The US Bank Altitude Reserve Is Now the Best Card for Costco Purchases
Update: Some offers mentioned below are no longer available. View the current offers here.
There are a few undeniable facts of life, and one of those truths is that (many) families love to shop at Costco. In fact, when I strike up conversations with "normal" suburban parents about which rewards credit card they use the most, an astonishing amount of the time their answer is the Costco Anywhere Visa Card by Citi -- and the Amex version before that. I can't say I fully understand all the nuances of the Costco love affair, but I can say with absolute certainty that it exists.
With that in mind, families will be interested to know there is a new best card to use for Costco purchases. The namesake Citi Costco Card — which earns you 4% cash back on eligible gas purchases worldwide (including gas at Costco) for the first $7,000 per year and then 1% thereafter, 3% cash back on restaurant and eligible travel purchases worldwide, 2% cash back on all other purchases from Costco and Costco.com and 1% cash back on all other purchases — is no longer the best credit card to use for Costco purchases. The card comes has no annual fee (with paid Costco membership). In fact, it's not even close to being the best card for shoppers who love their miles and points (and aren't afraid of annual fees).
Getting 2% back on purchases at Costco isn't terrible, but you can do better -- especially if you are a Costco regular who likes to travel. As of late August, Costco officially began accepting mobile payments across its stores -- this includes Apple Pay, Google Pay and Samsung Pay. Keep in mind that Costco only accepts Visa credit cards, so you can't use mobile payments to pay at Costco with a non-Visa card, but utilizing mobile payments opens up a whole new way to maximize Costco purchases.
Earn Bonus Points With Mobile Payments at Costco
Mobile payments are actually a credit card bonus category, much like travel, dining and groceries. As an example, the Chase Freedom (No longer open to new applicants) offered 5 points per dollar on mobile payments in the first quarter of 2018, but there is a another credit card that offers a bonus when using mobile payments on an ongoing basis.
Update: For the 4th quarter of 2018, the no annual fee Chase Freedom is offering 5 points per dollar spent at wholesale clubs (along with department stores and Chase Pay), so until you max out the 2018 fourth quarter $1,500 max, the Freedom is actually the best card to use at Costco -- especially if you also have a premium Ultimate Rewards card.
The U.S. Bank Altitude Reserve Visa Infinite Card is a very strong rewards credit card that awards 3 points per dollar on travel charges and mobile wallet spending. The points earned by this card are worth 1.5 cents each towards travel that you can use easily and for travel booked directly with travel providers. This means you are getting 4.5 cents in travel when you use your Altitude Reserve Visa Infinite to pay with a mobile payments system at Costco. This is obviously (much) better than getting 2% back on Costco purchases with your Citi Costco Card. However, keep in mind that the U.S. Bank Altitude Reserve has an annual fee as outlined below while the Costco Card does not. Additionally, the U.S. Bank card won't be for everyone as you need to have some sort of relationship with U.S. Bank to qualify for the card (such as having another U.S. Bank credit card).
The Altitude Reserve Visa Infinite isn't just strong at Costco and where mobile payments are accepted -- it also offers an enrollment bonus of 50,000 points worth $750 on travel after you spend $4,500 on the card in the first 90 days. The card also provides $325 in reimbursements on travel purchases each year, 12 annual GoGo inflight Wi-Fi passes, Priority Pass Select membership, a TSA PreCheck/Global Entry application credit and more. There is a $400 annual fee, but the $325 annual travel credit and GoGo passes can help ease the sting of that fee significantly for travelers. Learn more about the Altitude Reserve Visa Infinite's benefits and how to apply.
If Costco is on your family's list of regular shopping stops, then you need to know the best credit card to use for Costco purchases may not be the Citi Costco Card. If you want to earn 2% back at Costco without an annual fee then that's a solid option. However, if you already have the Altitude Reserve Visa Infinite in your wallet, or aren't afraid of adding a card with an annual fee, then putting the mobile payments bonus category to use in order to earn 4.5 cents back in travel for each dollar spent at Costco is the way to go. If you are a big Costco spender, remember that regardless of which card you use at check-out, you can tack on another annual 2% in Costco Rewards if you purchase a Costco Executive Membership.
H/T: Doctor of Credit