If you’re a Costco member, chances are you are already very familiar with their TrueEarnings American Express card. Here’s a quick review of its rewards program:
- On gas purchases at stand-alone gas stations in the US (which includes Costco stations) you will get 3% cash back on the first $4,000 spent annually (and 1% after that).
- On restaurants in the US and eligible travel purchases, you earn 2% cash back.
- On all other purchases you earn 1%.
Now I want to bring your attention to the bottom bullet about earning 1% on other purchases. All the marketing you see for the Costco American Express will say that. But they forget to mention the most compelling part, which is the real secret weapon you’re getting when you apply for their card….
On many other cards, warehouse stores (like Costco) are typically excluded from earning normal rewards. For example, on Discover cards you will see this in the fine print:
“Warehouse purchases (those made at select warehouse clubs, discount stores and their affiliates) earn .25%”
Of course you can’t use Discover at Costco. For credit cards they only accept AmEx. But if you’re not paying with your Costco AmEx card, be aware that you may be earning less rewards than expected. If you currently have an American Express, review the terms and conditions to see what rewards you earn at warehouse stores.
Comments like this are typical of warehouse shoppers.
So with other cards, you may or may not earn 1% (or 1 point per dollar) on Costco purchases. However with the store’s co-branded American Express, you are guaranteed to earn a full 1% cash back on all eligible purchases.
And don’t forget the gas category…
Sure, you can use other American Express cards at the Costco gas stations. But will their stations qualify for the gas category on your SimplyCash business card and earn 3% cash back? Nope.
Even though it is gas station, this AmEx card will give you lower rewards at Costco stations. However with the American Express Costco you will earn 3% on gas at their stations as well as other stand-alone stations in the US.
And since Costco usually has the cheapest gas, saving 3% there is more useful than earning 3% at say, Shell or BP.
Other things you need to know
1. You get your cash back in the form of an annual reward coupon. Each year on the last page of your February billing statement will be a reward coupon, for all the cash back you earned during the prior year. You can take this to any Costco store in the US and use it to buy merchandise or just convert into cold hard cash. Whatever you choose, make sure you use your rewards coupon before it expires on August 31st in the year it was issued.
2. You get American Express cardmember benefits. Just like their other cards, on eligible purchases you can get purchase protection, extended warranty coverage, travel accident insurance, global assist hotline, and car rental loss and damage insurance.
3. There’s no annual fee if you have a Costco membership. As long as you maintain your paid membership to their store, the Costco American Express doesn’t have an annual fee. That means this card is a no-brainer for those who already have a membership, since it allows you to earn better rewards at their gas stations and warehouse stores.
4. It’s a 2 in 1 card for both credit and membership. On the back of your American Express, your picture and membership info will be printed. A nice convenience since it means you will have one less card to carry around.
AmEx Costco vs. Visa/MasterCard debit cards?
Can you use debit cards at Costco? Yes. But you must use them as a PIN-based transaction. That means even if you’re lucky enough to have a MasterCard/ Visa debit card that comes with a rewards program, it won’t earn rewards at Costco since the transaction will be PIN based.
Conclusion? If you want to earn rewards, you need the TrueEarnings American Express. And if you have already have a Costco membership, then you might as well get the card since it’s available for no additional cost to you. Or you can choose not to get it, but please just be aware that you may be losing out on rewards whenever you shop there.