Is the Costco credit card worth it?
Is the Costco credit card worth it?
Is the Costco Credit Card Worth It?
If you’re a regular Costco shopper, youāve probably wondered whether the Costco credit card is worth signing up for. With various credit card options available, figuring out which one offers the best rewards, lowest fees, and added benefits can be overwhelming. This detailed guide will walk you through everything you need to know about the Costco Anywhere VisaĀ® Card by Citi, including its perks, drawbacks, and how it compares to other cards. By the end, youāll have a clearer idea of whether this card fits your spending habits and financial goals.
What Is the Costco Credit Card?
The Costco credit card is officially called the Costco Anywhere VisaĀ® Card by Citi. Itās a co-branded credit card specifically designed for Costco members, offering cashback rewards on purchases made at Costco locations, gas stations, restaurants, and more. Unlike the Costco Citi card it replaced, this card works anywhere Visa is accepted, both in-store and online.
This particular credit card is only available to Costco members, and you must have a Costco membership to apply and maintain the card. Thatās an important factor to remember when considering if this card is right for you.
How Does the Costco Anywhere VisaĀ® Card Work?
At its core, the Costco credit card rewards your spending with cashback in various categories. Hereās how the rewards break down:
- 4% cashback on eligible gas purchases, including gas at Costco (up to $7,000 per year, then 1%)
- 3% cashback on restaurants and eligible travel purchases
- 2% cashback on all purchases from Costco and Costco.com
- 1% cashback on all other purchases
The cashback is automatically applied as an annual credit on your card balance, usually once a year after your February billing statement. This rewards structure is designed to benefit Costco members who spend regularly at gas stations, restaurants, and Costco itself.
Key Benefits of the Costco Credit Card
There are several reasons why Costco shoppers consider this card worthwhile. Here are the main benefits to keep in mind:
- No annual fee beyond the Costco membership fee: The Costco Anywhere VisaĀ® Card itself doesnāt charge an annual fee, but you must maintain your paid Costco membership.
- High cashback on gas purchases: If you spend a lot on gas each year, 4% cashback (up to $7,000 annually) can translate to substantial savings.
- Cashback on dining and travel: 3% back on restaurants and travel is competitive compared to many cards that focus more on groceries or general purchases.
- Reward redemption is simple: Instead of monthly statements or points, you get a straightforward annual cash credit applied to your balance.
- Accepted worldwide: The Visa branding means you can use this card anywhere Visa is accepted, both online and in-store.
- No foreign transaction fees: This is a big plus for those who travel internationally, allowing cardholders to use their card abroad without additional charges.
Potential Drawbacks and Limitations
Even though the card offers good rewards, there are some drawbacks you should consider before applying:
- Must be a Costco member: If you have a household membership or no membership at all, you can’t access this cardās benefits privatelyāyou need a Costco membership.
- Annual cashback redemption only: If you prefer monthly or flexible cashback redemption, this might not be ideal, as cashback is awarded once a year as a statement credit.
- Reward caps on gas purchases: The 4% cashback is capped at $7,000 spent annually on gas, which might limit earnings for drivers with very high gas expenses.
- Limited bonus categories: There are no bonus rewards on groceries outside of Costco or on everyday purchases such as utilities, which are common in some other cash back credit cards.
- Foreign acceptance depends on Costco usage: While Visa is accepted worldwide, Costco itself only operates in select countries, so your ability to redeem rewards may depend on your local costs.
How Does the Costco Credit Card Compare to Other Cards?
To decide if the Costco credit card is the best choice, itās important to compare it against alternatives, especially other popular cashback cards and Costcoās previous credit cards.
Costco Anywhere VisaĀ® vs. Costco CitiĀ® Card
The Costco CitiĀ® Card was discontinued in 2017 and replaced by this card, improving acceptance worldwide. The main differences are:
- Broader acceptance: The new Visa card works anywhere Visa is accepted, the Citi card accepted only Mastercard.
- Similar rewards structure: Both cards offer similar categories, but Visa’s global acceptance is a key upgrade.
- No extra annual fee: Neither card charged an additional annual fee beyond the Costco membership.
Costco Anywhere VisaĀ® vs. Other Cashback Cards
- Chase Freedom UnlimitedĀ®: Offers 1.5% cashback on all purchases with no limits but no elevated gas or restaurant rewards. Costco cardās 4% gas and 3% dining categories can be better if you spend heavily there.
