In 2014 should you apply for a Sam's Club credit card? The card (and the rewards program associated with it) underwent some major changes in June 2014. Although it's still issued by GE Capital, it is now co-branded with MasterCard (rather than Discover). This review reveals what you need to know.
What's the annual fee?
The card carries no annual fee. However, to get it, you must have a Sam's Club membership. The Saver's tier of membership costs $45 a year, while the Plus tier costs $100 per year.
In the past, the Sam's Club credit card had a tiered reward system based on both how much you spent and which level of Sam's Club membership you had. With the old program, you earned less than 1 percent back unless your spending reached a certain threshold.
The system has since been streamlined and re-structured into what Sam's is calling the 5-3-1 program.
With the card (no matter which level of Sam's membership you have and how much you spend), you'll earn:
Cash-back rewards will be given to you in the form of a check, mailed to you with your February statement. To cash it, you'll need to present the check at Sam's Club with proper identification before the check expires.
- 5 percent cash back on fuel for the first $6,000 spent on fuel every calendar year. After the first $6,000 in fuel spending, you'll earn 1 percent. All gas stations located in the U.S. (including Sam's Club and Wal-Mart gas stations) are eligible for the 5 percent cash-back rate. Gas stations that are part of other warehouse clubs and supercenters are excluded.
- 3 percent cash back on dining at restaurants worldwide and travel. The restaurant category excludes dining at other warehouse clubs. So, as with the gas reward restrictions, they won't be rewarding you for any stealth spending at Costco or BJ's Wholesale Club. Merchant categories that fall under the "travel" umbrella include rental cars, airlines, hotels, passenger rail, bus lines, cruise lines, time shares, travel agencies and tour operators.
- 1 percent cash back on all other eligible purchases.
Rewards are capped at $5,000 in cash back per year. While rewards caps are rare among cash-back rewards cards, $5,000 is a pretty high one – you'd have to max out the gas category, spend tens of thousands on travel and dining and spend more than $100,000 on other stuff to get anywhere near that ceiling.
So is there an advantage to having a Plus membership anymore?
The new card's rewards program doesn't give a leg up to those who purchase the more expensive ($100 per year) Sam's Club Plus membership. Going forward, they'll earn the same rewards as those paying only $45 per year for the regular Savings membership.
Under the old system, those with "Plus" memberships used to be able to earn up to 2 percent back on all purchases. Depending on your spending patterns, you might miss that program. But keep in mind you won't be stuck earning a measly 0.25 percent on the first $1,500 in purchases. Moreover, you'll be earning extra on gas, travel and dining – three common categories that might account for a lot of your spending.
Also, Sam's has introduced a little something extra for its Plus members – the Cash Rewards program. If you're a Plus member (regardless of whether you have the credit card), you get a $10 rebate for every $500 spent at Sam's (that's 2 percent back). These rewards are automatically loaded onto your membership card and can be redeemed for cash at the register, membership fees or merchandise in-store and online. All Plus members are automatically enrolled in this program.
How's the Sam's Club card's customer service?
GE Capital manages it the card and handles the service side. They have a mixed reputation for customer service.
Which cards does Sam's accept?
One advantage to having a Sam's Club credit card is knowing it will be accepted in-store. Not all credit cards are. Currently, Sam's Club takes:
As you can see, Visa and American Express are not accepted. You don't necessarily need the Sam's Club credit card, though, as any MasterCard credit card, Discover card or debit card will still work.
- Its own credit card
- Wal-Mart shopping cards
- Cash or check
- All debit cards
This card is a competitive offer if you drive a lot because 5 percent on gas year round is rare. If you max out the category by spending $6,000 on gas each year, that's $300 cash back. A few cards offer gas as a rotating 5 percent category during some quarters, and a couple others give you 2 percent or 3 percent on gas year round.
Getting 3 percent back on dining and travel also puts the card ahead of some other offers on the market. While you can get up to 5 percent on restaurants with rotating-category cards, you might be able to squeeze more cash back out of a card that lets you earn 3 percent year round. As for travel, even cards with annual fees rarely go above 2 percent back in this category (and may require you to redeem for travel to get the full 2 percent value).
This card has one possible shortcoming, however: No extra rewards for groceries, not even at Sam's Club, which is ironic since Wal-Mart (Sam's Club's parent company) is the nation's largest grocer. To get a boost in that category, you'd need to use a different card. The Blue Cash Preferred card from American Express (a CreditCardForum advertising partner) is known for its 6 percent grocery rewards, but of course, they're not accepted at Sam's. To score extra rewards on groceries at Sam's Clubs there is an alternative detailed below, luckily. It also matches the Sam's Club card in gas rewards and trumps it in the restaurant category, at least during some quarters of the year. Otherwise, if you're buying most of your groceries at Sam's with the new Sam's Club card, you'll be stuck at 1 percent, unless you have the Plus membership.
The bottom line: This new 5-3-1 version of the card is an improvement over the old version of the card for many consumers. It's simpler, and low-spenders won't find themselves stuck earning less than 1 percent back. If you don't have a Sam's membership (and don't need one), it may not be the best choice, since several other no-annual-fee cards will give you bonus cash back on gas, travel and dining. However, if you're already paying for a Sam's membership, this card is a wise choice.
Alternatives for 2014?
The Discover it card described below is NOT affiliated with Sam's Club in any way, but is one of the card brands they accept.
The Discover it card offers two very unique advantages over the Sam's Club card:
- You get 5 percent cash back at grocery stores, gas stations, home improvement stores, department stores, movies, hotels, airlines, cruises, restaurants and other categories which rotate each quarter, up to a maximum of $1,500 in purchases
- You can get 5 percent to 20 percent cashback for your online shopping at nearly 200 popular retailers through ShopDiscover which is a free, exclusive program just for cardholders.