During my $1,720 + 267k Point Credit Card Application Spree  I picked up the Citi ThankYou® Premier Card  for the 50,000 point sign up bonus which is worth $500 or more depending on how you redeem it.
A reader, Barry, pointed out that the sign up bonus  on the Citi TYPremier card “is only 37500 points, not 50k. You must pay the 125.00 fee the second year before they give you the extra 30K points.” Barry is right. However, it actually gets even more complicated than that.
In my never ending quest to maximize every bonus offer I sign up for, I calculated the bottom line on the profit after you subtract the annual fee; I still found it was one of the best offers I could do with Citi right now. Since the bonus is spread over 2 years, I think it’s worth calculating the value of the offer at each point in time. But even beyond the bonus points, once you factor in the base points and spending categories, you can actually stretch the value of the sign up bonus even more! Let’s work through the math:
Citi Sign Up Bonus Year 1
The Citi ThankYou® Premier Card  bonus in the first year is pretty straight forward. You earn 20,000 points after spending $2,000 in the first 3 months. You can redeem the 20,000 points for a $200 gift card. (You can earn more when you redeem for airfare, but lets stick with the easy gift card or other 1:1 conversions).
In addition to the sign up bonus, you will earn additional Thank you points on your spending (1-3 points per dollar). Assuming the minimum, you’ll earn 2,000 extra points, for a total of 22,000 points in year one. We’ll look at the possibilities for additional category spending below.
The annual fee is waived for the first year, so you’ll net $220 in the first year.
First Year Profit: $220
Citi Sign Up Bonus Year 2
During the second year, you’ll earn 30,000 points when you spend $3000 more in the first 3 months of the second year using your Citi ThankYou® Premier Card . Again assume the minimum points earned on the $3,000 will be 3,000 and you will earn a minimum of 33,000 points.
Also during the second year, you’ll have to cough up the annual fee if you want to earn the second part of the sign up bonus. It’s $125.
You can redeem your 33,000 points for $330, less $125 and the net for the second year will be $205. It’s obviously still profitable to hold this card for the second year, even after the annual fee. Just make sure you put notes in your calendar to remember to complete the extra spending.
Second Year Profit: $205
Category Spending Bonus Points
I calculated the profits above based on earning 1 point per dollar on your $5,000 in spending. However, since you will earn 3 ThankYou Points for every $1 spent on purchases for dining at restaurants and entertainment and 2 ThankYou Points for every $1 spent on purchases for airfare and hotels, you have the potential to earn 15,000 points on the $5,000 in spending. That’s an extra 10,000 points or the potential for an extra $100. Don’t forget you will have to compare the categories to the other options you have for the cards you are currently using. For example, we’re currently using our Barclaycard Arrival card  for travel, so I probably wouldn’t use that option, but I would be willing to use this card for dining once we exhaust our quarterly rotating  bonus for restaurants.
Additional Possible Profits: $100
If you use your points for airfare, you need fewer points to redeem for the same value. They calculate it as 20% fewer points for redemption. If you use this option, you can add an additional $137.50 – $162.50 in value based on your original spending category.
Additional Possible Profits: $137.50 – $162.50
Total Sign Up Bonus
I probably won’t redeem our sign up bonus for airfare, since we just picked up 100,000 American Airlines Miles . My favorite and Best Way to Maximize Citi Thank You Points  is still redeeming it for mortgage (or student loan) payments, since it’s equivalent to cash.
If we can maximize the spending category for 3 points per dollar, we’ll see a total profit on the sign up bonus of this card of $525. Works for me! Now I just need to figure out how to maximize the category spending for dining and entertainment!
Based on the method of spending you choose and your redemption options you use, the total value of the sign up bonus after you pay the annual fee in the second year will be:
$425 – $687.50
What About the Third Year?
Obviously, the annual fee in the third year will be a factor without any other bonus offers. It would be hard for the Premier card to beat our Fidelity 2% Cash Back Credit Card  in year three. But as you can see, based on the calculations, it is worth keeping around in year 2, even with the annual fee!