- Blue Cash PreferredĀ® Card from American Express: Provides 6% cashback on U.S. supermarkets (up to $6,000/year) and 3% on gas. However, it charges a $95 annual fee, and is not accepted at Costco.
- Discover itĀ® Cash Back: Offers quarterly rotating categories, including gas and wholesale clubs, but requires activating the categories every quarter and caps on certain categories.
Ultimately, the Costco card shines for gas purchases and Costco spending but may lag if you want consistent flat-rate cashback or grocery rewards outside Costco.
Who Should Consider the Costco Credit Card?
This credit card is ideal for:
- Regular Costco Shoppers: If you frequently shop at Costco and spend a good portion of your budget there, the 2% cashback will add up quickly.
- Drivers with Moderate to High Gas Expenses: The 4% cashback on gas purchases can save hundreds of dollars annually, especially if you spend close to or above the $7,000 yearly cap.
- Dining and Travel Enthusiasts: People who eat out or travel often will benefit from the 3% cashback category.
- International Travelers: Thanks to no foreign transaction fees and Visa acceptance worldwide, this card is great for those who travel.
- Those Who Prefer Simple Cashback: Instead of managing points or transferring them, the straightforward annual cashback credit appeals to those who want clarity and ease.
How to Maximize Rewards with the Costco Credit Card
To get the most out of the Costco credit card, consider these tips:
- Use the card for gas purchases: Always use the card at gas stations, including Costco gas, until you reach the $7,000 cap annually.
- Shop at Costco wherever possible: Since 2% cashback applies to Costco and Costco.com purchases, itās a way to maximize returns on your regular Costco buys.
- Use the card for dining and travel expenses: This category earns 3%, which is better than standard cashback cards offering 1-2%.
- Combine with Costco membership benefits: Use card rewards along with Costcoās low prices and exclusive deals to increase your overall savings.
- Review annual cashback rewards statements: Keep track of your cashback credits each year to ensure you fully utilize the cardās benefits.
What Are the Fees and APRs?
Knowing the costs of any credit card is crucial to determining if itās worth it. Hereās what the Costco Anywhere VisaĀ® Card by Citi charges:
- Annual Fee: $0 for the cardāthough you must maintain a paid Costco membership (Standard membership is $60/year; Executive membership is $120/year, which comes with extra Costco benefits).
- Purchase APR: Variable, typically around 20.24% to 28.24% depending on your creditworthiness.
- Balance Transfer Fee: Either $5 or 3% of the amount of each transfer, whichever is greater.
- Cash Advance Fee: Either $10 or 5%, whichever is greater.
- Foreign Transaction Fees: Noneāan advantage for international users.
Because this card carries a relatively high APR, itās best suited for people who pay their balance in full each month to avoid interest charges and truly benefit from the cashback.
How to Apply for the Costco Credit Card
Applying is straightforward for Costco members. Hereās the process:
- Ensure you have an active Costco membership: You can apply for the card only if you are a Costco member.
- Apply online on Costcoās website or Citiās portal: The application requires standard personal and financial information as with most credit cards.
- Wait for approval: Many applicants get instant approval, but some may require additional verification.
- Receive your card by mail: Once approved, your card should arrive within 7-10 business days.
- Activate the card and link it to your Costco membership: Activation is simple, and youāll start earning cashback immediately with qualifying purchases.
Real User Questions and Insights
Is the Costco credit card only good for people who shop at Costco?
Not necessarily. While the card is optimized for Costco shopping (2% cashback), it also offers 4% cashback on gas and 3% on dining and travel, which can be valuable even for those who donāt shop very often at Costco. However, non-Costco members canāt apply for the card.
How does the cashback payout work?
Cashback is returned as an annual credit on your February billing statement each year, reflecting all eligible spending from the previous calendar year. You do not get monthly statements or cardholder rewards that can be redeemed in other ways.
Is the 4% gas cashback cap a dealbreaker?
If you spend significantly more than $7,000 per year on gas, then yes, the capped 4% cashback might limit your rewards. For most drivers, however, $7,000 worth of gas ā roughly 20,000 to 25,000 miles of driving per year ā is sufficient to maximize the rewards.
Is the card good for travel?
