Is the Costco Credit Card Worth It?
The Costco credit card offers valuable cash back rewards for some. Is it for you?
If you're a Costco member, you've probably seen various advertisements for its store-branded credit card. While co-branded credit cards often have limited benefits outside of purchases at the stores they're linked to, the Costco card is a major exception to the rule. Costco members can earn a lot of cash back on the card for everyday purchases.
One of the best no-annual-fee cash-back cards
The Costco credit card earns the following cash-back rates:
|Gas Stations||4% (up to $7,000 in spending)|
|Costco and Costco.com||2%|
The cash-back rates on gas, restaurants, and travel are some of the best available for a no-annual-fee card. And that cash-back rate is valid on gas purchases at Costco, whereas most other credit cards don't count Costco Gas as part of the bonus category.
The only catch with the cash back is that unlike other credit cards, the rewards are only redeemable at Costco. In addition, Costco issues the rewards just once a year. But if you're shopping at Costco anyway, that's just as good as cash.
Other benefits of the Costco credit card
The Costco credit card comes with some of the same benefits as other credit cards issued by Citi.
When shopping, cardholdres can take advantage of the following:
- Price protection: Cardholders can receive up to $500 in credit if they find a better published price within 60 days on an item they purchased using the Costco credit card. Customers can register purchases at CitiPriceRewind.com for automated tracking.
- Purchase protection: If an item is damaged or stolen within 120 days of purchase, Citi will repair it or reimburse up to $1,000 per item.
- Extended warranty: Citi extends manufacturers' warranties a full 24 months beyond the expiration. Coverage is limited to the amount paid for the item with the Costco credit card.
The Costco credit card also comes with the following travel benefits:
- Free car rental insurance: Simply decline the rental agency's damage waiver and Citi will take care of it.
- Roadside-assistance dispatch service: Citi will provide various roadside assistance services for a pre-negotiated price.
- Trip cancellation and interruption insurance and travel accident insurance: Free policies for travel booked with your Costco credit card.
These extra benefits are often an afterthought on most credit cards, but they can save a lot of money if you ever need to use them.
Who shouldn't sign up for the Costco credit card?
The Costco credit card is only available to Costco members. If you're thinking of signing up for a Costco membership just to get the credit card, that's probably not a great idea. As mentioned, the cash-back rewards are only usable at Costco, which isn't very useful if you don't shop there already. What's more, you'll effectively pay a $60 annual fee on the card, wiping out a lot of the cash-back benefits. At that point, you'll be better off applying for a different cash-back credit card.
Another drawback of the Costco credit card is that it doesn't come with much of a sign-up bonus. Costco might offer a free rotisserie chicken or a cooler, but other cash-back cards are offering cold, hard cash for meeting minimum spending requirements.
If you're more interested in travel rewards than in cash back, the Costco credit card isn't going to help very much. Costco does offer vacation packages, but the options are extremely limited. Signing up for a travel credit card should serve you better, and you'll get a lot of mileage (get it?) out of travel-specific points.
Other cash-back credit cards to consider
The Costco credit card is coveted for its premium rewards on gas and restaurants purchases, but there are other lucrative cards in the market that can go toe-to-toe with this rewards program. Discover it® Cash Back and Chase Freedom® are two examples. Both offer up to 5% cash back in rotating categories you activate each quarter (on up to $1,500 of spending each quarter) and these categories have included restaurants and gas.
Side by side comparison
|Discover it® Cash Back||Chase Freedom®|
On Discover's Secure WebsiteDiscover it® Cash Back Review
On Chase's Secure WebsiteChase Freedom® Review
|Bonus: Double cash back in the first year||Bonus: $150 After Spending $500 Within Three Months|
|Rewards Program: 5% Cash Back At Different Places Each Quarter Like Gas Stations, Grocery Stores, Restaurants Or Amazon.com Up To The Quarterly Maximum Each Time You Activate, 1% Cash Back On All Other Purchases||Rewards Program: 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate, 1% on all else|
|Intro APR: Purchases: 0%, 14 months Balance Transfers: 0%, 14 months||Intro APR: Purchases: 0%, 15 months Balance Transfers: 0%, 15 months|
|Regular APR: 13.74% - 24.74% Variable||Regular APR: 16.74% - 25.49%, variable|
|Annual Fee: $0||Annual Fee: $0|
On Discover's Secure Website
On Chase's Secure Website
Is the Costco credit card worth it?
If you're looking for a good cash-back credit card and you do a lot of shopping at Costco, you could do a lot worse than the Costco credit card. Unlike most store credit cards, the Costco credit card works everywhere Visa is accepted. It has excellent cash-back rates for gas, restaurants, and travel purchases, but you can find a better cash-back card if you don't shop in those categories frequently. If you're a regular Costco shopper, the Costco credit card is worth a spot in your wallet. It'll thank you later.