Costco’s breakup with American Express in 2015 was well publicized.
Personally, I think the split happened because Amex was unwilling to give Costco a card with the same benefits, and low swipe fees, that Sam’s Club offered through its new MasterCard. And Costco wanted to compete, and possibly beat, those offerings.
So let’s take a look at the new Costco credit card, and also see how it compares to the old one.
You can read our review of the Sam’s Club Credit Card here.
Or you can compare the Sam’s Club MasterCard against the Costco Anywhere Visa here.
As a reminder, if you currently have a Costco True Earnings Card, you will be able to use that card through June 19, 2016. After that point, your card will deactivate and you should shred it.
All rewards points you earn on the True Earnings card will rollover to your new Costco Anywhere Visa, and will be part of your annual rewards coupon to be issued in February, 2017.
Citi will start mailing the new Anywhere Visa cards in May. And these cards will be active starting June 20, 2016.
How the Rewards Program Works
With the Anywhere Visa by Citi, Costco really improved the benefits of their rewards program. Costco finally matched (possibly even exceeded) the cash back rewards offered by the Sam’s Club MasterCard.
So let’s take a look at the new rewards program, and how it improves upon the old True Earnings program.
4% Cash Back On Gas
You will get 4% cash back on the first $7,000 you spend on gasoline every year. If you hit that cap, you will receive 1% cash back on gas for the rest of the year.
The 4% reward level is limited to gasoline purchased at Costco and stand alone gas stations. You will only earn 1% cash back for gas purchases at superstores, supermarkets, convenience stores and other warehouse clubs.
How it Compares
The True Earnings card provided 3% cash back on up to your first $4,000 of gas purchases. So you get a bigger reward on more spending. Nice!
3% Cash Back on Restaurants and Travel
You will get 3% cash back on restaurants and eligible travel purchases.
Restaurants include cafes, bars, lounges and fast food joints.
Eligible travel costs include airfare, hotels, car rents, travel agencies and Costco Travel purchases. (Which makes it clear that this benefit is not limited to purchases made through Costco Travel.)
Best of all, there is no cap for this category!
The Fine Print
Right now, we know that the dining bonus rewards will not apply to certain restaurants and cafes inside department stores, grocery stores and warehouse clubs. Bakeries are also excluded. I’m not sure yet how they will distinguish cafes from bakeries – this will almost certainly be on a case by case basis, depending on how Citi codes different eateries.
You should not be limited to 1% cash back to dining at Costco, since all Costco purchases are awarded at a bonus level.
Also, at this time, I think they are qualifying travel expenses as non-eligible only if you use your card to purchase travelers cheques or make other similar to cash type transactions.
How it Compares
With the Amex True Earnings card, you received only 2% back on dining and eligible travel purchases. So another improvement compared to the old Costco card.
2% Back at Costco and Costco.com
You will also receive 2% back on all other purchases you make at Costco or Costco.com.
(Remember: you can receive up to 4% on gas and 3% on Costco Travel and in store dining.)
How it Compares
This doubles the 1% you received on most items purchased at the warehouse or online. So also a nice improvement versus the True Earnings card.
1% Back on Everything Else
You will also get 1% back on all your other purchases.
How it Compares
This is one category where Costco was not able to give you an additional 1% cash back when compared to the True Earnings card.
Your Costco Anywhere rewards are calculated annually based on your January through December statements. You then receive a reward coupon as part of your statement the following February. (So that rewards earned on your 2016 billing statements will be available to you in February 2017.)
All rewards earned this year on your True Earnings card will rollover to your new Costco Anywhere Visa, and be part of your February 2017 rewards coupon.
Rewards coupons can be redeemed at your local Costco warehouse, and used for purchases in the warehouse or redeemed for cash back.
Please note that you must redeem a rewards coupon by December 31st of the year it is issued.
Fees and Interest Rates
The Costco Anywhere Visa does not carry an annual fee. However, you will need to pay your annual Costco membership fee to use this card. (As of the time of this article, the membership fee is $55/year for regular members and $110/year for Executive Members.)
The interest rate for new purchases and balance transfers will be a variable 15.49% APR. There is also a 3% fee for balance transfers (minimum charge: $5).
Don’t be late on your payments, as the penalty APR is 29.99%.
Returned payment fees and late payment start at $27, but go up to $37 if you miss 7 in a row.
Cash advances have a variable APR of 25.49%, and will also come with a 5% fee (minimum fee: $10).
There is a foreign purchase fee of 3% (though this is waived at foreign Costco locations).
Other Perks and Benefits
Of course, Costco would not issue a credit card without providing some of the consumer benefits and other perks many of assume when we use our cards.
For the Anywhere Visa card, these perks include:
- Use your card as a Costco membership card
- Damage and Theft Protection
- Extended Warranty
- Car Rental Insurance
- Travel Accident Insurance
- Trip Cancellation and Interruption Protection
- Citi® Private Pass
- EMV chip
- Worldwide Acceptance
We love the new Costco Anywhere Visa by Citi. It improves upon all the bonus categories, and adds an entire new one (actual Costco shopping), when compared to the old Costco credit card.