Itās solid, especially given the 3% cashback on eligible travel and absence of foreign transaction fees. However, it doesnāt offer travel perks like airport lounge access or travel insurance found on premium travel cards.
Does the card have any special purchase protections?
Yes, the Costco Anywhere VisaĀ® Card includes standard Visa protections, such as fraud protection, extended warranty on purchases, and travel accident insurance. These benefits provide an extra layer of security but are not unique compared to some other cards.
Final Notes on Deciding If the Costco Credit Card Fits You
When asking yourself if the Costco credit card is worth it, consider your spending habits, Costco shopping frequency, and ability to pay off balances monthly. For frequent Costco shoppers who drive regularly and enjoy dining and travel, this card offers valuable cashback rewards without an annual fee beyond Costco membership. On the other hand, if you rarely shop at Costco or donāt spend much on gas, other cashback or rewards cards may offer more tailored benefits.
Ultimately, knowing where you spend the most moneyāand how much value you place on simple cashback rewardsāwill guide you to the right decision. If you fit well into the rewarded categories, this card is an excellent addition to your wallet.
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Is the Costco Credit Card Worth It?
If you frequently shop at Costco or use its services, finding the right credit card that maximizes your savings is essential. The Costco credit card offers several benefits designed specifically for Costco members, including impressive cashback rates on purchases made inside Costco warehouses, gas stations, restaurants, and travel. Many users wonder if itās truly worth applying for this card or if other credit cards offer better rewards. By understanding its rewards structure, fees, and how it fits your spending habits, you can decide whether the Costco credit card aligns with your financial goals.
Frequently Asked Questions About the Costco Credit Card
1. What types of rewards does the Costco credit card offer?
The card provides cashback rewards, including 4% on eligible gas purchases, 3% on restaurants and travel, 2% on Costco purchases, and 1% on other purchases.
2. Is the Costco credit card only available to Costco members?
Yes, you must be a Costco member to apply and use the Costco credit card.
3. Does the Costco credit card charge an annual fee?
There is no additional annual fee for the credit card itself, but you must have a paid Costco membership which has its own fee.
4. Can I use the Costco credit card anywhere?
The Costco credit card is a Visa, so itās accepted widely across the U.S., not just at Costco locations.
5. How does the cashback work with the Costco credit card?
You earn cashback as rewards that are redeemed annually via a reward certificate redeemable at Costco warehouses.
6. Are there any foreign transaction fees?
No, the Costco credit card does not charge foreign transaction fees, which is great for international travel.
7. Is the cashback rate competitive compared to other cards?
The cashback is highly competitive, especially for Costco shoppers and gas buyers, making it a strong choice.
8. Can I use the Costco credit card for online purchases?
Yes, you can use the card for online purchases wherever Visa is accepted.
9. How long does it take to receive cashback rewards?
Rewards are issued annually, typically in the form of a Costco reward certificate each February based on the previous yearās spending.
10. Does the Costco credit card offer any purchase protection?
Yes, it includes standard Visa purchase protections like extended warranty and price protection on eligible purchases.
11. How does the Costco credit card differ from Amazon or other store cards?
The Costco card focuses on cashback rewards mainly on Costco and gas, with no foreign transaction fees and acceptance widely through Visa networks.
12. Can one person have more than one Costco credit card?
No, each member can have only one Costco credit card per household.
13. Is the application process for the Costco credit card complicated?
No, applying online or in-store is straightforward, requiring proof of Costco membership and standard credit checks.
14. What credit score do I need to qualify for the Costco credit card?
A good to excellent credit score is typically required, generally 700 or above for approval.
15. Can I add authorized users to my Costco credit card?
Yes, you can add authorized users, which can help build credit for family members or partners.
Conclusion
The Costco credit card offers distinct advantages for regular Costco shoppers, providing strong cashback rewards on gas, dining, travel, and Costco purchases. Its no foreign transaction fee and widespread Visa acceptance make it a flexible choice for everyday spending and travel. If youāre already a Costco member, this card can enhance your savings without additional annual fees beyond your membership. However, if you rarely shop at Costco or spend heavily in other categories, other cards might offer better benefits. Ultimately, the Costco credit card is worth considering if you seek straightforward rewards aligned with your Costco lifestyle, helping you maximize value while enjoying convenient payment features.
