Costco’s partnership with American Express (a CreditCardForum advertising partner) ended June 20, 2016. Going forward, Visa will be the only plastic accepted at Costco, and the new co-branded Costco rewards card is the Costco Anywhere Visa card by Citi.
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.
If you were an AmEx TrueEarnings cardholder, your new Citi card should have already arrived by mail — and you should securely destroy your old card). You can register your account for online access at citi.com/CostcoSetup. The transition should have been automatic, and Citi shouldn’t have done a new 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 never had the TrueEarnings card, you can apply for the Costco Anywhere Visa on Citi’s website, according to American Express.
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 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:
|NEW Costco Anywhere Visa||OLD TrueEarnings American Express|
|U.S. gas purchases (incl. Costco)||4%||3%|
|Costco and Costco.com||2%||N/A|
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.
The TrueEarnings AmEx didn’t have an annual fee, and neither does the Citi Anywhere card. However, Costco membership is required to hold the card. Costco memberships start at $55 per year.
The American Express TrueEarnings card charged a 2.7 percent foreign transaction fee, while the Citi card charges 3 percent.
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 and frequently shop at Costco, 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.
However, if you don’t often shop at Costco, we suggest you tap the brakes. The redemption structure is designed for avid Costco shoppers. Your rewards come annually 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 AND wholesale clubs for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter. It’s a Visa Signature card, so you’ll be able to use it at Costco post-transition. 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 now a MaserCard card, however so you can no longer use it at Costco (to get 1.5 percent back), but there’s always Sam’s Club, which loves MasterCard.
- 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 U.S. supermarkets on up to 6,000 in purchase per year, then 1% (but not at warehouses like Costco) and 2% at U.S gas stations and select U.S department stores (all locations). If you’re willing to pay an annual fee of $95, consider the Blue Cash Preferred card, which rewards you 6% back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%) and 3 percent at U.S. gas stations and select U.S. department stores. Just remember that you won’t be able to use either at Costco (although you can at Sam’s Club and BJ’s wholesale clubs)
Why we gave it 3/5 stars
This card’s rating was based on our standards for cash-back cards, as cash back is the primary advertised mode of redemption.
While it earned stars based on its return on spending and value, it lost stars due to its relative inflexibility for redemptions.
|Rewards-earning rate: We consider this card a no-annual-fee card, as it charges no AF in addition to a Costco membership. It meets our standards for no-AF cards, in that it offers at least 3 percent in at least one bonus category.|
|Cash-back redemption value: This card meets our standards by offering a 1 percent return on cash-back redemptions.|
|Rewards simplicity and flexibility: We rewarded no star in this category, as this card has fairly inflexible redemption terms. Reward certificates are given once per year and expire.|
|Bonus-earning opportunities: This card has no advertised sign-up bonus and no sustained options for earning bonus points beyond what’s advertised.|
|Unique perks: As a Citi product, this card includes Price Rewind and free FICO-score access.|
Updated July 27, 2016