Credit Card Changes at Costco: Goodbye, American Express. Hello, Visa.

Credit Card Changes at Costco: Goodbye, American Express. Hello, Visa.

Costco Pic

If you are a member of the mega wholesale club Costco, you may want to familiarize yourself with the major credit card changes that are coming in less than 48 hours.

I’m guessing that many of you shop at your local Costco a few times each month. If you have kids, you may even make weekly Costco runs. Our son loves fruit snacks and we regularly we find ourselves stocking up on fresh produce such as apples and berries. That doesn’t even begin to cover the other things that we buy in bulk such as paper towels, toilet paper, and diapers.

If you’re a loyal customer like our family, along with approximately 81 million members worldwide, you need to mark your calendar for Sunday, June 19th. Besides being Father’s Day, (you’re welcome for the reminder), tomorrow is the last day that you’ll be able to use American Express branded credit card at Costco. Starting on Monday, June 20th, Costco will begin an exclusive partnership with Citibank, thus ending their 16-year partnership with Amex. As I’m writing this I am starting to feel quite old, as I remember when Costco had their partnership with Discover Card back when I was in college. It seems that they are making the rounds with the major credit card companies. Who knows, maybe their next relationship will be with MasterCard!

No need to worry if you don’t use a credit card, as Costco will continue to accept cash, debit and ATM cards, checks, Costco Cash Cards, and Electronic Benefit Transfer (EBT).

You may be wondering if this credit card change is good, and for the most part, I think you’ll be pleased. There really won’t be any work for you to do if you currently are a Costco’s TrueEarnings Amex cardholder. Citibank purchased the existing Costco credit card portfolio from American Express and Citi will convert all of those existing cardholders to an Anywhere Visa Card. Be on the lookout if you haven’t received your new card, as Citi started sending the new cards out at the end of May.

Citi Visa

There won’t be an annual fee for your new Citi Visa, as Costco has included the cost of the card in the $55 membership fee that you’re already paying. Also, you’ll be happy to know that if you still have cash back rewards on your Costco Amex you won’t lose them. They will simply be transferred to your new Citi Visa Costco card. In my opinion, that’s huge, as there is nothing worse than losing rewards that you’ve earned.

Many within the industry think that the new Citi Visa offers customers a better way to earn rewards than the soon-to-be extinct Costco Amex. Here are a few of the highlights:

  • 4% back on the first $7,000 of eligible gasoline purchases both at Costco and other gas stations per calendar year. Once you’ve spent over $7,000 you’ll earn 1% back. This is substantially better than the previous reward of 3% back on the first $4,000 that was offered by the Costco Amex. While this card can be used at gas stations worldwide, it’s probably not in your best interest to use overseas as there is 3% foreign transaction fee.
  • 3% back on restaurant and eligible travel purchases worldwide. This is a slight increase from 2% back from the Costco Amex.
  • 2% back on purchases made at Costco and Costco.com.
  • 1% back on all other purchases.

 

The nice thing about this new partnership with Visa is that any Visa branded card can be used at Costco. For those of you who want to get the most bang for your buck, you may want to consider using the Chase Freedom card at Costco for the 5% cash back bonus on the first $1,500 of eligible purchases per quarter for the rest of 2016. This reward originally was slated to end on June 30, 2016, but has been extended through the end of this year. I should mention that in addition to Costco, this reward also applies to other wholesale clubs including Sam’s Club and BJ’s. For the third quarter of 2016, the card also earns 5% back at restaurants, up to combined spending of $1,500. In Q4 of 2016, you can earn also earn 5% on holiday shopping, which is pretty broadly defined, but usually includes most department stores, electronics stores and online retailers like Amazon.com. Again, the 5% is earned on your first $1,500 of spending across all of the categories for that quarter. The Chase Freedom card does not have an annual fee, but those of you who travel should keep in mind that it does have a 3% foreign transaction fee.

Chase Freedom Card

While most of the changes for the new Costco Citi Visa card are quite positive, there are a few disadvantages that you may want to know about. All of your cash back rewards that you earn must be redeemed at Costco. Also, the Costco Citi Visa will not have a roadside assistance hotline available. I’m guessing that won’t be a big deal for most of you, as you may not even have known that a perk of the old Costco Amex.

Are you looking forward to the new credit card changes at Costco? Let me know your thoughts!

For more information on the Chase Freedom Card, follow this link:

https://creditcards.chase.com/credit-cards/chase-freedom.aspx?CELL=6555

Be sure you don’t sign up for the new Chase Freedom Unlimited card, as that card earns unlimited 1.5% cash back on all purchases, but doesn’t have the 5% bonus categories.

For more information on the new Citi card, please visit your local Costco.

*We do not have an affiliate relationship at this time with JPMorgan Chase or Citibank and, thus, do not earn any compensation as a result of this post or any links you may click.

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