Costco Credit Card Review

This product is in a state of flux right now, as Costco’s partnership with American Express (a CreditCardForum advertising partner) is ending June 20, 2016. On that date, the TrueEarnings Costco rewards card will become defunct.costco citi anywhere

From June 20 onward, Visa will be the only plastic accepted at Costco, and the new co-branded Costco rewards card will be the Costco Anywhere Visa card by Citi. There will be a personal and business version available.

In this review, we’ll compare both cards, guide current TrueEarnings cardholders through the transition and help potential new applicants decide whether the new card is worth getting.

The transition

If you already have the American Express TrueEarnings card, you can continue to use it through June 19. Your new Costco Anywhere card will arrive in the mail by May (at which point, you should securely destroy your old card). You can register your account for online access at citi.com/CostcoSetup. The transition will be automatic, and Citi will not perform a credit pull.

As for the rewards you already earned with the TrueEarnings card, those will be automatically transferred, and you’ll receive them on your next regular February cash-back rewards coupon.

If you do not already have the TrueEarnings card, it is closed to new applicants, according to American Express. The new Citi card is not yet open to new applicants.

If you have no intention of getting a Costco rewards card, how happy you are about the transition will depend on the cards already in your wallet. If you enjoyed using large Costco purchases to earn American Express Membership Rewards on, say, your American Express Everyday card, you’re likely not thrilled with the change, as AmEx will no longer be accepted at Costco. On the other hand, if your primary rewards-earning card is a Visa, you can start using it to rack up rewards on your bulk purchases.

The rewards

The reward structure for the new Citi product is definitely an improvement over the old card. Oddly, the old TrueEarnings card did not give extra rewards for Costco purchases, but the new Costco Anywhere card does. The new card also bumps up the amount of cash back you’ll earn on gas, dining and travel:

When it comes to receiving your rewards, you’ll get them annually. This is a big difference from the redeem-whenever-you-want structure of most cash-back cards. Every February, you’ll be mailed a rewards coupon with your billing statement. It’s redeemable at any Costco location for merchandise or cash. If you want cash, you’ll need to request it in person at Costco. The coupon expires in August the same year it was issued.

Fees

Neither the TrueEarnings AmEx nor the Citi Anywhere card has an annual fee. However, Costco membership is required to hold the card. Costco memberships start at $55 per year.

The American Express TrueEarnings card charges a 2.7 percent foreign transaction fee. No details have been released regarding foreign transaction fees on the new Visa card.

Other perks and benefits

Visa and American Express offer their own suites of protections to cardholders. While Visa offers the standard collection of damage and theft protection, purchase protection, travel accident insurance, extended warranty and secondary rental car insurance, American Express extends some unique benefits, including a popular and robust deals program (AmEx Offers) and free ShopRunner membership (which offers free shipping from certain merchants). If you made use of AmEx Offers and ShopRunner, saying goodbye might be hard. However, the boosted cash back on the new Visa card may be some consolation.

Other cards to consider

The new Citi card is a solid product for Costco members, especially now that it’s adding 2 percent back on Costco purchases. If you’re already paying the annual Costco membership fee, the card is an obvious choice. It offers cash back in everyday categories, in addition to what you buy at Costco. Four percent back on gas and 3 percent back on dining and travel isn’t a combination you’ll find on any other no-annual-fee card.

If you’re not already a Costco member, these rather high bonus categories may have you thinking about joining and paying the membership fee. However, if you don’t often shop at Costco, we suggest you tap the brakes. The redemption structure is designed for Costco shoppers. Your rewards come in the form of a coupon to be redeemed at Costo. These are not the kind of rewards you can redeem for a statement credit in any amount at any time.

If you’re looking for more flexible cash-back rewards that hit similar categories, here are some ideas:

  • BankAmericard Cash Rewards™: This card hits the gas category (3 percent) and also offers 2 percent back at grocery stores. It’s a Visa Signature card, so you’ll be able to use it at Costco post-transition. However, warehouse stores aren’t eligible for the grocery category, so your Costco purchases will get you 1 percent back. Your rewards are much more flexible, though, as you can redeem them whenever you want as a statement credit, check or deposit into a Bank of America account.
  • Capital One Quicksilver: This card keeps it simple, rewarding you with 1.5 percent cash back on everything, which you can redeem in any amount at any time via statement credit or check. It’s also a Visa card, so you can use it at Costco (and get 1.5 percent back).
  • American Express Blue Cash cards: If you still want an American Express card after your TrueEarnings card is phased out, consider one of the Blue Cash cards. The no-annual-fee version gives you 3 percent back at supermarkets on up to $6,000 in purchases per year (but not at warehouses like Costco) and 2 percent back at gas stations and department stores. If you’re willing to pay an annual fee of $75, consider the Blue Cash Preferred card, which rewards you 6 percent back at supermarkets (on up to $6,000 in purchases per year) and 3 percent at gas stations and department stores.