American raised its premium Citi credit card’s annual fee to $695, added more credits and status benefits, and made buying comparable lounge membership without the card much more expensive. That makes more sense when you understand what American and Citi are trying to build together.

American wants annual cash payments from its credit card and other loyalty partners to approach $10 billion. Selling more miles is part of that. Getting customers to choose American, acquire a Citi card, keep it, and actually use it are all connected.

Citi’s latest earnings offer a revealing look at the economics. Sometimes paying partners more is the consequence of a bank’s credit card business performing better.

What Citi Just Disclosed

On its October 13 earnings call , Citi reported flat revenue in U.S. Consumer Cards.…