How can one run a mileage program without the backing of airlines? With its newly released PremierPass credit card series, Citi is trying to answer this question. Citi also wants to give you more than that by allowing you to earn miles from and redeem miles on any airline in the world. Is it too good to be true?

The PremierCard series actually includes three different types of cards: Citi PremierPass Card - Elite Level, Citi PremierPass Card and CitiBusiness PremierPass Card. Let's start by digging into the features of the PremierPass Card - Elite Level:

- $75 Annual Fee
- 15,000 bonus points after first purchase
- 1 point for every mile you fly on any airline (this is in addition to the miles you will collect in the airline-specific programs like United's MileagePlus or Northwest's WorldPerks)
- 2 points for every dollar spent at supermarkets, drugstores or gas stations; 1 point for every dollar spent elsewhere.
- Points can be bought at a rate of 2.5 cents per point in increments of 1,000 points.
- Points can be redeemed for flights by any airline: 25,000 points for a domestic roundtrip ticket and 50,000 points for a roundtrip international ticket. (Only half of the points can be from the 1 point per mile award; the rest should be from other channels.) You need to book your tickets thru Citi; there is no blackout date.
- Points can also be redeemed for merchandise or statement credits via Citi's ThankYou Network. Every 1,000 points are probably worth $10 or so, depending on how you choose.
- Free unlimited companion travel: buy a roundtrip coach class ticket for $359-$379 or above (depending on date) with a destination in the continental United States and "bring a friend along on your next flight".
- Points never expire as long as one purchase is made every 3 years.

For the other two cards, think the no-annual-fee Citi PremierPass Card as the stripped-down version: 1 point is awarded for every 3 miles you fly, and 1 point for every dollar purchase (no double points). Also there is only 5,000 bonus points after first purchase and don't dream of the free companion travel. The CitiBusiness PremierPass Card targets businesses, and with $75 annual fee (waived for the first year) it offers very similar features as the Elite Level card.

Now let's run the math: the 1 point per mile is obviously a god-send. An across-the-continent roundtrip can easily land you 4,000 to 5,000 points; at a typical price level of $400-$500 per coach class roundtrip ticket, the reward equals to more than 10 points per dollar spent on airfare. It, therefore, is much easier to collect points from mileage than from purchase. Assuming you charge all your flight to the PremierPass card, the clause that only half of the 25,000 points required for a free domestic ticket can be from mileage is effectively capping the reward to one ticket per $12,500 purchase on the card or so.

Here is how a cosumer can perfectly play the game: you should charge all your personal air travel on this card, and you can collect 12,500 points after three coast-to-coast trip. You then should spend $12,500 in non-grocery store/drug store/gas station purchases to get another 12,500 points (and your three paid trips should give you 1,000 to 2,000 points from purchases too). If you value the reward of a domestic roundtrip ticket as $400, Citi is effectively giving you around 3% cashback on every dollar spent (after the $75 annual fee). If you wait and cash out the generous 50,000 point per international flight ticket, these points can be more valuable. The companion travel option can effectively boost your return to 5%-6% cashback on total purchase.

The beauty of the card is, at the same time you should already accumulated another 15,000 miles from your favorite airlines, and are closer to another free ticket from the airline too.

If everyone plays by the book, PremierPass will be a money-loser for Citi, but here are the upside for Citi:

- If you don't track your points consistently, you might charge too much air travel to this card and create an imbalance between points from miles and points from purchase, thus lower the potential gain.
- Based on what I read, only the miles you yourself fly will count toward points from miles; if you purchase tickets in a batch for your family members as well, your family member's ticket will only count toward points from purchase.
- If you don't travel or charge very often, you might pay several annual fees before you land your first reward ticket.

To some extent, the no-fee PremierPass card is the better choice for infrequent travels. You probably need nine or ten coast-to-coast trips, another $8,000-$10,000 charge on the card and several years to get your reward ticket, but the effective reward ratio is still above 3%.

(By the way, there is still one thing that bothers me: how Citi can find out the exact trip you are making, and thus credit you with the right number of points based on miles? I feel that by making a purchase via credit card, Citi should only kow the amount charged and the merchant name. How can Citi find out from airlines and countless travel agents what's in my itinerary? Is it an invasion of my privacy? What's more, even if Citi has a systematic process to find out my itinerary via major airlines, how about when I purchase a travel package from Expedia? According to Citi's FAQ, Citi's decision on number of travel points is the final decision. I don't question the integrity of the reputable Citibank, but I still doubt they can make no mistake in collecting the trip details and count the miles. I am an infrequent traveler so I am still in the sideline.)