The average Costco member spends about $2,500 a year at the wholesale club but many may not be getting the full benefit from his or her spending. While the Costco co-branded card, the Costco Anywhere Visa Card by Citi, is tough to beat on pure rewards rates in select categories, other Visa cards may be a better choice for Costco members, depending on spending habits.

Before we dig in to the best cards for Costco members, let's review what Costco members can earn from the co-branded Citi card. We'll use this as the "bogey" to find cards that may earn at a higher rate in individual categories, or on general spending.

Rewards Rate

Details

4%

Eligible gas worldwide, including Costco (on up to $7,000 of spending, 1% thereafter)

3%

Restaurants and eligible travel

2%

Costco and Costco.com

1%

All other purchases

Data source: Citigroup.

It's worth pointing out that rewards earned from the Costco Anywhere Visa Card by Citi are redeemed only once per year when annual credit card reward certificates are mailed during the February billing statement. Notably, both credit cards below offer more frequent redemption options, which we think enhances their value.

A bonus-bursting card

The BankAmericard Cash Rewards™ card is an excellent choice in no-annual-fee credit cards. Its 3-2-1 rewards program pays 3% cash back on gas, 2% on groceries and warehouse clubs (including Costco), and 1% on all other spending. The card's 2% and 3% categories are capped at a $2,500 combined quarterly bonus limit, after which cardholders earn at a standard 1% rate.

Bank of America customers who have an active checking or savings account can earn a 10% bonus by redeeming the bonus to their account. Those who have Preferred Rewards status enjoy up to 25% to 75% of bonus rewards on top of their normal earnings rate. Thus, gas purchases can earn at an all-in rate of 5.25% at the very top of the scale. (The math is as follows: 3% bonus cash back on gas * 1.75 multiplier for top Preferred Rewards clients = 5.25% cash back.)

At its worst, this card merely matches the 2% cash back earned by the Costco co-branded card on Costco purchases. At its best, Preferred Rewards clients earn as much as 3.5% on their Costco purchases. Most importantly, the average Costco member, who spends $2,500 per year, on average, is unlikely to top the card's $2,500 quarterly bonus limits. Spending at grocery stores also earns at an elevated rate, as does spending at Sam's Club, which may be important for those who double-dip with two warehouse-club memberships.

Eligible cardholders can also take advantage of a $100 cash rewards bonus when they spend just $500 in the first 90 days after approval. Rewards can be redeemed at any time, starting at a $25.00 redemption amount. See why we rank this card as one of the best cards for cash back by reading the full review of BankAmericard Cash Rewards™

Woman picking up a bell pepper at a market

Costco members who don't use a cash back rewards credit card may be leaving money on the table. Image source: Getty Images.

A card for lower spenders

The Chase Freedom Unlimited takes a spot in this list because it offers a simple cash back rewards program (unlimited 1.5% cash back on all purchases), plus an large new cardholder bonus of $150 when qualifying cardholders make $500 in purchases in the first three months after account opening.

What it may lack in higher rewards on purchases at Costco stores and Costco.com, it may more than make up for with the up-front bonus for qualifying cardholders. Consider that to break even with the Costco Anywhere Visa Card by Citi, one would have to spend $30,000 at Costco. (The math: $150 bonus on Chase Freedom Unlimited / 0.5% cash back differential on Costco spending = $30,000.)

In the best case, the Costco store card breaks even at $6,000 in spending at gas stations before exceeding the one-time new cardholder bonus and on-going rewards rate of Chase Freedom Unlimited. To put that in perspective, at a recent national retail price for gasoline of $2.35 per gallon, that's about 2,553 gallons of gas, or more than 51,000 miles on your car at 20 miles per gallon. (The math for the breakeven point: $150 bonus / 2.5% cash back differential on gas = $6,000.)

This card may be best for those who want to thread the needle through their entire monthly budget, as it doesn't offer any bonus categories, but it does offer unlimited 1.5% cash back on every purchase. Thus, for those who spend more outside of Costco than at the wholesale club, this may be the better pick on an average rewards rate basis.

Importantly, Chase Freedom Unlimited has a truly no-minimum cash back redemption program in which rewards can be collected on the cardholder's schedule in any amount, which may be preferable to the once-a-year payout of the Costco Anywhere Visa Card by Citi. See why we rank this card as one of the best cards for cash back by reading the full review of Chase Freedom Unlimited.

A warning on credit cards

It should go without saying that no one wins with rewards credit cards when carrying a balance. At double-digit interest rates, it takes less than a few months' interest to erase the rewards earned on the very best categories of the very best cash back cards. It makes little sense to earn at a one-time rate of 1% to 5.25% of your spending only to build up credit card debt at interest rates of 15% or more per year.

For this reason, rewards credit cards are best used by people who pay their balances in full each month. Those who have credit card debt would be better off with 0% intro APR balance-transfer credit cards, which can help eliminate debt with 0% intro periods that last as long as 21 months. As for those who simply can't resist the temptation to max out a credit line, well, it's probably best to stick with cash. 

Jordan Wathen has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Costco Wholesale and Visa. The Motley Fool has a disclosure policy.