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:
- 3 percent cash back at U.S. gas stations and on gasoline at Costco up to $4,000 per year in purchases, then 1 percent.
- 2 percent cash back at U.S. restaurants.
- 2 percent cash back on eligible travel purchases, including at Costco.
- 1 percent cash back on other purchases, including at Costco.
- On all other purchases you earn 1percent.
- Terms and limitations apply; You will receive your cash back annually in the form of a reward coupon.
Now I want to bring your attention to the bottom bullet about earning 1 percent 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 some 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%”
Feb. 2014 update: Discover’s newest card, the Discover it, does not have this restriction.
Of course you can’t use Discover (or MasterCard or Visa) at Costco. For credit cards, they only accept AmEx. And, historically, other AmEx cards besides the Costco one were less rewarding at Costco.
These days, American Express’s cash-back offerings don’t appear to have that restriction (although you won’t earn those bonus grocery points offered by the AmEx Blue Cash cards when you shop at Costco).
The bottom line is that, if you’re using other rewards cards, they might be less rewarding for Costco purchases — or not be accepted at all. However with the store’s co-branded American Express, you are guaranteed to earn a full 1 percent 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 or Blue Cash card and earn you 3 percent cash back? Nope.
Even though it is gas station, AmEx cash-back cards will give you lower rewards at Costco stations. However with the American Express Costco you will earn 3 percent on gas at their stations as well as other stand-alone stations in the U.S.
And since Costco usually has the cheapest gas, saving 3 percent there is more useful than earning 3 percent 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 31 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 maximize your rewards earnings at Costco, 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.