Citi Card Spending Rose 11% as Bank Bets on AI and Rewards

Citigroup's U.S. card customers spent 11% more in the third quarter and borrowed 6% more, figures the bank's top cards executive presented as evidence of a disciplined prime consumer — with a caveat attached. Pam Habner, head of U.S. Consumer Cards at Citi, told a fintech conference that the numbers describe a narrower population than the American consumer at large: 86% of Citi's card customers carry FICO scores of 660 or higher.

"The consumer is shopping, is borrowing, but in a very disciplined way," Habner said. She reported stronger spending among customers with the highest credit scores, though growth appeared across credit-score bands. The 11% spending figure, in other words, says more about Citi's book than about the economy.

What does the spending data actually cover?

A prime-skewed portfolio tempers any read-through to broader consumption. Habner herself flagged a gap between sentiment and behavior: consumers remain pessimistic in surveys even as they keep spending. She cited expert forecasts of roughly 5% holiday spending growth — an estimate, she noted, whose outcome remains to be seen. The gap between what consumers say and what they do is the unresolved variable in every one of these figures.

Where is Citi putting its money?

The U.S. card business serves 70 million consumers and operates largely at its target of a low-20s return on tangible common equity through the cycle, Habner said. The near-term commitment: mid-single-digit revenue and loan growth. The funding mechanism is internal — the business runs an efficiency ratio of about 37%, and Citi plans to squeeze further efficiencies to pay for new investment in products, customer acquisition and loyalty benefits.

The payback horizon is long. Acquiring a card customer takes three to five years to pay back, Habner said, which makes acquisition a longer-term bet than automation projects that return cash faster. The investments include:

• Conversion of the Barclays American co-branded portfolio, adding more than 2 million customers.
• 18 new products launched from 2022 through 2025, two more this year, and another set announced for next year.
• Expanded focus on annual-fee products, including the AAdvantage and Strata cards.
• A retail media offering intended to generate advertising revenue.

The takeaway: Citi is spending today against revenue it expects several years out, and the low-20s return target assumes the cycle cooperates.

Why is Citi shifting toward general-purpose cards?

Habner said private-label cards face structural pressure, and Citi is leaning further into general-purpose products. She cited industry estimates that general-purpose card customers spend roughly nine times as much and borrow four times as much as private-label customers — and said Citi's own portfolio shows similar patterns. Interest on card loans, she noted, still accounts for the vast majority of the card business's revenue, which makes borrowing volume, not fee income, the engine of the model.

How does AI fit into the card strategy?

Citi is working with large language model providers, payment networks and industry groups to keep card transactions secure as consumers shop through AI assistants. Habner said the bank wants to preserve its direct relationship with customers even when an assistant makes a purchase on their behalf — a hedge against the assistant layer absorbing the customer relationship.

Internally, Citi applies AI to cybersecurity, fraud detection, card marketing and customer service. A conversational experience for tasks such as booking travel with card rewards sits on the roadmap; Habner described the timing as "imminent," though roadmaps and shipped products are not the same thing.

Is buy now, pay later a threat?

Not in Habner's view. She said BNPL providers have not emerged as a major threat to Citi's card business, but conceded their installment products inspired Citi's own Flex Pay and Flex Loan features — competitive imitation dressed as indifference. She also pointed to Citi's announced intent to acquire offers-platform company Kard and its dining partnership with inKind as examples of using fintech capabilities to support loyalty.

Every growth promise here — 5% holiday spending, imminent AI features, a three-to-five-year acquisition payback — carries a condition the bank does not control. The consumer has stayed disciplined so far; Citi's returns depend on that holding.