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You’re now only able to use Visa cards (rather than Amex) to pay for your Costco purchases. TPG Points & Miles Editor Sarah Silbert walks you through some of the best options to use.
Update: The BankAmericard Cash Rewards Credit Card from Bank of America is also a fantastic option, as it now offers 2% cash back at grocery stores and wholesale clubs on the first $2,500 in purchases each quarter. Additionally, you’ll receive a 10% bonus whenever you redeem cash back into a Bank of America checking or savings account, and this card does not have an annual fee.
Costco’s long-standing partnership with American Express is about to end, as the retailer switches to Visa on June 20. As of that date, customers will only be able to use Visa cards to make purchases, and current holders of the Costco-branded Amex card will automatically receive a new Citi-issued Visa.
With the change occurring in less than two weeks, you may be wondering which cards to use next time you stop by to stock up on bulk items. Keep reading for a rundown of some of the best Visa options, all of which will offer solid rewards for your Costco purchases.
The first pick is the most obvious one. If you held the TrueEarnings Amex card, you were automatically switched over to the new Citi-issued Visa — and you should have received the new card in the summer (The last day to use the Amex was June 19.) Like the previous Amex-issued card, the Costco Anywhere Visa will offer bonus cash-back categories, though the list has been improved to include an opportunity to earn 4% cash back. Details are as follows:
- 4% cash back on eligible gas worldwide, including gas at Costco, for the first $7,000 per year and then 1% cash back thereafter
- 3% cash back on restaurant and eligible travel purchases worldwide
- 2% cash back on all other purchases from Costco and Costco.com
- 1% cash back on all other purchases
The sweet spot for this new card is clearly gas purchases at Costco and other vendors, though note the cap of $7,000 at the 4% level per year. Also note that while you’ll get 4% back on gas worldwide, the card charges a 3% foreign transaction fee, so it’s really only worth using in the US.
Moving on to non-co-branded Visa cards to use at Costco, the recently introduced Chase Freedom Unlimited is a solid option. This card offers 1.5% cash back on every purchase with no cap and no annual fee — higher than the Costco Anywhere Visa Card will earn you on non-bonus spending.
Plus, if you also hold a premium Ultimate Rewards-earning card like the Chase Sapphire Preferred or the Chase Ink Business Preferred Card, you can redeem cash back earned from the Freedom Unlimited Card as Ultimate Rewards points, effectively increasing your return on all purchases from 1.5% to 3.15%. This could definitely be worth considering, especially if you’re interested in redeeming for awards rather than only receiving straight cash back — at least with this card (provided you also have another UR-earning card in your wallet), you have the option to transfer to a variety of travel partners.
Not to be confused with the previous card, this option offers rotating quarterly bonus categories that earn you 5% cash back (or 5x Ultimate Ultimate Rewards) on the first $1,500 spent on eligible purchases. Through the end of 2016 (originally through June 30), you can earn these bonus rewards on purchases at grocery stores and wholesale clubs including BJ’s, Sam’s Club and — yes — Costco.
Chase extended the time period for maximizing this bonus category, so you now have plenty of time to earn a 10.5% return on spending at Costco. Just remember that, as with the Chase Freedom Unlimited, you need to hold the Chase Sapphire Preferred or the Ink Business Preferred Card to translate cash back into redeemable points. Even if you don’t hold one of these other cards, though, the ability to earn 5% back on Costco purchases is not too shabby at all. This card has no annual fee, though it does charge foreign transaction fees.
Due to its wholesale prices, Costco is a go-to for many shoppers looking to buy big-ticket items like TVs and jewelry. If you plan to make a large purchase at this retailer, you might want to consider using this card due to its purchase protection policy. With the Chase Sapphire Preferred, you’re covered for theft, damage or “involuntary and accidental parting” on eligible items for up to 120 days after you made the purchase (charging it to this card, of course). The policy will replace, repair or reimburse you for up to $500 for each claim, with a maximum of $50,000 per account.
Even if you don’t need this coverage, the Chase Sapphire Preferred Card could be worth using on Costco purchases since it earns you valuable Ultimate Rewards points. You’ll only get 1 point per dollar at this retailer, since the card’s only bonus category is 2x on travel and dining, but you’ll still be getting a 2.1% return based on TPG’s valuation. The Chase Sapphire Preferred Card has a $95 annual fee that’s waived the first year, and no foreign transaction fees.
The last card on this list may be surprising to some, since it doesn’t offer any bonuses on spending at Costco. Still, the Alaska Airlines Visa Signature Card earns you 1 mile per dollar on everyday purchases (and 3 miles per dollar on Alaska Airlines purchases), and TPG values these miles at 1.8 cents apiece — higher than any other airline currency.
Though Alaska awards on popular redemptions like Emirates partner flights got much more expensive, these miles can still be plenty valuable for Cathay Pacific flights, trips to Hawaii and more. For more information, see this post on 6 Alaska Awards That Still Make Sense to Book. This card comes with a $75 annual fee and no foreign transaction fees.
With the upcoming switch to a Visa-only policy, Costco customers actually stand to benefit. Not only is the new Costco Anywhere Visa Card by Citi an improvement over the co-branded Amex thanks to improved cash-back categories, but there are plenty of other Visa cards that earn you valuable rewards with the retailer.
What Visa cards will you use for Costco purchases?
Even after the introduction of the Chase Sapphire Reserve, the Chase Sapphire Preferred is still a fantastic choice if you want to avoid the Reserve’s $450 annual fee, earn 2x on all travel & dining and earn a 50,000 point sign up bonus.
- Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®
- Named Best Credit Card for Flexible Travel Redemption - Kiplinger's Personal Finance, July 2016
- 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
- Earn 5,000 bonus points after you add the first authorized user and make a purchase in the first 3 months from account opening
- No foreign transaction fees
- 1:1 point transfer to leading airline and hotel loyalty programs
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 50,000 points are worth $625 toward travel
- No blackout dates or travel restrictions - as long as there's a seat on the flight, you can book it through Chase Ultimate Rewards