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:

Category Cash-Back Rate
Gas Stations 4% (up to $7,000 in spending)
Restaurants 3%
Travel 3%
Costco and Costco.com 2%
Everywhere else 1%

Data source: Costco

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.

Costco

Image source: Costco

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®
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Star Review Icon = Poor
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3.5 stars Info icon We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
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Star Review Icon Star Review Icon Star Review Icon Star Review Icon = Excellent
Star Review Icon Star Review Icon Star Review Icon = Good
Star Review Icon Star Review Icon = Fair
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Discover it® Cash Back Review
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On Chase's Secure Website

Chase Freedom® Review

Credit Rating Requirement: Good/Excellent

Credit Rating Requirement: Good/Excellent

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

Highlights:

  • INTRO OFFER: Discover will match ALL the cash back you've earned at the end of your first year, automatically. There's no signing up. And no limit to how much is matched.
  • Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate.
  • Plus, earn unlimited 1% cash back on all other purchases - automatically.
  • Redeem cash back any amount, any time. Rewards never expire.
  • Use your rewards at Amazon.com checkout.
  • Receive FREE Social Security number alerts-Discover will monitor thousands of risky websites when you sign up.
  • No annual fee.

Highlights:

  • 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 16.74-25.49%. Balance transfer fee is 5% of the amount transferred, $5 minimum
  • Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
  • Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate
  • Enjoy new 5% categories each quarter
  • Unlimited 1% cash back on all other purchases - it's automatic
  • Cash Back rewards do not expire as long as your account is open and there is no minimum to redeem for cash back.
  • Free credit score, updated weekly with Credit Journey℠
  • No annual fee

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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.