Citigroup plans on unveiling a digital savings account for American Airlines cardholders

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Michael Corbat, CEO of Citigroup at the 2018 WEF in Davos, Switzerland.

Adam Galica | CNBC

Citigroup is making another push for digital deposits.

The bank is planning on offering users of its American Airlines co-branded credit card a high-interest online savings account early next year, according to people with knowledge of the plans. To entice people to join, Citigroup will offer up to 50,000 in miles as a sign-on bonus and a 25% boost on miles earned through the card (capped at the first $50,000 spent.)

Citigroup, the third biggest U.S. lender by assets, is leaning on its popular credit-cards to help it raise deposits on the banking side. Rivals J.P. Morgan Chase and Bank of America have exceeded it in gathering deposits in recent years, thanks in part to their bigger respective network of physical branches, and Citigroup is fighting back with a suite of digital offerings.

The strategy appears to be taking hold; the firm gathered almost $2 billion in digital deposits in the third quarter. Citigroup has already unveiled service bundles that boost reward points or cash-back earned on Citi-branded cards, and bank executives recently hinted that the strategy would extend to its partner-branded products.

“As we think about investments we’ve made in technology and our ability to mine the data that we have of our customers, we’re able to create value propositions that they’re likely to respond to,” CFO Mark Mason said last month.

“For example, we know which of our card customers enjoy and prefer our ThankYou rewards programs and which of our card customers respond to many of the other programs that we offer from a rewards point of view, so we’re able to create packages for them that reward them with benefits they respond to.”

The new digital service will be named the Citi Miles Ahead savings account and will only be available in areas where Citigroup doesn’t have physical branches. The bank also recently extended a feature to American Airlines cardholders that allows them to repay debt in fixed payments.

The bank hadn’t yet determined the interest rate it will offer on the account, but when it launched another online savings account called Citi Accelerate earlier this year, it featured an annual interest rate well above 2%. 

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