Credit card fringe benefits, aside from the points/miles per dollar, often go unnoticed by most consumers. If I were to ask my wife, for instance, about which card she should use for large purchases to an extend a warranty, or which card to use for a hotel, she would have no idea. In fact, the whole concept of a credit card extending a warranty or providing travel interruption insurance wouldn’t even cross her mind. The only thing she knows about is collision damage waivers for rental cars. I suspect most consumers are also in this boat.
And our situation is really easy - travel, restaurants, groceries, and anything that needs an extended warranty goes on the Crystal Visa Infinite card. Everything else goes on the Priceline card. Most consumers have wallets full of credit cards and no clue what benefits are attached to them aside from their payments and maybe the points they get per dollar spent.
On the flipside, the customers that are aware of the benefits, and thus use them, are likely Citi’s least profitable customers. People on no-AF cards like Double Cash that make extended warranty claims, carry no balance from month to month, and file $500 price protection requests are bad customers for them.
As you mentioned, the interesting group of people seems to be those shelling out the big bucks for a luxury card with annual fees in excess of $400. Those folks likely know about the fringe benefits since they are paying for them, and so long as they aren’t abusing the hell out of the card, are also likely pretty profitable for Citi. They are probably higher income as well… not sure what they are thinking to cut benefits from these cards. It would have allowed them to create a clear tier system where no AF cards get zero benefits, and the expensive cards get a slew of perks.