpd with Maybank cards, then the cpm with citi payall would be 1.54cpm instead of 0.8cpm.

Last edited 15 days ago by D K

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