what you need to know about caustic's transition to visa

Costco Transition to Visa: What You Need to Know

Starting June 20th, you will no longer be able to use your American Express cards at Costco. For long time Costco members curious about what cards will be accepted, and whether there will be a replacement for their True Earnings card, here is what you need to know.

What Cards Will Be Accepted at Costco – and When?

Costco and American Express had a 16 year relationship that was publicly not renewed last year. But while their formal agreement will expire on March 31st, Costco will continue accepting American Express cards – including the co-branded Costco True Earnings card, through June 19, 2016.

Starting June 20th, you will be able to use only Visa credit cards at Costco. And note that this Visa relationship is not just with Citibank. You will be able to use any Visa card.

And, according to Costco, you will continue to earn your rewards on your True Earnings card through that date.​ This means that your True Earnings rewards will be rolled over into your new Citi account, and available to you as part of your annual rewards check that will be part of your February 2017 statement.

Additionally, I just learned from American Express that your True Earnings card will no longer be valid or usable after June 19th. So you will want to shred it at that time.​ This must be part of the deal Amex reached with Citi in connection with the sale of the True Earnings card portfolio.

So Why Is Citi Doing this Deal?

Citi is doing this deal with Costco to get access to Costco’s customers, who are apparently very loyal to Costco.

Apparently, ​10% of all American Express cards are the co-branded Costco True Earnings cards. So that is a lot of customers.

And, based on the rewards Citi will be offering with their new co-branded Costco Anywhere Visa card, ​Citi will be trying hard to win over a bunch of Costco members who never signed up for the True Earnings card. Details on the new Costco card benefits will be sent out to existing cardholders in April – but we have those details below.

When Will I Get My New Costco Anywhere Card?

Citibank bought the portfolio of credit cards from AmEx, and will start shipping your new cards in May. These cards will then be ready to go starting June 20th.

For Costco members who never signed up for the existing Costco card, you will see be able to sign up for the new Anywhere Card in your local warehouses.

What Will My New Card Benefits Be?

The cash back rewards that will be offered by the new Citi-Costco co-branded Anywhere card will be more generous than what you’ve been getting to date – and probably more generous than pretty much any other card out there:

  • 4% cash back on eligible gas worldwide, including gas at Costco, for the first $7,000 per year in gas purchases and then 1% thereafter.
  • 3% cash back on restaurant (including cafes, bars, lounges and fast food restaurants) and eligible travel purchases worldwide, including airfare, hotels, car rentals, travel agencies, cruise lines and Costco Travel.
  • 2% cash back on all other purchases from Costco and Costco.com.
  • 1% cash back on all other purchases.

These perks do come with some limitations that you need to be aware of:

  • Gas: You will only earn 1% cash back, not 4%, for gas purchased at superstores, supermarkets, convenience stores and warehouse clubs other than Costco or for fuel used for non-automobile purposes.
  • Dining: You will only earn 1%, not 3%, for purchases made at bakeries and certain restaurants/cafes inside department, grocery or warehouse clubs. The list of the “certain” restaurants and cafes to fall into the 1% category is not yet available.
  • Travel: Details on what exactly is and is not “eligible travel purchases” are not yet available.

These benefits are clearly superior those offered by the Amex card (of 3% back on gas, up to $4,000, 2% on dining and eligible travel, and 1% elsewhere). And, despite the lack of clarity on the limitations listed above, this new card appears to truly be awesome.

If you have any more questions about the transition to Visa or the new Costco Anywhere by Citi Visa card, check out this page on Costco’s site.

And, if you are looking for a great cash back card to pair with your new Costco card to cover the 1% cash back category, check out our Guide to Cash Back Credit Cards.

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