The 2014 Costco American Express Card Has a Secret Weapon

Posted by CreditCardGuru

American Express CostcoIf you’re a Costco member, chances are you are already very familiar with the TrueEarnings card, offered by American Express, a CreditCardForum advertising partner. Here’s a quick review of its rewards program:

  • 3 percent cash back at U.S. gas stations up to $4,000 per year in purchases, 1 percent thereafter.
  • 2 percent cash back at U.S. restaurants.
  • 2 percent cash back on eligible travel purchases, including at Costco.
  • On other purchases you earn 1 percent.
  • 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%”

It’s worth noting that 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.

costco rewards complaint

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.

gas station rewards

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.


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Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

6 comments... read them below or add your own

  1. Kal November 7, 2014 at 9:29PM

    I have not been checking my rewards statements for the past 3 years.
    Not sure how much money AmEx “Stole” from me. Its very misleading on their part to send it as part of monthly statement (I signed up for online paper less statements).
    I called them and they say can only issue 50% statement credit for the last year rewards. I am going to use my AmEx card as less as possible!

  2. Francesca August 12, 2014 at 8:26PM

    I completely agree with above posts about lost reward checks. I did not receive my statement for 2013; therefore, did not receive the coupon. I actually was not even aware that coupons were sent out in February statements. I called them to ask if they could reissue the coupon and they told no. I spoke with the supervisor and she also told me no. This is indeed a very bad policy. They issue the “reward coupon” and only give you 6 months to use it and place it on the very last page of your 10-17 page statement!! It is my REWARD. It should have a very minimum of 1 year before it expires and if you do not use it then they should at least give you a one time courtesy of reissuing the coupon. The fact that this multi million company is not very accommodating to their customers, especially good customers is a real tragedy. I would never recommend this company to any of my friends or family.

  3. Dansktex May 1, 2014 at 9:16AM

    I cannot find any explanation for the “eligible travel expenses” for the 2% rebate. I get the 2% on air tickets, but I seem to have been given only 1% on motels when I travel.

  4. Fred February 1, 2014 at 6:18PM

    Beware. Costco AmEx does not tell you which 1% puchases get a rebate. I use my AmEx card for EVERYTHING I can, but clearly am not given the 1% credit on many items. I have yet to find anyone at Costco or AmEx who will give me a clear detailed list of which purchases qualify and which do not.

  5. michael January 31, 2014 at 5:41PM

    Where does it say in the terms that your cash back is forfeited if you do not redeem the check by 8/31? Why cant they simply reissue this check? Where does your money go? To the bottom line of AMEX. This should be absolutely considered stealing and AMEX needs to revamp their business practice as it relates to this policy. No one should lose the money they actually EARN due to this flawed, strong arm policy. Is this government regulated?

  6. Jim December 9, 2013 at 2:15PM

    Lousy rules – was traveling in the first half of year, and apparently rebate check was on page 16 of the bill…my parents held my mail and they moved, so opened it today to find that i had received a check for over $400 but it had ALREADY expired. Great scheme to keep from paying the rebate – read other forums, lots of people complaining about this lousy system…I always like AMEX, but this is a sleazy way to run a business and they should be ashamed.

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